Australia's Uranium Mines Set to Flourish Under India Export Deal

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Researched by Industrial Info Resources Australia (Perth, Australia)--Australia can now sell uranium to India under an agreement reached by the nations' two leaders. Australian Prime Minister Tony Abbott and Indian Prime Minister Narenda Modi lifted a long-standing ban on selling uranium to India, allowing uranium exports for use in power generation.

The deal may have come as a surprise to many, as Australia has been a strong advocate in not allowing the mineral to be exported to any nuclear-armed country that has not signed the Nuclear Non-proliferation Treaty. Along with Israel, North Korea and Pakistan, India has never signed the treaty.

The deal could spark a rise in uranium prices, which would be welcome news among Australia's uranium producers. The country is the world's third-largest uranium producer, with more than one-third of global uranium reserves. Demand for uranium likely will double in the next decade, as substantial economic growth continues in China and India, and as Japan begins to restart its own nuclear generators in the wake of the Fukushima disaster.

Japan said earlier this month that two reactors at the Sendai plant on the southern island of Kyushu have met stricter safety guidelines that were imposed after the disaster, putting them first in line to be restarted along with the country's idle nuclear reactors.

China will be a crucial secondary recipient of uranium imports from Australia. China sees nuclear power as a way to reduce air pollution caused by coal-fired power plants. Some believe that China may surpass the U.S. as the No. 1 uranium consumer, with a requirement of more than 20,000 tonnes per year.

With a production rate of more than 4 million tonnes per year, Rio Tinto's (NYSE:RIO) (London, England) Ranger Uranium Mine could be the main beneficiary of the deal. Also, Heathgate Resources' (Adelaide, Australia) newly operational Four Mile Uranium Mine can add 1 million tonnes to Australia's exports.

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The Australia-India agreement could be crucial to Australia's mining future. State governments throughout Australia have been encouraging development of the uranium industry for some time. In July, a decade-long ban on uranium production in Queensland was lifted, which will allow new mines to spring up within the next decade. In New South Wales, six companies will be given the opportunity to apply for exploration licenses. The new developments signify a trend that would see Australia embrace the changing uranium industry, and the prospects that these opportunities provide.

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