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Wednesday, 31 August 1994
Page: 707

Senator COULTER (4.40 p.m.) —This afternoon we are debating the Customs Tariff (Uranium Concentrate Export Duty) Act Repeal Bill 1994. This bill repeals legislation which over the years has been used to raise an export duty against uranium to pay for the costs of, essentially, the Office of the Supervising Scientist in the Northern Territory.

  The export duty has risen on a number of occasions since its introduction, through amendments to section 6(1) of the principal act, in 1987, 1988, 1989 and 1991. Currently, the duty stands at $1.30 per kilogram. The reason for the increase in duty on each occasion has been stated in parliament to be the need to move towards full cost recovery for the activities of monitoring and information gathering. In 1987 the increase brought cost recovery to 50 per cent; in 1988 to 75 per cent; and thereafter closer to full cost recovery. In previous debates on this particular area of legislation I have certainly supported the notion of full cost recovery because, clearly, if we were not mining uranium we would not need the Office of the Supervising Scientist and we would not then need to pay for this expense.

  I must say that, having been associated with the early stages of the Ranger mine through the so-called Ranger inquiry under Mr Justice Fox, having given considerable evidence to that inquiry, having gone up to the Northern Territory and visited this area before Kakadu National Park was created as a world heritage area, and having been part of the ACF push to establish that area, I was certainly very keen that the environment be properly looked after.

  I have to say that when Mr Bob Fry was moved from what was then the Australian Atomic Energy Commission over to the Office of the Supervising Scientist I was rather doubtful about whether that office would carry out its duties in a diligent way and I wondered whether in fact it would be overly protective of uranium mining. But over the years Mr Fry did an excellent job and I think the Office of the Supervising Scientist has performed extremely well.

  Certainly, when one looks at the environmental protection which has gone on in the Northern Territory in relation to the Ranger mine, one sees that the environmental protection has certainly been of a much higher quality than that we have seen in the case of the Olympic Dam mine in South Australia where, as I think most senators would know, the tailings dam has leaked very seriously. Western Mining knew over a number of years that the tailings dam was leaking down into the water table and in fact failed to inform the South Australian government and any independent monitoring authority that that leakage was occurring. In the Northern Territory, on the other hand, I think we have had reasonably good environmental protection.

  We now come to this particular piece of legislation which seeks to remove the levy from uranium mining. I think that in itself is a very interesting exercise because it says a great deal about the profitability and competitiveness of uranium mining, comparing one mine with the other, and uranium mining with other activities in the economy. The Bills Digest states:

The explanatory memorandum to the Bill states that the abolition of the levy is a result of—

I think these words need emphasis—

the current uncertainty in the world uranium market, and the view that it is no longer an appropriate mechanism for ensuring adequate industry contribution to environmental costs of mining in the region.

The minister's second reading speech brings out exactly the same thing. Among other things it states:

However, with diminishing exports from the Alligator Rivers Region, due to the closure of the Nabarlek mine and declining exports from the Ranger mine due to the poor state of the market for uranium, levy collections have become uncertain.

It goes on:

Ranger, as the sole producer of the Region and the only one contributing to the levy should therefore not be expected to meet the full costs of these activities.

It then talks about the need for Ranger to be able to better compete with Roxby Downs or the Olympic Dam mine in South Australia where the export levy does not apply.

  I have already mentioned the fact that there is a marked difference in the environmental standards to which the Ranger mine and Olympic Dam have been forced to adhere. What we have here is the removal of the levy because the mine which has been able to operate with much lower environmental standards is able to compete unfairly with a mine which, through the Office of the Supervising Scientist, has been forced to maintain much higher standards. That indicates one of the ways in which this government is going for lower and lower environmental standards as a way of encouraging some of our export related industries.

  That is simply not acceptable. We must insist that our industries maintain not the lowest but the highest environmental standards. If that means the imposition of a levy on the mining industry which represents the externality associated with environmental damage and the picking up of that externality through appropriate environmental protection regime, then so be it. That is the appropriate, economically sound way to go.

  I pick up another point which comes out in the minister's second reading speech. I have already quoted that the Ranger mine is not able to pay the levy because of the poor state of the market for uranium and that levy collections have become uncertain. I point out again to the Senate that, currently, Ranger has a five-year contract with Kazakhstan to import from it roughly one-third of the uranium which it puts on the market because that nation can produce uranium at a much lower cost than that of getting it out of the Ranger mine.

  If Senator Tambling and others from the Northern Territory who have held out this marvellous bonanza of more mines, more profits and employment for Aboriginal people really want to address this problem, they should be concerned about the fact that here we have a mine in the Northern Territory right in the middle of an important Aboriginal area that could provide more employment. The reason it is not providing that employment is that the market for uranium is so poor that ERA is importing 30 per cent of its uranium from Kazakhstan, which can produce it much cheaper. I think that simply indicates—this whole piece of legislation indicates—the failure of the predictions which have been made by those in the nuclear industry who want to promote it.

  When we look at the situation in countries which have gone very much to a free market situation, we see that in the United Kingdom the Thatcher government sold the central electricity generating board lock, stock and barrel. It found that it could not sell the nuclear reactors. Indeed, no new nuclear plants are opening up under that private scheme. Similarly, in the States, under an open market system, nuclear energy simply cannot compete. In those countries in which nuclear reactors are being built, they are being built with very heavy government subsidies, not in an open market system.

