Annual Report 1998-99

In 1998–99 Australia exported 5,989 tonnes of U₃O₈ (uranium ore concentrates). This quantity of uranium is sufficient for the annual fuel requirements of about 25 reactors, producing around 200 Terawatt hours (TWh) of electricity¾ in excess of Australia’s own electricity production, which in 1998 totalled 190 TWh.

Australia is the world’s third largest exporter of uranium and has approximately 27% of the world’s low-cost uranium resources. While Australia recognises the importance of this substantial uranium holding as a source of energy for other countries not as well endowed with natural resources, strong support for the nuclear non-proliferation regime has always been a paramount consideration.

Australia exports uranium only to countries with which it has a bilateral safeguards agreement - details of these agreements and the conditions under which Australia exports uranium are given in the following pages.

Australia has 14 bilateral agreements covering 24 countries. These agreements are listed in Table 9. Those countries which imported Australian uranium in 1998 are listed in Table 8.

Table 8. Countries to which Australian Uranium was supplied in 1998.

These figures are for calendar year 1998 and hence do not correspond exactly to exports for 1998-99.

As at the end of 1998 there were 434 power reactors in operation in over 30 countries, with a total electrical generating capacity of around 350 GWe, and an electrical output of 2,300 TWh. These reactors produced 16% of the world’s electricity (see Table 7). Of these, 339 reactors were operated by the countries to which Australia supplies uranium. The reactors in these countries produced 13% of total world electricity: nuclear energy’s contribution to electricity production in individual Australian bilateral partner countries ranged from 12% in Canada to 76% in France.

In 1998, exports of Australian uranium represented about 8% of the total carbon dioxide emissions saved world-wide by generating electricity by nuclear energy rather than fossil fuels - the savings attributable to Australian uranium were around 180 million tonnes of carbon dioxide a year. By way of comparison, Australia’s total annual carbon dioxide emissions, from all sources, are around 308 million tonnes, of which about 48% - 147 million tonnes - are from electricity generation. In other words, countries using Australian uranium thereby saved carbon dioxide emissions equivalent to 125% of the emissions which Australia produced through use of fossil fuels for electricity generation.

Safeguards on Australian Uranium Exports

It is fundamental to the Government’s uranium policy that exports are permitted only under stringent safeguards. Uranium exports are made only to selected countries and are covered by a bilateral safeguards agreement.

Bilateral safeguards are concluded between the supplier and the recipient of nuclear items and serve as a mechanism for applying conditions additional to IAEA safeguards: for example, restrictions on retransfers, high enrichment, and reprocessing.

The safeguards requirements Australia applies to uranium exports are bilateral; they are elaborated in a series of treaty-level agreements with each country involved. These requirements are outlined below.

The key point is that Australia’s safeguards requirements are superimposed on IAEA safeguards.

IAEA safeguards provide the basic assurance that nuclear material is not being diverted from peaceful to non-peaceful purposes.

It should be noted that IAEA safeguards are generally not concerned with origin attribution, that is, the ‘flag’ and conditions attached by suppliers (for the IAEA there are limited exceptions, e.g. under certain non-NPT safeguards agreements). This is the purpose of bilateral safeguards agreements.

Australia’s safeguards requirements are intended to ensure that:

• AONM is properly accounted for as it moves through the nuclear fuel cycle;
• AONM is used only for peaceful purposes in accordance with the applicable agreements;
• AONM in no way enhances or contributes to any military process.

Australia’s Safeguards Conditions

The application of Australia’s requirements starts with a careful selection of those countries eligible to receive AONM:

A basic requirement is the conclusion of a safeguards agreement between Australia and the country concerned, setting out the various conditions which apply to AONM. The principal conditions for the use of AONM set out in Australia’s bilateral safeguards agreements are summarised as follows:

• an undertaking that AONM will be used only for peaceful purposes and will not be diverted to military or explosive purposes, and that IAEA safeguards will apply;
   
• none of the following actions can take place without Australia’s prior consent:
   
• transfers to third parties
   
• enrichment to 20% or more in the isotope uranium-235
   
• reprocessing;
  
  Consent has been given in advance to reprocessing on a programmatic basis in the case of five Agreements: Euratom, France, Japan, Sweden and Switzerland.
   
