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Policies, agreements and treaties

Australia-China Nuclear Material Transfer Agreement and Nuclear Cooperation Agreement

November 2007

Frequently Asked Questions (FAQ)

Why is China interested in Australian uranium?

China is seeking secure, long-term sources of energy to fuel its
economic growth. It is the second largest energy consumer
behind the US, currently generating some 80% of its electricity by
fossil fuel, mainly coal.

China is seeking a 4-fold increase in nuclear energy by
2020. Such expansion of nuclear energy will help manage
greenhouse gas emissions and reduce pollution, not only in China
but globally.

While China currently meets its own uranium needs, it will need
to start importing uranium within the next few years if it is to
meet its expanding nuclear energy requirements. Australia has
about 30% of the world's medium cost uranium reserves.

Why are there two agreements?

China requested two agreements to reflect its domestic
responsibilities for international agreements. One agreement
covers transfer of nuclear material, and the other covers nuclear
cooperation, including transfer of nuclear-related material,
equipment or technology. The two agreements, read and applied
together, have the same effect as previous Australian safeguards
agreements, and fully meet all of Australia's safeguards
requirements. A number of other Australian safeguards
agreements apply only to nuclear material transfers, with no
specific provisions for nuclear cooperation (e.g. the
Australia/Euratom nuclear transfer agreement) – the Nuclear
Material Transfer Agreement with China covers similar ground to
these transfer agreements.

Do the agreements comply with Australian nuclear
safeguards requirements?

Yes, the two agreements fully meet all Australia's safeguards
requirements. The agreements ensure that any nuclear material
transferred between Australia and China will be used solely for
peaceful, non-military purposes. Likewise, any
nuclear-related material, equipment or technology transferred
between Australia and China, and any nuclear material produced
using such material, equipment or technology, will be used solely
for peaceful, non-military purposes.

Australia has similar safeguards agreements in place with three
of the other nuclear weapon states (US, UK and France), and a
safeguards agreement with Russia covering processing of uranium on
behalf of other Australian safeguards agreement partners.

What conditions will apply to Australian uranium?[1]

Australian uranium would be supplied to Chinese power utilities
for electricity generation.

A key condition for supply of AONM (Australian obligated nuclear
material–Australian uranium and nuclear material derived from
this) to a nuclear weapon state, such as China, is that AONM must
be covered by the state's safeguards agreement with the IAEA.
The Nuclear Material Transfer Agreement ensures that AONM will be
used or processed only within the jointly agreed list of
facilities, which will be subject to China's safeguards agreement
with the IAEA.

Monitoring of AONM will be based on safeguards procedures
applied at the facilities where AONM is handled, in accordance with
China's safeguards agreement with the IAEA and procedures under the
Australia-China Nuclear Material Transfer Agreement. ASNO
(Australian Safeguards and Non-Proliferation Office) will
cross-check reports on AONM provided by China for consistency with
information from the IAEA and from other sources.

While China has the right to choose which facilities are
eligible for IAEA inspections, Australia and China must jointly
agree on which facilities will be eligible to use AONM under the
Australia-China Nuclear Material Transfer Agreement. These
agreed facilities must then be subject to IAEA safeguards under the
China-IAEA safeguards agreement.

Further Australian safeguards conditions required by the
agreement include:

  • no retransfers to third countries (note: consent for some
    retransfers is given in the agreement – see below); no
    enrichment to 20% or greater in the isotope uranium-235; and no
    reprocessing; without Australia's prior consent;
  • an assurance that internationally agreed standards of physical
    security would be applied to all AONM during use, storage and
    transport; and
  • detailed administrative arrangements setting out procedures for
    accounting for and reporting on AONM – these are to be
    concluded between ASNO and its counterpart, the China Atomic Energy
    Authority.

Requirement for Australia's prior
consent

The Nuclear Material Transfer Agreement provides for transfers
of AONM to third countries only with the prior consent of
Australia. Prior consent is already provided under the
Agreement to allow China to transfer AONM to other Australian
agreement partners for uranium conversion, enrichment or fuel
fabrication. Similar consent has been given under Australia's
other safeguards agreements.

