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Wednesday, 30 November 1983
Page: 3016

Senator BUTTON (Leader of the Government in the Senate)(3.29) —Mr Acting Deputy President, what Senator Chaney said in his last remarks is not correct. The Government has not sought to base its decisions in relation to uranium mining on a set of very confused predictions about the state of the market into the future. Certainly the Minister for Resources and Energy, Senator Walsh, and others have said that that is a relevant factor which the Government had to take into account but it has not been the basis for decisions which have been made by the Government. At a later stage I will mention that basis because Senator Chaney specifically raised that question in the course of his remarks.

The Uranium Advisory Council, in its last annual report-the members of that Council were, of course, appointed by the previous Government-had this to say:

. . . there may be disagreement about the likely extent of the market for uranium.

I do not think Senator Chaney retreats from that proposition at all. In fact, the burden of much of his speech was to point out that there will be disagreement about the likely state of the market, particularly beyond the year 1990. The simple point I want to make at the beginning of my remarks is that forecasting future demand of uranium for nuclear electricity generation is a very hazardous enterprise and that statement is borne out by what happened during the 1970s.

The projection of future demand depends on a wide range of factors to which I wish to refer. First of all, it depends on the future levels of overall economic activity. It depends upon the share which electricity has in total energy consumption. It depends on the share of nuclear electricity within total electricity consumption. It depends particularly on a capital intensive industry such as the nuclear power industry. It depends very much on the future levels of interest rates. It depends on the future prices for uranium relative to prices for other energy fuels. It depends on the present and future levels of commercial uranium inventories and national stockpiles. It depends on technical matters such as the future optimal tails assay levels in the uranium enrichment process. It also depends on nuclear regulatory requirements and future restriction lead times. It depends on future technological developments affecting reactor burn-up rates which also affect the quantity of uranium feed stock requirements.

Therefore, I do not think there would be any disagreement between the parties that many variables are involved in trying to estimate or forecast the future demand for uranium. It is not surprising, given the number of variables involved , that the Government has received conflicting advice from various sources as to future levels of demand for uranium. I am grateful that Senator Chaney tabled or had incorporated in Hansard various documents which provide yet a further assessment, I gather, of future demand prepared by various entities with a particular interest in the matter.

As I said at the beginning, the Uranium Advisory Council summarised in the passage I quoted the likely disagreement about the extent of the market for uranium in the future. I said that in those circumstances the Government had received conflicting advice. I can give some examples of that. The Government has received advice concerning the future levels of uncommitted demand for uranium, that is demand not already committed under existing long term contracts . It has been suggested that cumulative uncommitted demand for the non-communist countries for the next ten years could be of the order of 100,000 to 112,000 short tonnes with the bulk of this demand occurring towards the end of the decade. But even if one-third as distinct from the 25 per cent projection of which Senator Chaney spoke, were to be directed to Australia it would clearly be insufficient to support all of the Australian projects that have been proposed to be developed in the 1980s. That is not just a judgment of this Government; it is a judgment shared by the Australian uranium industry and overseas nuclear analysts. The Opposition seems to be saying, I suppose, that in respect of uranium mining it is advisable as a matter of resource allocation to let the market sort it out and let 100 flowers bloom.

Senator Chaney —At least half a dozen.

Senator BUTTON —'At least half a dozen' says Senator Chaney. I think that is a very pertinent interjection because the estimates about how many flowers should be allowed to bloom are about as ad hoc as the estimates about likely future demand. I am simply making the point that it is a judgment of the Government and , as I said, of the industry and overseas analysts that even if one-third of world demand were directed to Australia, the market would not support all the projects which have been talked about.