• provision for fallback safeguards or contingency arrangements in case NPT or IAEA safeguards cease to apply in the country concerned;
   
• an assurance that internationally agreed standards of physical security will be applied to nuclear material in the country concerned;
   
• detailed ‘administrative arrangements’ between ASNO and its counterpart organisation, setting out the procedures to apply in accounting for AONM;
   
• regular consultations on the operation of the agreement; and
  
• provision for the removal of AONM in the event of a breach of the agreement.

Table 9. Australia’s Bilateral Safeguards Agreements and their Date of Entry into Force.

Australian Obligated Nuclear Material

A characteristic of the civil nuclear fuel cycle is the international interdependence of facility operators and power utilities. Apart from the nuclear-weapon States, it is unusual for a country to be entirely self-contained in the processing of uranium for civil use—and even in the case of the nuclear-weapon States, power utilities will seek the most favourable financial terms, often going to processors in other countries. Thus it is not unusual, for example, for a Japanese utility buying Australian uranium to have the uranium converted to uranium hexafluoride in Canada, enriched in France, fabricated into fuel in Japan, and reprocessed in the United Kingdom. The international flow of nuclear material enhances safeguards accountability, through ‘transit matching’ of transfers at the different stages of the fuel cycle.

The international nature of nuclear material flows means that uranium from many sources is routinely mixed during processes such as conversion and enrichment. Uranium is termed a ‘fungible’ commodity, that is, at these processing stages uranium from any source is identical to uranium from any other - it is not possible physically to differentiate the origin of the uranium. This is not unique to uranium, but is also the case with a number of other commodities. The fungibility of uranium has led to the establishment of conventions used universally in the industry and in the application of safeguards, namely equivalence and proportionality. These are discussed below.

Because of the impossibility of physically identifying ‘Australian atoms’, and also because Australian obligations apply not just to uranium as it moves through the different stages of the nuclear fuel cycle, but also to material generated through the use of that uranium, e.g. plutonium produced through the irradiation of uranium fuel in a reactor, the obligations under Australia’s various bilateral safeguards agreements are applied to Australian Obligated Nuclear Material (AONM). ‘AONM’ is a shorthand way of describing the nuclear material which is subject to the provisions of the particular bilateral agreement.

This approach is also used by those other countries applying bilateral safeguards comparable to Australia’s, principally the United States and Canada. These countries attach a safeguards ‘obligation’ to nuclear material which they upgrade, hence giving rise to the situation of ‘multi-labelling’, for example, AONM enriched in the US will also become US obligated nuclear material (USONM), and its subsequent use will have to meet the requirements of both Australian and US agreements. This is a common situation, that is, a significant proportion of AONM is also characterised as USONM and is accounted for both to ASNO and its US counterpart (the USDOE).

The equivalence principle provides that where AONM loses its separate identity because of process characteristics (e.g. mixing), an equivalent quantity is designated AONM, based on the fact that atoms or molecules of the same substance are indistinguishable, any one atom or molecule being identical to any other of the same substance. In such circumstances, equivalent quantities of the products of such nuclear material may be derived by calculation or from operating plant parameters. It should be noted that the principle of equivalence does not permit substitution by a lower quality material, e.g. enriched uranium cannot be replaced by natural or depleted uranium.

The proportionality principle provides that where AONM is mixed with other nuclear material, and is processed or irradiated, a proportion of the resulting material will be regarded as AONM corresponding to the same proportion as was AONM initially.

Some people are concerned that the operation of the equivalence principle means there cannot be assurance that ‘Australian atoms’ do not enter military programs. This overlooks the realities of the situation, that uranium atoms are indistinguishable from one another and there is no practical way of attaching ‘flags’ to atoms. The objective of Australia’s bilateral agreements is to ensure that AONM in no way materially contributes to or enhances any military purpose. Even if AONM were to be in a processing stream with nuclear material subsequently withdrawn for military use, the presence of the AONM would add nothing to the quantity or quality of the military material (NB as noted elsewhere in this Report, those nuclear-weapon States eligible for the supply of Australian uranium have ceased production of fissile material for nuclear weapons).

Accounting for AONM

Australia’s bilateral partners holding AONM are required to maintain detailed records of transactions involving AONM, and ASNO’s counterpart organisations are required to submit regular reports, consent requests, transfer and receipt documentation to ASNO. ASNO accounts for AONM on the basis of: