Cracks in Australia's no new uranium mines policy

By Michael Perry

SYDNEY, March 23 (Reuters) - Cracks are appearing in Australia's long-running opposition to uranium mining, with a powerful state government leader backing the case for new mines in the northern state of Queensland.

State Premier Peter Beattie had been a strong opponent of uranium mining over concerns of nuclear proliferation and the impact on the coal industry, but his spokeswoman said he now supported lifting an effective ban on new mines.

"Mr Beattie changed his position after receiving a report that said uranium mining would not harm the state's coal industry," the spokeswoman told Reuters on Friday.

The spokeswoman said Beattie's support was conditional on uranium exports only being sold to nations which had signed the nuclear non-proliferation treaty.

Australia holds about 40 percent of the world's uranium reserves and is a major exporter of the material.

Uranium mining is allowed in South Australia state and the Northern Territory, but is banned in minerals-rich Western Australia and Queensland under a decades-old policy of the centre-left Labor Party, the governing party in the two states.

The opposition to uranium mining has its roots in the anti-nuclear movement in the 1970s.

Australia's national government is a strong supporter of uranium mining but only controls mining in the Northern Territory, while state governments control state mining.

Resource spokesman for the national Labor opposition, Chris Evans, also backed uranium mining on Friday, saying the time had come for Labor to drop its ban on new mines.

"I think the mood now is that we need to move on it," Evans told local radio. "This policy hasn't worked and it won't work so we need to abandon it."

Evans joins Labor leader Kevin Rudd and other senior Labor figures in supporting the expansion of uranium mining.

The Labor Party, which leads the conservative government of Prime Minister John Howard in opinion polls ahead of elections expected in the latter part of 2007, will discuss the uranium policy at its national conference in Sydney next month.

"Significantly, middle Australia has shifted ground considerably and positively on uranium exploration and mining and there is now a much larger groundswell of support for an expansion of this potential," Australian Uranium Association executive director Michael Angwin said.

FRENZY

Speculation that Australia may lift its ban on new mines, and increasing international interest in the nuclear industry particularly in India and China, has sparked a frenzy of uranium prospecting in Australia.

This has seen uranium prices quadruple since the start of 2005, rising more than 13 percent in recent weeks to nearly $100/lb. Prices are seen climbing above $100/lb on concerns that consumption will outpace production for years to come.

Nearly 40 ASX-listed companies are exploring for uranium nationwide, though only two -- majors BHP Billiton Ltd./Plc. (BHP.AX) (BLT.L) and Rio Tinto Ltd./Plc. (RIO.AX) (RIO.L) subsidiary Energy Resources Australia Ltd. (ERA.AX), actually mine the mineral, needed to make nuclear fuel.

Uranium exports were likely to increase by 5.4 percent in 2006/07, with production to increase by about 8 percent to around 10,800 tonnes, earning about A$790 million ($594 million), the Australian Bureau of Agricultural and Resource Economics said.

Australia and China in January ratified a nuclear agreement clearing the way for the export of uranium, but Australia refuses to sell uranium to India as it had not signed the nuclear non-proliferation treaty. (Additional reporting by James Regan) ($1=A$1.24)