Senator Chaney said a lot about uncertainty which has been generated in the market by the actions of the Government. Let me say one thing quite clearly right at the beginning: The International Atomic Energy Agency and other regulatory bodies have expressed a concern that Australia remain in the market within their knowledge, within the confines of the policy which the Labor Party enunciated prior to the election and within the knowledge that the industry will not be allowed to develop in the same way as it has in the past. While there is a lot of talk about uncertainty in the market-certainly one can understand that talk coming from Mr Tony Grey of Pancontinental Mining Ltd-I think references to other comments about uncertainty created by the Government's policy have to be a little more substantiated than they were by Senator Chaney.

I said that if one-third of world demand were directed to Australia the market would still not be sufficient to support all the Australian projects that have been proposed in the 1980s. I think there is an important qualitative aspect to this, namely that the prices and other terms and conditions on which Australian uranium should be sold have to be considered. If all uranium projects were given the go-ahead, the ensuing overproduction would depress prices and prejudice market stability leading to lower levels of returns from, amongst others, the existing mines at Ranger and Nabarlek and the projected mine at Roxby Downs. This would be so notwithstanding the fact that there is bipartisan support for the maintenance of some sort of uranium floor price policy. It has been the long standing practice of governments not to disclose details of the ways in which that policy is applied at the commercial level and this practice will continue under the present Government. Senator Walsh, in answer to questions in this place, has made it quite clear that he will continue that policy. Notwithstanding that policy, however, the chances of a recovery in market prices to levels exceeding floor price levels would be impeded if the Opposition's preferred course of unrestricted development of uranium mining were to be adopted.

This is one of a series of, I suppose, a baker's dozen matters of public importance that have been brought forward in the last three months by the Opposition in this place in relation to uranium mining. I can understand the basis on which the earlier matters of public importance were brought forward in the Senate. I think an objective observer would be pardoned for thinking that there was some confusion about the Government's uranium policy because it was a subject of long discussion within the Labor Party, within the Government and in the public arena. Following the announcement by the Government of its decsion on 7 November, the policy is clear. It has been articulated in answers to questions in the Senate and in the course of discussion in the Senate. The policy, firstly , is simply that if a commercial decision is made to proceed with the development of the Roxby Downs project the Government will permit that development to go ahead subject to the safeguard requirements which apply generally to uranium at the time of exports from that mine and exports from Australia generally. With the exception of Roxby Downs, if it is commercially feasible, the Government will not permit the development of any new mines.

Secondly, an inquiry is to be conducted by the Australian Science and Technology Council under the direction of its Chairman into Australia's role in the nuclear fuel cycle. The Council is to report to the Government no later than mid-May of 1984. Some of the matters which that inquiry has to examine will include Australia's nuclear safeguard arrangements, the opportunities for Australia through the conditions of its involvement in the nuclear fuel cycle further to advance the cause of nuclear non-proliferation, the question of the adequacy of existing technology for the handling and disposal of waste products by consuming countries, and so on. Of course, Senator Chaney will say that the Government's policy is being dictated by political considerations. Surprise, surprise! I think everybody who spends time in this chamber and earns a living as a senator would recognise very quickly that the Government has to take a number of political considerations into account.

Senator Chaney —But Walsh says the main reason is the limit on the market.

Senator BUTTON —Senator Chaney is interjecting to say that Senator Walsh says that the main reason is the state of the market. With respect, I do not think that that is correct. A number of reasons is given for the policy.

Senator Chaney —He calls it the chief reason.

Senator BUTTON —Senator Walsh may have said that.

Senator Chaney —Many times, but I refer to Hansard, page 2250, of 8 November 1983.

Senator BUTTON —I understand that Senator Walsh may have said that on a number of occasions, but I am putting to Senator Chaney, who is interrupting, and to anyone else who is listening, that everybody in this place is aware that the Government decision was dictated by a number of political considerations. Senator Walsh in answer to questions has said that the market question is a chief consideration.

Senator Chaney —'The'.