The Agreement requires Australia's prior consent before AONM can
be reprocessed. Australia recognises China's interest in
reprocessing as part of its civil nuclear energy program, to ensure
efficient energy use and management of spent fuel. The
Agreement sets out conditions under which consent to reprocessing
would be given in the future. These conditions are similar to
those for reprocessing consent under Australia's agreements with
Euratom (including the UK and France), Japan and Switzerland.

Are military uses proscribed?

Yes. AONM cannot be used for any military purpose.
The agreement proscribes direct military applications of nuclear
energy or nuclear material such as nuclear weapons, military
nuclear propulsion, military nuclear reactors, production of
tritium for military purposes, and direct military non-nuclear
applications of nuclear material such as depleted uranium
munitions.

AONM is not eligible for use in military facilities (which are
excluded under China's safeguards agreement with the IAEA).

How can we be sure that China will not divert Australian
uranium to weapons?

Assurances that AONM will not be used for military purposes
derive from a number of factors, which include: (1) China's
willingness to give a treaty-level commitment to use AONM solely
for peaceful purposes; (2) the safeguards agreements China has with
both the IAEA and Australia; (3) detailed nuclear accounting
information to be reported to ASNO; (4) uranium would be bought for
power utilities for electricity generation and not sold for
unspecified purposes; and (5) the five countries recognised as NWS
under the NPT – China, France, Russia, UK and USA –
have sufficient fissile material for their military programs
– Open sources suggest that China ceased production of
fissile material for nuclear weapon some years ago. Australia
has urged China to join the other nuclear weapon states in
announcing a moratorium on production of fissile material for
nuclear weapons.

Does the IAEA inspect nuclear facilities in
China?

Yes. China has a number of nuclear facilities eligible for
IAEA inspections. These were designated some time ago –
and the IAEA conducts inspections on a selective basis. Given
the requirement that AONM can only be used in safeguarded
facilities, once supply begins, it is likely that the number of
facilities eligible for IAEA inspections will increase beyond those
already designated.

What happens if China does not abide by the
agreements?

Australia has the right to suspend or cancel further transfers
of nuclear material should China fail to comply with the provisions
of the Nuclear Material Transfer Agreement or IAEA safeguards
arrangements.

Will nuclear material under the agreement be properly
secured in China?

China has committed itself to meet the requirements of the
Convention on the Physical Protection of Nuclear Material and the
security guidelines set out by the IAEA.

What is China's non-proliferation record?

China joined the Nuclear Non-Proliferation Treaty (NPT) in
1992. Like the United States, China has signed but not yet
ratified the Comprehensive Nuclear-Test-Ban Treaty (CTBT). In
2002 China ratified the Additional Protocol (AP) on strengthened
IAEA safeguards, the first nuclear weapon state to do so (the UK,
France and Russia have since ratified the AP, the US has signed the
AP and is working towards ratification). In 2004 China joined the
main nuclear export controls group, the Nuclear Suppliers
Group. China has strengthened its domestic controls on the
export of WMD-related items and further developed its enforcement
procedures. Australia maintains a regular dialogue with China
on arms control and non-proliferation issues.

Have other countries concluded nuclear safeguards
agreements with China?

Yes. China has nuclear cooperation agreements with a
number of countries, including Argentina, Belgium, Canada, France,
Germany, Japan, Republic of Korea, United Kingdom and the United
States of America.

When will the agreement come into force?

The agreements entered into force on 3 February
2007.

When will we start selling uranium to China?

This is a commercial matter between Australian uranium producers
and Chinese nuclear power utilities.

What types of nuclear cooperation are
envisaged?

The Nuclear Cooperation Agreement provides for cooperation
across the spectrum of nuclear science and technology, including
uranium exploration. Such cooperation is likely to include
research at the Australian Nuclear Science and Technology
Organisation's new OPAL reactor, which will provide a world class
neutron beam science research capability.

