India Needs Australia’s Uranium

May 16, 2011

Despite the Fukushima disaster, India still believes nuclear energy is the way to go – and it wants Australia to be part of its plans.

813 Australia's uranium reserves are the world's largest, with 23% of the total.

While India maintains that nuclear power is the best way to address its growing energy needs, it does not possess sufficient uranium to meet demand. Australia would make an ideal supplier, but its concerns over India's unwillingness to sign the NPT (nuclear non-proliferation treaty) are souring the relationship.

The alarming events that have unfolded at Japan's Fukushima nuclear power plant have raised environmental and health concerns the world over. The Indian government, however, is unlikely to completely dismiss the benefits of nuclear energy, given the energy crunch it is facing. India has one of the highest economic growth rates in the world, with the Indian government's latest economic survey predicting that the country will experience annual growth of 8.6% in 2010-11. Concurrently, India's demand for energy is expected to double by 2025; to meet this projected level of consumption, India would have to import almost 90% of its petroleum requirements.

Ensuring India's energy security has therefore become one of the main planks of India's foreign policy. More than 50% of India's energy is currently generated from coal, but the inferior quality of Indian coal – and the absence of modern technology to clean it – make it economically unviable, and a major environmental concern. India is already facing international pressure to accept legally binding carbon-emission targets, which the Indian government is neither willing nor able to do at this point in time. But, as a rising global power aspiring to a permanent seat on the United Nations Security Council, India cannot afford to overlook these concerns for long.


Energy security through nuclear power

The supply of oil from the Middle East is not immune to disruption resulting from political crises, and the fate of the IPI (Iran-Pakistan-India) gas pipeline now seems to be hanging in the balance: India does not wish to antagonize the United States, which has made its opposition to this deal known. India is also unlikely to suddenly begin building massive hydroelectric power plants to bridge the shortfall, since their construction involves displacing thousands of people, and causes irreparable damage to the environment. It also does not help that many Indian states rich in hydropower potential, such as Arunachal Pradesh, are in seismically active and sensitive border regions.

In the light of these factors, India has decided to go for nuclear power generation in a big way. As of 2011, nuclear power accounts for only 3% – around 3,700 Megawatts electrical – of India's total energy basket. However, if things go as planned, this figure is likely to go up to 20,000 MWe by the year 2020. The country-specific waiver, granted to India by the Nuclear Suppliers' Group (NSG) in September 2008, has given India the courage and ability to aim for big increases in nuclear power generation. India, however, lacks adequate domestic uranium deposits to supply its nuclear power plants.


International energy relations

Australia possesses nearly 40% of the world's uranium reserves, and could play a major role in ensuring India's energy security; it already exports coal, crude petroleum and LNG (Liquefied Natural Gas) to India. India could also make use of Australia's expertise in modern, technology-intensive mining techniques.

A joint working group on energy and minerals between Australia and India was established way back in 1999, signalling the intent of both the countries to increase their cooperation on the energy front. During a November 2008 visit to India by the Australian Minister for Resources, Energy and Tourism, Martin Ferguson, five Action Plans in the fields of coal, mines, new and renewable energy, petroleum, and natural gas and power were signed.

Then in a landmark deal in August 2009, India's Petronet LNG (the country's largest LNG importer) signed a 20-year deal with Exxon Mobil Corporation to import about 1.5 million tons per year of LNG from Australia's Gorgon project.


Diplomacy, pragmatism, and non-proliferation

However, Australia's insistence that it will not supply uranium to India unless India signs the NPT has not only become one of the biggest stumbling blocks in energy ties between Australia and India, but also in the bilateral relationship. India has made it clear to Australia that it is unwilling to sign the NPT as a 'non-nuclear-weapon state', objecting that the treaty defines 'nuclear-weapon states' as only those countries which have manufactured and exploded a nuclear explosive device prior to January 1967.

India has an excellent record when it comes to non-proliferation, unlike countries like Pakistan and North Korea.

There are several reasons why Australia should reconsider its decision to not supply uranium to India:

• India has an excellent record when it comes to non-proliferation, unlike countries like Pakistan and North Korea. China has allegedly supplied nuclear and missile know-how to Pakistan, and then rogue elements within Pakistan – like the AQ Khan network – have led to further nuclear proliferation worldwide. However, despite China's doubtful nuclear credentials, Australia concluded a nuclear deal with China in 2006, paving the way for China to import Australian uranium.

• Australia's ties with India have suffered significant damage on account of the incidents of attacks on Indian students in Australia, which have been latched on to by the Indian media. If Australia does change its stance on the uranium issue, it could give a new lease of life to Indo-Australian ties, in the same way as US-Indian ties were renewed following President Bill Clinton's historic visit to India in March 2000.

• Finally, India is poised to overtake China as the most populous country on the planet. The increasing use of fossil fuels in India has already led to significant environmental damage; a shift to nuclear energy will help mitigate at least some of the consequences.