Senator BUTTON —That may be so. I think it is very important that the market situation be taken into account. As has been said on previous occasions and by me in the last few minutes, the Government received advice about the projected situation of the market and, of course, that was taken into account. I was going on to say that the matters I just mentioned in relation to the type of inquiry which is to be conducted by ASTEC are certainly political. The Government does not retreat from that fact. They involve political decisions about the circumstances in which the nuclear industry should develop and the circumstances under which the Australian Government and Australian industry should be involved in the nuclear industry. There is no retreat from the fact that they are matters involving political considerations. I was enumerating the major points of policy which were announced on 7 November because I think if they have not been made clear by now, they ought to be.

The third point I was coming to was that all future exports of Australian uranium will be subject to stringent supply conditions which will be determined by the Government following the inquiry to which I referred. Fourthly, a permanent commission will be established to examine on an ongoing basis the full range of issues relating to the nuclear fuel cycle, and that commission will report regularly to the Government. Fifthly, no new contracts will be approved from existing mines until after the inquiry, with the exception of the two contracts, which have been the subject of some discussion, already negotiated for the supply from the Ranger mine to the United States utilities. The conditions attached to exports under these contracts will be determined after the inquiry. Sixthly the existing suspension of uranium exports to France will be further considered in the light of the report of the inquiry or on any progress being made towards the cessation of the French nuclear testing in the Pacific. With regard to other aspects of the policy, I will just add that the Government has decided that it does not wish to facilitate or be otherwise involved with the Uranium Enrichment Group of Australia's study into the feasibility of establishing those operations in this country. The decision to abolish the Uranium Advisory Council was taken some time ago and was announced at that time.

I said that the Opposition's attitude is that there should be much greater freedom for anybody wishing to develop uranium mines in this country. I said earlier that neither on nuclear industry grounds nor on economic grounds does the Government agree with the view which has been expressed by the Opposition. It is that sort of attitude which has got this country into tremendous economic difficulties in a variety of industries over the last 20 or 30 years. It is the sort of attitude which should be challenged in relation to this matter and to developments in any other industry in the 1980s when Australia has to have a much more rational look at resource allocation issues than it has in the past.

The Opposition asserts that the market for uranium should be exploited by anyone wishing to have a go; we do not agree with that. Not only do we not agree with that for the reasons which I have enunciated but also do we not agree with that for some of the reasons, which were accepted by the previous Government, in relation to the ownership of particular companies and their commitment to acquiring the required level of Australian ownership. As I said, even if one were to accept the argument of the Opposition that anybody should be able to participate in this industry-and the Government does not-it is the Government's view-

Senator Chaney —It is not the Opposition's view, and you well know it.

Senator BUTTON —Senator Chaney says that it is not the Opposition's view. I am not clear as to what the Opposition's view is, if that is not its view. Opposition senators have been asking questions.

Senator Chaney —No one suggested that foreign investment rules do not apply.

Senator BUTTON —I do not know. For example, there have been a number of questions in the Senate from Opposition senators about the Ben Lomond mine.

Senator Chaney —That is subject to foreign ownership requirements.

Senator BUTTON —All of these questions have been asked on the basis: 'Why does the government not allow that mine to go ahead?' None of those questions has been directed on the basis that the Opposition suggests that it has the view that that mine should not go ahead. They have all been put on the assumption that the Government was doing something wrong in not letting it go ahead. I was making the point that it is the Government's view that there would not be a market for the uranium mined if the Opposition's apparent policy were followed. I stress that that view must be seen in the light of the Government's decision in relation to Roxby Downs. I make the point that in the view of this Government , to deny the opportunity for Roxby to go ahead, would be to prevent the establishment of a major project capable of producing large quantities of other minerals as well as uranium. In addition, in relation to additional mines it is the preferred choice simply because of the employment implications and the implications for the State of South Australia, which are very important. Those are the Government's views on the topic. We are grateful to Senator Chaney for making available a further set of projections for the uranium market in the late 1980s and beyond. We think that the general sentiments expressed by the Opposition should be rejected. But it is all part of an ongoing and important debate about the future of this industry and we do not in any sense suggest that it should not take place.