By Jim Green
Rumours have been circulating amongst anti-nuclear activists that Energy Resources of Australia (ERA) wants to pull out of the Jabiluka uranium mine in the Northern Territory.
ERA began construction of the mine in June. At the moment, the major project is the construction of a tunnel to the ore body. ERA's plan is to stop construction temporarily once the ore body has been reached; there will be no work on the mine from June 1999 to June 2000. Extraction of the uranium ore will be delayed from 2000 to 2001.
ERA has given three reasons for the 12-month delay. First, it will give the company time to bully and/or bribe the Mirrar traditional owners into allowing milling of the ore at the nearby Ranger mill. If it does not succeed, ERA will be forced to build a mill at Jabiluka at an additional cost of around $100-200 million.
Second, ERA is to build a road between Ranger and Jabiluka during the delay. The traditional owners can negotiate over the route of the road, but they cannot legally stop the road from being built.
Third, a 6-12 month "design" phase is necessary to determine the quantity of ore in the deposit and finalise plans for its extraction.
Late last year, Democrat Senator Lyn Allison claimed that ERA and the federal government were involved in negotiations to terminate the Jabiluka project, with some compensation to ERA. The government and ERA denied the claim. ERA has also denied that the 12-month delay signals an intention to withdraw from the project.
As reported in Green Left Weekly last week, ERA says the project is going "full speed ahead".
ERA has three main problems: the strong possibility that Kakadu National Park, which surrounds Jabiluka, will be listed as "world heritage in danger" because of the mine; a range of economic problems; last but not least, the national (and international) campaign to stop the mine.
Kakadu is listed under the Word Heritage Convention for its natural and cultural attributes. The 21-nation World Heritage Committee has given the Australian government until April 15 to explain how it will ensure that there is no danger to Kakadu as a result of the mine.
Last year, the committee recommended that construction of the mine cease until the final decision, expected in June, on a world heritage in danger listing.
Federal environment minister Robert Hill rejected the recommendation, saying the world heritage report was "biased, unbalanced and totally lacking in objectivity".
Hill claimed that Australia is being unfairly singled out. Dredging up a 1997 report to the UNESCO, which shows that 54% of world heritage sites are under threat from developments outside their boundaries, Hill said: "Many of the factors which UNESCO claims are putting Kakadu at risk are commonplace in world heritage areas around the world". As if that makes the Jabiluka mine acceptable!
A world heritage in danger listing would come with a recommendation that the project be stopped. The federal government would probably ignore that recommendation. Nevertheless, the issue has already caused enormous political damage to the government and ERA.
Financial troubles
ERA says an additional benefit of the 12-month delay is that it will allow the international uranium market to improve. ERA's performance in the past two years suggests it needs all the help it can get: in the 34 months to December 1998, ERA's share value dropped by about 65%; ERA's net debt increased to $77.6 million by the end of the 1997-98 financial year; ERA's profit after tax for 1997-98 decreased 34%, with a 13% drop in sales revenue due to lower spot prices affecting nearly half of the company's sales; and $415 million was lost in the value of ERA's listed shares over the course of 1998, making the company one of the year's "dog stocks", according to a report in the Melbourne Age.
The situation appears to be going from bad to worse for ERA. According to Dave Sweeney, from the Australian Conservation Foundation, the company's performance over the first half of the 1998-99 financial year yielded the following grim statistics: a profit decline of over 50%; an increase in unit production costs; a production decrease of 18%; a decline in sales revenue of about 30%; the premature closure, from March 31, of part of the existing Ranger milling facility because of "weaker market conditions" (ERA's term); and an acknowledgment that the adverse market conditions mean it is more viable for the company to meet any extra contractual obligations through international purchase rather than domestic production.
The international picture is not much brighter. Nuclear power output is stagnant or in decline in North America, western and eastern Europe and Russia. Nuclear power has never had — and is never likely to have — anything more than a minimal presence in South America, Africa and the Middle East.
There are plans to expand nuclear power in Asia, especially in Japan, South Korea, China and India. However, a modest expansion is the best that the nuclear industry can hope for.
Public opposition, economic difficulties, intractable problems with nuclear waste and the shift away from nuclear power in the major industrialised countries mitigate against a major expansion in Asia. Overall, it is unlikely that there will be an increase in global nuclear power output over the next 20-30 years.
By 2010, about 70% of nuclear power reactors will be over 25 years old, and many will be candidates for closure. Even if there is some growth in nuclear power, there is no certainty that new mines such as Jabiluka will secure large contracts. Uranium stockpiles, ex-military uranium and plutonium and existing mines may leave little room for new producers.
According to a 1998 report by the London-based Uranium Institute, there is a global oversupply of uranium, and this will continue for at least two decades. ERA's prospects look dim.
However, a sustained worldwide decline in nuclear power and uranium demand is likely to occur gradually. Certainly, the industry does not lack state support.
The US House of Representatives voted US$228 million for nuclear energy research and development for 1999. The UN provides political and financial support for just one energy source — nuclear power. Australian governments have provided tens — probably hundreds — of millions of dollars to subsidise uranium mining in the NT.
There are other factors working in ERA's favour. Fuel costs are relatively small in comparison with overall costs for nuclear power, so nuclear power utilities put a premium on security of supply. ERA signed seven new sales contracts in 1998, and 25,000 tonnes of production are committed over the next 10 years (from Ranger and/or Jabiluka). ERA already has contracts with 15 countries for Jabiluka-origin uranium.
The political struggle against nuclear power will ultimately determine the fate of nuclear power and the uranium mining industry.
If the Jabiluka mine is stopped, the gloomy economic forecast for the nuclear industry will have played a part, if for no other reason than that it will diminish ERA's resolve to fight. However, it is very unlikely that economic factors alone will determine the outcome of the battle over Jabiluka.
The political struggle against ERA and the federal government remains crucial. For so long as ERA says the project is going "full speed ahead", then so must the campaign.