Uranium Won't Pay the Bills

Uranium mining is frequently presented as the only solution to a range of economic power security and climate change challenges. In reality, however, the uranium industry creates far more problems than it claims to solve.

In a highly questionable move, the Western Australian Premier-elect has tied the increase in funding for regions, through the Nationals’ "royalties for regions" program, to uranium mining. In planning to lift WA’s ban on uranium mining — a ban that had been supported by the outgoing Carpenter government — Colin Barnett has named the issue as one of his two key priorities, along with the large-scale release of genetically modified organisms into the environment.

Decades of deep community opposition is only one of the reasons there has never been a commercial uranium mine in Western Australia. Another is the inherent volatility in the uranium market.

Barnett’s hopes for uranium as the newest phase of WA’s quarry economy should be treated with deep suspicion by West Australians, not only for the serious environmental and social concerns this type of mining raises, but also because the economic reasons for uranium mining are far more shaky than the industry would have us believe.

While the risks associated with uranium mining and nuclear power are of such a nature that they extend beyond the scope of normal economic modelling, even a more restricted study reveals a whole range of reasons why uranium is an economically flawed proposition.

The fortunes of the uranium miners — and their political supporters — now depend entirely on three factors: the long-term profitability of the global nuclear power industry; the geopolitics of multiple nuclear arms races and the potential for acts of nuclear terrorism; and the determined opposition from those in the community who stopped believing the lies of this industry a long time ago. All three of these factors are entirely out of the hands of the new Premier.

The global nuclear power industry is strongly convinced that a global "nuclear renaissance" is underway — an idea which they are basing on evidence which actually points in the other direction completely. According to one investor’s guide, "…right off the bat we know that demand for the radioactive metal is set to increase just because of the growth in nuclear power generation […] Simply put, investing in uranium is a ‘no-brainer’. Uranium prices are almost guaranteed to continue increasing in value."

Since this was written, the reverse has occurred. The uranium spot price fell from nearly US$140/lb a year ago to $64.50/lb by September 2008. The same thing happened with the uranium "boom" of the late 1990s — a whole field of junior explorers was wiped out the last time the nuclear industry declared there was a "renaissance" going on.

It is an article of faith within the industry that nuclear power capacity is growing strongly after 30 years of virtual standstill, and that this is the key driver of higher uranium prices. This is demonstrably not the case. The number of operating nuclear power stations peaked in 2002 then fell by five units the end of 2007, to 439 reactors. The International Atomic Energy Agency lists 32 units as under construction in 2007, which is 20 less than were under construction in the late 1990s.

There has been a virtual moratorium on new reactor construction in Western Europe and North America since the 1980s: today the average age of the world’s operating nuclear power stations is 23 years. Compare that to the average age of their 117 decommissioned reactors, which was 22 years at the time of closure. Where is the renaissance that will sustain our uranium industry?

A recent status report of the global nuclear industry concluded that on the basis of faltering construction rates, rising costs, legal and political challenges, the ageing of the world’s current reactor fleet and the uncompromising nature of the technology, "…the number of nuclear power plants operating in the world will most likely decline over the next two decades with a rather sharper decline to be expected after 2020."

Worldwide, the industry tends to emphasise construction efforts in the heavily state-subsidised markets of China and India, with Russia leading the export market. Around half the Russian reactors are slated for shutdown over the next decade, and nuclear power in China and India makes up only a tiny fraction of their overall electricity generation (1.9 per cent and 2.6 per cent respectively), with no sign that the slow and expensive reactor construction process will meet the ambitious targets in either country. The single reactor under construction in Western Europe — the Olkiluoto 3 reactor in Finland — is already $2.7 billion over budget and more than two years behind schedule, after two years of work.

Despite the extremely generous hand-outs some governments make to the industry, they are still apparently not enough to kick-start nuclear power generation as a reliable market for our uranium.

In the US, since 2000, the Bush Administration has offered substantial tax credits, loan guarantees, a highly favourable regulatory environment and an extension of limited liability under the Price Anderson Act until 2025 to entice new reactor builds. The industry response has been lukewarm at best, with no firm commitments to new construction.

