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Australia to confront Uranium policy

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The Australian Labor Party, in opposition federally but in power in all states, will confront and review its current uranium policy, which could be inhibiting development of the industry, Martin Ferguson, the party's federal spokesman on resources, said Thursday. The Labor Party's no new mines uranium policy will be subject for review, as is usual with all its policies, at the next national conference, scheduled for 2007, he said. The policy, which dates from 1984, means Australia's three current uranium mines can continue to operate, but stops new mines opening. This means Australia can become the world's biggest exporter of uranium with the largest mine in the world, depending on approvals for expansion at BHP Billion Ltd.'s (BHP) Olympic Dam copper/gold/uranium mine, he said. Ferguson noted the differing stances towards uranium mining and processing adopted by different states and territories. Queensland and Western Australia states maintain bans on uranium mining, whereas South Australia actively supports an expansion of production at Olympic Dam, while Northern Territory continues to willingly and knowingly grant uranium exploration licenses, he said. Moreover, Southern Cross Resources Inc.'s (SXR.T) Southern Cross Resources Australia Pty unit in 2001 obtained an export permit for uranium from the Honeymoon project and received environmental clearance from South Australia state, he said. The proposed Honeymoon mine approvals were in place before a Labor Party government was elected in South Australia, he said. "It acknowledges those approvals and will honor them," he told Dow Jones Newswires in an interview. Ferguson said he finds it intellectually hard to accept coal can be mined in Queensland but uranium can't. "I thought the Labor Party could actually walk and chew gum at the same time," he said. "These things will be confronted as time goes on," he said. Australia's other two uranium mines are Ranger in the Northern Territory, operated by Energy Resources of Australia Ltd. (ERA.AU), a 68.4%-owned unit of Rio Tinto PLC (RTP), and General Atomics' Beverley mine in South Australia state. In fiscal 2004-05, Australian uranium exports rose to 10,964 metric tons valued at A$475 million, from 9,569 tons valued at A$364 million in the previous fiscal year ended June 30, 2004. Annual production now represents about 22% of world production, making Australia the second largest producer after Canada, but with 1 million tons of identified uranium resources, holds about 40% of total world known resources. The federal government wants state Labor governments to drop their opposition to uranium mining, believing this opposition to be based on ideological grounds. Labor Must Confront Hard Issues Asked whether, Labor's policy was inhibiting investment in the uranium industry, Ferguson said there wasn't much interest in uranium because of ready supply from secondary sources. But with a reduction in supplies from those sources, the price has rocketed over the past two years and now "uranium is the flavor of the month in terms of potential investment and development," he said. More than 40 companies, including Areva's (427583.FR) Cogema mining unit and Canada's Cameco Corp. (CCJ), the world's biggest uranium producer, and an increasing number of small local concerns, are exploring for uranium in Australia. "The market speaks for itself: Australia is now a focus in terms of an expansion of the uranium mining industry whether federal Labor likes it or not," Ferguson said. "The Labor Party from time to time has to confront hard issues," he said. "The issue of uranium isn't going to go away." Early August, the federal Liberal-National Coalition announced it was assuming control for the approval of uranium mining in the Northern Territory. Ferguson said the federal government has a responsibility to pursue opportunities, such as the potentially big export earnings and job creation from uranium development, so the time was right to push things along given lags between in exploration and production. "It's highly sort after, it's a very valuable product, potentially a big export earner," he said. Australia's mining industry is keen to develop the nation's uranium resources. Mitchell Harry Hooke, chief executive of national lobby group the Minerals Council of Australia, said a month ago, that Australia's restrictive policies covering mining and processing of uranium can't be justified on rational grounds and must change. It is "quite absurd" to place artificial limits on the number of mines but then have no such limits on the size of current mines, he said. The global spot price for uranium has doubled since early 2003 to more than US$30/pound on the back of strong demand for energy and a focus on all readily available sources of energy, he said.Global demand for uranium is driven by increasing demand among industrialized and developing nations, citing new capacity being planned by China, Russia, Finland, France and India, he said. By Ray Brindal, Dow Jones Newswires, 612 6208 0902; [e-mail] Edited by Paul Dekkers (END) Dow Jones Newswires 10-06-05 0400ET Copyright (c) 2005 Dow Jones & Company, Inc.