Uranium Mining : For Whose Benefit ?
The scientists who built the atomic bomb said the splitting of the uranium atom had led not only to a weapon of annihilation but had also opened the way to abundant energy. They spoke of thousands of power reactors operating by the end of the century and of the need to find the uranium to fuel them.
Governments drew up ambitious programs for developing nuclear energy and funded them lavishly. The prospects of an economic bonanza for countries endowed with large deposits of uranium ore seemed assured.
Seeking a stake for Australia in the coming nuclear age the Federal Government offered rewards to prospectors who discovered payable uranium ore bodies.
Hopes ran high for finding rich deposits. Some foresaw a replay of the gold rush days of last century only on a grander scale; great wealth would flow into the country and jobs would be created in large numbers.
By the 1970s several payable ore bodies were discovered making Australia the country with the largest uranium reserves in the world. But although mining companies have made profits and jobs have been created no bonanza ever eventuated because most of the planned reactors were never built.
Australian Uranium
The stunted growth of the uranium industry in Australia has been partly a consequence of the strength of public antipathy towards the industry. Many Australians perceive uranium mining as a threat to the environment, especially in Kakadu National Park where the richest ore bodies have been found. Mining in this region has had a destructive influences on Aboriginal culture
As well there is public distrust of the effectiveness of the international safeguards supposed to prevent the diversion of Australian uranium into nuclear weapons.
Public opposition strengthened as understanding of the radioactive hazards has grown. The outcome has been that while Australia has one-third of the world's uranium reserves it exports only about one-tenth of the world's total production.
Understandably irked by its disproportionately small share of the world uranium trade the mining industry continually urges the Federal Government to allow the opening of new mines. It is the Federal Government that has the final say on whether or not a new mine opens through its power to decide who gets export licences.
Certainly in difficult economic times turning to the exploitation of natural resources to solve our economic problems is an instinctive reaction on the part of many Australians.
However, past experience tells us that to do so is unrewarding in the long term. Australia does have other opportunities for trade more likely to build a stable and sustainable economy than opening new mines which have a limited life and cannot provide a permanent basis for the Australian economy. Besides, the value of mineral and other natural products on world markets has continued to decline relative to the value of manufactured products. Australia's economic dependence on uncertain commodity markets to pay its way means it has to export increasing volumes of commodities to pay for its imports of manufactured products.
If we choose to take the ethical path that is leave uranium in the ground we can still prosper and provide employment opportunities by making judicious investments in new manufacturing industries and other fields. In the following we explain why.
Our Uranium Market
Today uranium markets remain uncertain. Uranium is starting to come on to world markets from the military inventories of the United States and Russia as a result of international agreements to dismantle a part of the huge stocks of nuclear weapons.
Unlike other commodities the demand for uranium comes almost entirely from a single end-use the generation of electricity.
Thus the fortunes of uranium mining are bound up with those of the nuclear industry. Today the nuclear industry not only faces grave economic and technical difficulties but just about insurmountable political obstacles arising out the resistance of people to having nuclear reactors built in their own backyard.
All this makes the fortunes of the nuclear industry, and so of the uranium industry, very uncertain.
Prices of uranium on the spot market remain low. The price of uranium was at its lowest ever in 1995 at $9 a pound having fallen from around $40 per pound in the 1970s. The price is now hovering around $14 per pound. All indications are that prices will remain at a low level throughout the 1990s.
Australia, so far as has been revealed, sells its uranium on long-term contract and not on the spot market. The government initially attempted to maintain a high 'floor price' of US$32 a pound. The reality of world markets forced the selling price much below this.
As old contracts run out and new ones are negotiated the worldwide trend is for contract prices to be adjusted in keeping with depressed spot prices.
In 1994 Energy Resources of Australia (ERA), who operate the Ranger mine, produced only 1500 tonnes of yellowcake (uranium oxide) of its 3500 tonnes capacity. ERA found it more profitable to purchase yellowcake from Kazahkstan, some through long-term contract, the rest on the spot-market.
While companies have protected their profits uranium mining has not brought workers the promised bonanza in employment.
Mining And The Economy
Why then is the mining industry lobbying so hard for opening new mines when market prospects are so uncertain? Basically because the industry accepts forecasts inflated by the nuclear industry and governments of nuclear countries for their own economic ends. When their optimistic forecasts are not fulfilled then the uranium purchasers benefit from the surplus through lower prices.