In Britain, despite the announcement by the Government of a new fleet of reactors — underwritten by public funding for plant decommissioning, waste storage and protection from open-ended liabilities — those projects will inevitably face the same legal, safety, technical, economic, social and environmental realities which have held their industry in limbo for decades.

As an industry, uranium’s economic viability is also acutely vulnerable to the unique hazards and imponderable risks of accidents at nuclear power stations. The industry often claims that there is less risk from the power plants that are newer. But here again, the facts point the other way. Of the seven major accidents resulting in known radiation releases from reactor core melting, the average operating age of the reactor was less than three and a half years. The frequency of accidents can be expected to rise as reactors age and equipment fatigue takes its toll — particularly as plant owners seek to extend the life of their plants decades beyond the original design life.

The industry won’t survive another accident on the scale of Chernobyl or Three Mile Island. All over the world, people are working to have these plants closed before another serious accident ends the argument in the worst possible way.

In its quest for economic viability, the uranium industry has found justifications to push its product to some very risky customers. Nuclear power reactors were first designed as weapons factories, producing plutonium destined to be refined for weapons production. The same enrichment plants which produce nuclear fuel can also be used to produce bomb-grade material. This is a fundamental concern that has never been satisfactorily addressed by the uranium mining industry, which in promoting the spread of "civilian" nuclear power around the world makes it so much easier for nations and sub-national entities to obtain the means to produce nuclear weapons.

Nuclear power remains the only energy source which provides the feedstock for weapons of mass destruction. Australia currently sells uranium to several nuclear weapons states and is considering sales to Russia. The Federal Goverment also supports a US-proposed deal to transfer nuclear technology and fuel to India despite that country’s refusal to sign the Nuclear Non-Proliferation Treaty.

Beyond the obvious security concerns, it is uncertain how markets — and more importantly, the public — would react to the very real possibility of an attack on a nuclear facility resulting in the widespread release of radiation.

These concerns would be enough to prevent our involvement in any other industry imaginable — so why is uranium mining still being supported by some of our leaders?

In the absence of State or Federal Government commitment to protect the population from the risks that this industry brings, it is once again up to the community to step up and take a stand on its own behalf.

With the recent demise of the Carpenter Government and the capitulation of federal Environment Minister Peter Garrett in approving the Beverley mine expansion in SA, the uranium miners seem confident that they’ll be given a very easy ride through the environmental and heritage protection laws which were intended to safeguard us from exactly this kind of development.

In 12 years of the Howard government, during which dozens of uranium mines were promised, only one, small, polluting mine at Beverley actually opened. Concerted opposition at all levels of society has stopped uranium mines, nuclear power stations and radioactive waste dumps, not just in Australia but all over the world.

Opposition to this industry is not based on emotion, irrationality or a fear of progress. Rather, the global and local anti-nuclear movement has based its campaign on simple acknowledgement that this industry is profoundly damaging to the environment and to human beings.

The inability — after six decades — of any nation to provide a satisfactory disposal method for the lethal wastes arising from the industry has long been a key limiting factor. But there are also many other problems with this industry, less well known, that constantly degrade our environment, our security and our economy. These include the high rates of water consumption at uranium mines and nuclear power stations, the reliance on abundant and inexpensive fossil fuels, the magnitude of "routine" (ie non-catastrophic) radiation releases from nuclear facilities, the hazards of radioactive and chemical contamination at uranium mine sites, and the degree to which the public costs of the industry are buried in the fine print of tax offsets, guaranteed power purchase agreements, waivers of liability and other covert hand-outs.

The stepped decline of nuclear power began in the 1970s, and growth in the industry has now been overtaken by the rise and rise of wind power and solar installation over the same period. While uranium’s fortunes will forever be limited by its 60 years of accidents, astronomic costs and unanswered questions, the future lies in the same fast-moving green energy technologies which have shown rapid growth rates at the same time as nuclear power has stalled.

The people of West Australia, like those around the country, need energy and economic solutions that will work now, and well into the future — not a short-term dash for cash that may backfire economically, contaminate their environment and leave a toxic legacy for generations to come.