Won't supply of Australian uranium free-up
China's own uranium for military use?

No. Uranium is not a scarce commodity–every country
has uranium; if cost is no object it can even be recovered from
seawater. All NWS have sufficient uranium for their military
programs. The choice for a NWS is not, will it use uranium
for weapons or for electricity, but rather, will it generate
baseload electricity with nuclear, or coal, or gas, or hydro?
Open sources suggest that China ceased production of fissile
material for nuclear weapon some years ago.

If Chinese conversion facilities are not open for
inspection, how can we be sure that Australian uranium will not be
diverted for military purposes?

China has agreed to use AONM only at nuclear facilities covered
by its safeguards agreement with the IAEA. However, uranium
conversion facilities are before the "starting point"
for IAEA safeguards procedures and are not included in IAEA
safeguards agreements with nuclear weapon states. In
accordance with long-standing international principles of
accounting for nuclear material, on receipt of AONM (yellowcake) in
China an equivalent quantity of converted natural uranium in the
form of uranium hexafluoride will be added to the inventory of a
facility designated for safeguards – e.g. an enrichment
plant. This will have exactly the same effect as if the
yellowcake had moved through the conversion plant, and will ensure
that after receipt in China, AONM remains in a facility designated
for safeguards and listed under the agreement at all times.

Will China be allowed to prospect for uranium in Australia
and invest in Australia's uranium mining
industry?

Investing in Australian mines is not a short cut to Australian
uranium. Irrespective of ownership, uranium mined in Australia is
subject to Australia's export policies and the conditions set out
in bilateral safeguards agreements.

While uranium exploration is one type of cooperation provided
for in the Cooperation Agreement, this is merely a mechanism for
collaborative work. Cooperation in this area is not new
– Geoscience Australia and the Chinese National Nuclear
Corporation have already held technical exchanges in China on
geological and exploration techniques.

Any Chinese investment in the Australian uranium industry would
be subject to State and Territory legislation, and subject to
Government approval through Australia's foreign investment policies
and regulations. The existing Australian uranium mines have varying
levels of foreign ownership. [Current foreign ownership is
principally: Ranger Mine (NT), ERA - Australia & the UK;
Olympic Dam (SA), BHP-Billiton - Australia & the UK; Beverley
(SA), Heathgate - US; Honeymoon project (SA) Southern Cross -
Canada & South Africa.]

Glossary of Terms

Additional Protocol
An agreement designed to
complement a state's Safeguards Agreement with the IAEA in
order to strengthen the effectiveness and improve the efficiency of
the safeguards system. Australia was the first state to sign and
ratify an Additional Protocol, doing so in 1997.
AONM
Australian Obligated Nuclear Material.
Australian uranium and nuclear material derived from it, which is
subject to obligations pursuant to Australia's bilateral
safeguards agreements.
Conversion
Purification of uranium ore concentrates
or recycled nuclear material and conversion to a chemical form
suitable for isotopic enrichment or fuel fabrication.
Enrichment
A physical or chemical process for
increasing the proportion of a particular isotope. Uranium
enrichment involves increasing the proportion of 235U
from its level in natural uranium, 0.711%. For nuclear power
reactor fuel the proportion of 235U is typically
3‑5%.
Euratom
Atomic Energy Agency of the European
Union.
IAEA
International Atomic Energy Agency.
NWS
Nuclear-weapon state(s). States recognised by
the NPT as having nuclear weapons at 1January 1967 when the
NPT was negotiated – i.e. China, France, Russia, UK, and
USA.
NPT
Treaty on the Non-Proliferation of Nuclear
Weapons.
Reprocessing
Processing of spent fuel to separate
uranium and plutonium from highly radioactive fission products.

[1] Further
details can be found on pages 26-28 in ASNO's 2006-07 Annual
Report – www.asno.dfat.gov.au.

Last Updated: 9 January 2013
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