The mining industry places its hopes on an upsurge in demand, in the late 1990s, when reactors now under construction will come on stream. However, only a small number of reactors will be commissioned before the year 2000. On the other hand up to sixty reactors in various countries will be reaching the end of their working life early next century and will be decommissioned.
In the United States, Europe and Russia nuclear power programs are almost at a standstill, stalled by public antipathy to nuclear reactors and active resistance by anti-nuclear and ecological movements to building new reactors
Japanese nuclear power program, one of the few still active national programs faces considerable public opposition which has grown stronger since a reactor at Mihama went close to meltdown.
Since the Chernobyl reactor catastrophe in the Ukraine anti-nuclear movements in Russia and other former Soviet republics, and in Eastern Europe, have succeeded in stalling the building of a number of nuclear reactors. The remaining three operating reactors at Chernobyl will be shut-down by the year 2000.
Nuclear power is not financially realistic for developing countries in view of the huge foreign debts they have accumulated and cannot repay. A recent United Nations report recommended that nuclear power was not a suitable energy source for developing countries which should, report said, develop alternative energy sources.
The depressed uranium market in the 1980s caused many mines around the world to close or cut production. This has resulted in the production of uranium being less than its consumption by operating reactors. Australian uranium miners have taken hope from this. They forecast a turn-around in their fortunes and the opening of new mines. However, the unused capacity of existing mines and military uranium and plutonium waiting to enter the market will continue to keep prices low.
Based on its present annual uranium sales even Ranger, in 1995, held seven years of stockpiled ore awaiting refining. Nonetheless ERA is pressing to open Jabiluka which it has taken over from Pancontinental. The company says, without detailing new customers, that its sales could reach 4500 tonnes a year by year 2000. Miners are ever ready for a gamble though it may not be in the national, interest.
The reality is that nuclear power prospects are as uncertain as they ever were for reasons both economic and political. The green movement is growing stronger and closing down nuclear industry is one of the movement's important aims.
Employment Benefits
Mining is a very capital intensive industry. Mining projects use massive machinery to quarry, transport and process the ore.
The high cost of these calls for high capital investment compared to manufacturing industry.
High capital investment in turn calls for high returns on investors' funds and high interest repayments on borrowings. Mines are therefore designed to minimise labour costs. Whereas, in general, about 33 people are employed in manufacturing for each million dollars of 'value added' only 10 are employed in mining projects.
Uranium mining companies require even fewer workers to create their wealth. Ranger employs only two workers for every one million dollars of value added. Ranger mine employs only about 300 people directly and generates work for about another 400 indirectly.
The mining industry promoted Roxby Downs as a bonanza for the depressed economy of South Australia. However, the mine even after its planned expansion in the late 1990s will still operate at a much lower production level than promised in the fanfare with which Western Mining first heralded the venture. Instead of the 5000 jobs the company said the mine would employ the number is around 600 workers.
Had we been a 'clever country', which politicians like to talk about, more investment would have gone into manufacturing industries such as those producing solar energy equipment. Our foreign earnings would be greater and Australians would have benefited from greater employment opportunities.
Private Profit - Public Cost
While the number of jobs created by opening a uranium mine is relatively small Australians pay heavily through their taxes for back-up facilities and for regulating the mining operation and its heavy environmental impacts.
The starting up of a mine requires considerable back-up facilities, called infrastructure, such as roads, new or improved ports and a range of services for the mining settlement. Once the mine is worked-out many of these public facilities are simply abandoned or sold off cheaply.
The South Australian government put $50 million into the infrastructure servicing the Roxby Downs mine. This is a subsidy of $100,000 for each job. The Government is paying $10 million a year towards interest and charges.
Government funds going to support a mining project are taken from fund allocations to community welfare, childcare, health and education where they are more desperately needed than ever before.
Mining venturers also receive many financial inducements from governments by way of tax concessions. Interest payments are tax deductible and mines pay little tax in the early years of their operation.
In effect governments subsidise the company's investment besides contributing to the costs of the infrastructure and regulating the industry.
The generosity of the South Australian Government to the Roxby Downs venturers is matched by the Federal Government's hand-outs for setting up the uranium industry in the Northern Territory.
