Earlier this week, on April 3, China and Australia signed a uranium supply deal. Australia will provide as much as 20,000 tonnes of the radioactive metal annually for power generation in China. By comparison, all the world's uranium mines produced a total of 27,430 tonnes of U3O8 in 2004. The amount in the Chinese agreement would vault Australia into the position of the world's largest uranium producer, ahead of the current No.1: Canada.
Will the deal freeze Canadian uranium out of the growing Chinese market? Probably not for some time. Australian exports are currently 10,000 tonnes/year, and that is the estimated Chinese demand by 2010. It is doubtful that demand could be met from a single country. If BHP BILLITON goes ahead with an A$5-billion expansion at its Olympic Dam mine, uranium output at that site would double sometime after 2012.
Australia currently exports uranium to the United States, Japan, South Korea and the European Union. These countries are signatories to the Nuclear Non-Proliferation Treaty. That means that uranium imports may not be used for weapons research or production. The new Chinese-Australian deal stipulates that Australian uranium be used only for electric power generation, and it provides for the inspection of Chinese nuclear facilities.
China is confident that it can build the nuclear generating capacity it wants in the next 15 years. The country is actively developing a pebble-bed reactor prototype. This type of reactor is fuelled with small graphite balls containing tiny uranium cores. It is cooled by a gas such as helium (in the Chinese model), nitrogen or carbon dioxide. The hot gas drives the generating turbine directly, eliminating the need for a steam management system. A pebble bed reactor is 50% more efficient, and far safer and even more "meltdown-proof", than conventional reactors.
The first 200-MW production plant in China is expected to come onstream in 2007, and 30 more such plants will be operational by 2020.
A secure fuel supply is a must for the Chinese nuclear industry. Although the country produces an estimated 750 tonnes/year U3O8, it is far from supplying its own needs. To fuel so many new reactors, China may not be done shopping for uranium yet.
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