  I think this also bears on another point which is of great importance. It was held out by Senator Boswell in his speech on this bill that somehow or other the opening up of these mines was going to produce a lot of jobs and that it was terribly unfair of the Democrats to in any way oppose uranium mining because what we were doing was impeding Aboriginal people getting jobs. I point again to the fact that the Olympic Dam mine in South Australia is currently contemplating an expansion worth $1 billion to produce an extra 300 jobs. That is $3 million of capital investment for each job created. Quite clearly, that is not going to produce the jobs that are necessary to solve the unemployment problem in Australia, whether it is Aboriginal employment or any other employment. The whole idea that an expansion of uranium mining is either going to be an economic bonanza for Australia or will produce very many jobs simply perpetuates a fraud on the Australian people. It is particularly pernicious when that fraud is being foisted upon Aboriginal people.

  The point that I made the other day in an urgency debate is that the figures from the international uranium mining body indicate that should the disarmament agreement between the Russian and US governments be fulfilled, the amount of highly enriched uranium—which would have to be diluted—which would come on to the market over the next 20 years would be sufficient to meet all the needs of the civil nuclear fuel cycle without any more uranium being mined. Again, the likelihood of an expansion in the market leading to the profitable and employment generating opening of new mines is simply not on.

  I am building on what the minister has put down in his second reading speech, which I think is terribly relevant at this time when the Labor government may well be contemplating whether to move from essentially a two-mine policy to an open slather. I think it is also worth pointing out the figures which came out of the Industry Commission report No. 7 on the actual costs of production, bearing in mind that in June 1994 the spot price for Australian produced uranium was between $9.20 and $9.30 per pound. The levy of $1.30 per kilogram which we are now removing—roughly 60c per pound which is coming off the price—is thought to be a sufficient inducement to Ranger to make a competitive difference. But the former communist countries are producing uranium at $7 to $7.20 per pound.

  The IC report No. 7 states that the costs of production at Ranger are $15 per pound and $15 to $20 per pound at Roxby Downs. Of course, Roxby Downs is primarily a copper mine and therefore it does not matter too much what price they get for the uranium. The figure for Koongarra is $20 to $25, and $25 to $30 for Jabiluka—the mine which I do not doubt Senator Tambling will mention in a moment should be opened up. The prospect of that mine becoming profitable in the foreseeable future—and I am talking about a 20 to 30 year range—is really ridiculous.

  I go back to a point which I made the other day. If the opposition is claiming that uranium mining should simply be left in the hands of the private marketplace—if it is profitable then investments will be made and if it is not profitable, investments will not be made; governments should wash their hands of policy—I simply point to two areas. It is not possible to maintain high standards of safeguards if one is desperate to sell a product at less than the cost of production. Under those circumstances one is forced to compromise on the question of safety.

  In a question to Senator Gareth Evans in October 1993, less than a year ago, I asked about sales of uranium to Taiwan and whether the government was trying to circumvent its own safety standards—that is, to fulfil the requirement that another party must be a party to the nuclear non-proliferation treaty, that they must have negotiated a safety agreement with the IAEA and also must enter into a bilateral agreement with Australia. At the time, in October 1993, when the Australian government was attempting to circumvent its own safeguards agreements, Taiwan could not meet two out of the three of those safety requirements. Yet Australia was attempting to get Australian uranium to Taiwan via a third party, America. It indicates the lengths to which governments and commercial interests are forced when the producer is operating very much in a buyer's market. When the price that one can get for a product is less than the cost of production, it is extremely difficult to go in hard on the question of safeguards.

  Further to the matter of whether the government should leave its uranium mining policy simply to market forces, I again stress that when mining is such a high capital cost industry, when the number of jobs likely to be produced is marginal compared with the number of unemployed people in Australia, when the profitability is likely to be marginal, I believe the government has a responsibility to ensure as far as it can that investment flows into those areas which will be most socially beneficial in terms of production of jobs and most beneficial to the economy as a whole, so that the benefit to the country in terms of exports will be improved. Uranium does not meet either of those criteria.

  There is just one other matter which I would like to mention. Fifty per cent of Australia's uranium is currently going to Japan. Japan is engaged in a program of attempting to build breeder reactors—breeder reactors which will get 60 times as much energy out of the uranium by breeding plutonium than the normal burner reactors that most countries which have nuclear reactors now are using. It seems quite likely that this technology will be developed in Japan. If that technology is successful over the next 20 years, it seems that the demand for Australian uranium will be extremely small.

  That is another nail in the coffin of the uranium production industry. The demand around the world for uranium, including Australian uranium, will remain extremely small. In the meantime, the very fact that Japan is going down this road and that we are allowing the Japanese to reprocess our uranium to build up a stockpile of plutonium in anticipation of its breeder reactor program is one of the primary causes of the development of nuclear weapons in North Korea. Recently, we have seen the North Koreans hold the world to ransom and extract billions of dollars of ransom payment from the United States in return for not going nuclear. That again indicates the inherent danger of this industry.

  I conclude by saying that we are not opposing this legislation, but the minister's second reading speech indicates the extremely parlous state of the uranium mining industry, and indicates yet again the reason why the government should not move from a two mines policy to open slather in uranium mining.