In 1977-78 federal government expenditure associated with uranium industry development in the Northern Territory was $84 million. This figure includes $38 million to the Australian Atomic Energy Commission which has little to justify its existence outside servicing the uranium industry and its overseas customers
Up to 1985 the Federal Government had spent $48 million for facilities in Jabiru, the township servicing the Ranger mine, and for setting up and maintaining the Supervising Scientist's Office, which monitors the mine's environmental impacts on Kakadu's environment.
A special environment tax on uranium mines has raised only a few million dollars.
The receipts from royalties have been reduced by the slump in world uranium markets. The royalty received by the Northern Territory government is 1.25 per cent. At this low rate and with depressed markets, income from royalties is roughly the same as the government's expenditure on services for the mine. In 1983-84 the Government spent $4 million while royalties amounted to $3.7 million. The cutback in mine production will mean an even lower return to the government and the Aboriginal communities receiving royalties.
When an ore body is mined out companies like to forget about the goose that laid the golden egg. When the Rum Jungle mine ceased operations in 1972, the company left behind a scarred bulldozed earth studded with derelict buildings. Over 100 square kilometres of land had been made lifeless by the mine's pollution.
It was left to the Federal Government to use $17 million of taxpayers' money to partially rehabilitate the area. The company that operated the mine contributed not a cent.
Because of persistent campaigns by environment groups mining companies are now obliged to rehabilitate the mine area; nonetheless companies still try to do it on the cheap. Rehabilitation can often be cosmetic. Much environmental damage remains to be controlled at the public's expense.
The Mining Mentality
Increasing uranium production is part of the mining industry's general case that mineral resources should be exploited to the utmost limit to help reduce our foreign debt. This ignores the limitations on investment monies and the benefits relative to those available from investing in other industries.
So too is government financial support limited for infrastructure, market promotion and environmental monitoring. The more that goes to mining the less there is for manufacturing.
The mining lobby also says Australia should refine more of the minerals it extracts so earning the value added to the raw minerals. Applied to uranium this means building a plant to enrich uranium. But entering the enrichment business only compounds the problem we already have with our foreign trade a dependency on commodity markets which are too narrow and too often glutted.
Also it has been argued by the Australian Nuclear Scientific and Technology Organisation (ANSTO) that Australia could profit from importing the radioactive wastes our customers create in their reactors from our exported uranium and reprocessing them. Going down this path Australia would become not only a quarry but also a radioactive rubbish bin!
The benefits of resource-based industries are narrowly distributed in the community. Mining employs around two per cent of the Australian workforce. Closing the two uranium mines would have less effect on our economy than closing down the tobacco industry, which appears to be the aim of government policy.
Said Barry Jones, a former Minister for Science: "It has been a commonly held view that we can rely on the exploitation of our abundant energy and mineral resources as an alternative to a fundamental transformation of our manufacturing. It is essential that this view be rejected".
Frequently, on the stock exchange mining ventures burst like bubbles. Dreaming of a mining venture turning into an Eldorado springs from the national ethos bred into it during the gold rush days.
Attitudes and policies are only slowly changing. The mining lobby still exerts great sway in Canberra. For while the Government makes great play on switching to manufacturing industry it falls back all too readily on commodity production as the way out of our balance-of-payment difficulties.
The consequences go beyond misdirection of investment. It helps sustain Australians' illusions that the nation can go on earning a good living by digging minerals out of the earth and chopping trees. Meanwhile the support given those with ability to initiate innovative enterprises is inadequate. And incentives remain lacking for the young to learn new skills.
Countries devoting their efforts for financial viability on commodity production are becoming, if they are not already, 'Banana Republics'. Countries prospering most are those that have fostered manufacturing skills among their people.
"What is at issue", says political economist Ted Wheelwright, "is the creation of an Australian productive culture...Skills and skill formation are central to this."
We are becoming clients of Asian nations like South Korea and Taiwan. These nations have developed skilled workforces (more significant than their cheap labour). They stand to gain from an Australian economy locked into a dependence on supplying minerals and fuels at prices largely dictated by the industrialised countries.
Other nations are investing in energy-efficient equipment and methods which allow them to produce more with less of the fuels, including uranium, that Australia exports.
The mining industry would like us to believe we have no option but to rely increasingly on resource-based industry. That is far from the truth.
The path to a sustainable economy lies in other directions than reliance on the exploitation of uranium and other natural resources.
Information from the MAUM public education sheet on the Benefits of Uranium Mining.
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