By Aaron Morey, Chief Economist and Director of Policy, Influence and Strategy at the Chamber of Commerce and Industry WA
Countries around the globe are hungry for uranium to fuel their transition to net zero, and Western Australia has some of the biggest reserves in the world. However, a ban on uranium mining in the state has meant that much of the resource remains in the ground.
According to the Chamber of Commerce and Industry WA (CCIWA), the ban is a missed opportunity that could cost the Australian economy more than $1 billion a year.
CCIWA has been examining the potential of Western Australia’s uranium industry for the past 12 months. CCIWA’s inquiry involved a deep dive into the policy and regulatory framework around uranium in Western Australia and in-depth consultation with key stakeholders. It revealed a tantalising potential for the state, if it acts quickly to capitalise on current demand.
Spot prices for uranium more than doubled in 2023 and look set to continue on this trajectory as the market senses a shift in how the world’s biggest economies will keep the lights on.
Countries like the US, the UK, South Korea, Japan, India and France are all moving to dramatically expand their use of nuclear power – considered to be a reliable and emissions-free energy source – as they work to decarbonise their economies.
For many Northern Hemisphere nations that are not as blessed with renewable resources as Australia, nuclear power plays a key role in helping reach their net zero ambitions.
Global commitments
CCIWA predicts that the commitment at the recent COP28 summit to triple nuclear production will drive a surge in demand for uranium.
At the same time, the supply of uranium is struggling to keep pace. The current gap between supply and demand is being filled by inventories and reprocessed uranium, which will not last for long.
Adding to supply constraints is the fact that a large portion of uranium typically enters Eastern Europe through Russian ports. The ongoing war in Ukraine means that the US Congress is now considering banning countries from sending uranium through Russia.
All of these factors have created a once-in-a-generation opportunity for jurisdictions with strong uranium industries.
Western Australia’s missed opportunity?
In Australia, South Australia has found itself in the box seat, with three active mines that are sending uranium overseas. These mines employ more than 1,400 people and are delivering multi-million-dollar royalty windfalls to the state.
The Northern Territory is not far behind – rapidly expanding exploration with the aim of riding the wave of demand for uranium globally. Both of these jurisdictions see great potential in uranium to create high-quality jobs for local workers and bring much-needed capital into their economies.
Western Australia is missing a trick. Uranium has long been a partisan political issue in Western Australia. Labor first banned uranium mining in 2002, before the Liberal Government lifted the ban in 2008, which allowed for exploration and the eventual approval of four new uranium mines in Western Australia.
When Labor returned to government in 2017, the then- Premier, Mark McGowan, moved to reinstate the ban, effectively mothballing those mines.
At a ‘WA Breaking Ground’ forum hosted by the Association of Mining and Exploration Companies (AMEC) in March 2024, Western Australian Opposition Leader, Libby Mettam, pledged to overturn the government’s ban on uranium mining if elected next year.
“Embracing uranium mining in Western Australia is a strategic move that not only addresses our economic needs but also positions us as pioneers in the global transition towards sustainable energy,” Ms Mettam said.
Ms Mettam’s announcement was welcomed by many throughout the industry including AMEC, with the Minerals Council of Australia’s CEO, Tania Constable, saying that the policy change is a step in the right direction and could unlock the immense potential of Western Australia’s uranium resources.
As it stands, the rationale behind the uranium ban points to health, safety and environmental concerns. However, according to CCIWA, these concerns are not fundamentally different to those managed by any other mining operation. Western Australia is a mining state with a global reputation for safety and the world’s best practice.
Advanced extraction techniques and new technology have made it safer than ever to mine and transport uranium.
The mines in South Australia and exploration operations in the Territory operate transparently with local communities and Traditional Owners.
Companies that are allowed to export uranium do so under strict Commonwealth legislation which also ensures it is only used in electricity generation and does not fall into the wrong hands.
Western Australia’s stringent and well-established regulations, paired with existing infrastructure and local technical know-how begs the obvious question: if South Australia and the Northern Territory can manage a uranium exploration and mining industry, why can’t Western Australia?
Western Australia’s uranium potential
CCIWA’s inquiry found that Western Australia has around 226,000t of known uranium deposits, with potential to produce around 10,800t per year.
Australia is currently the world’s fourth largest producer of uranium. If Western Australia lifted its ban on uranium mining, Australia would be catapulted to second place behind Kazakhstan. If Australia were to be ranked higher, foreign investors looking to back uranium may potentially see Australia as a safer destination for their capital.
CCIWA believes there is a need for serious debate in Western Australia about the benefits of uranium mining, to balance prior views about the industry’s safety with the clear benefits to the national economy.
Distinguishing uranium mining from nuclear power
Public perception plays a big role in the debate around uranium mining in Australia.
Naturally, the issue of uranium mining is often tied to nuclear power, but it is important to stress that the two are, in fact, mutually exclusive – uranium can be exported without there being a domestic nuclear power industry in Australia.
CCIWA’s inquiry into uranium mining did not examine the issue of domestic nuclear power, but it is undeniable that no matter what Australia thinks of nuclear energy, other countries across the globe are embracing it.
If you switch on a light in London, Paris, Berlin, Dubai, Tokyo or New York, it’s likely that electricity has come from a nuclear reactor. While concerns around the safety of nuclear energy do exist in these places, it is clear that attitudes have changed over time, as better technology drives increased safeguards for people and the environment.
The shift towards nuclear energy in developed countries is a pragmatic one. Most younger people don’t remember the nuclear panic of the Cold War era and people in countries where nuclear power enjoys support are more concerned with decarbonising their economies as quickly as possible to combat the global threat of climate change.
These countries will buy their uranium from somewhere, but – for now at least – it won’t be from Western Australia.
Strength in diversity for Australia’s mining sector
The nascent uranium boom comes at a crucial time for the Australian resources sector.
Increased volatility in the critical minerals market has highlighted just how important it is to have diverse mining interests.
Prices for battery minerals nickel and lithium have dropped to five-year lows and export earnings are forecast to be cut by almost half, fuelled by oversupply in China and Indonesia and slowing demand for electric vehicles.
As a result, investors who had seen great potential in critical minerals have begun to look more closely at uranium.
Western Australia is a mining state and its resources sector accounts for almost half of the state’s economic activity and underpins the relative stability of Australia’s national economy.
Demand for commodities is cyclical and the old adage ‘make hay while the sun shines’ can rightly be applied to Australia’s resources sector; timing is everything.
That being said, the uranium industry represents more than just turning a quick buck.
The countries who are embracing nuclear power are doing so with an eye to the future, given the significant expense and long time frames involved in commissioning a nuclear power plant.
They will be looking for a pipeline of safe and reliable sources of high-quality uranium to fuel their economies for decades to come.
If Western Australia wants a piece of the action, it needs to seize the opportunity or risk underplaying its hand, to the detriment of its future prosperity.
Featured image: RHJPhtotos/shutterstock.com
