Australia Signs Uranium Deal with UAE

Wednesday, 08 August 2012

Background

In late July, Australia and the United Arab Emirates (UAE) reached an agreement on the provisions governing the export of uranium to supply Abu Dhabi’s nuclear energy programme. The UAE’s energy policy and security concerns are not unique, and are felt across the Middle East. In the future, therefore, it is likely that more states in the region will join the UAE as an Australian energy importer.

Comment

After an agreement reached in late-July, Australian producers may supply uranium to the United Arab Emirates fledging nuclear programme. While not a commercial agreement, the commitment details the conditions under which nuclear material will be supplied to the UAE. Quantity, price and other specific considerations will be settled between the importing and exporting parties.

The Australian decision comes less than a month after the announcement that the UAE’s nuclear regulator had awarded a licence to Emirates Nuclear Energy Corp for construction of the state’s first two nuclear reactors. Led by a South Korean Consortium, the multi-billion dollar project will be the first maiden nuclear power plant project for a country in over twenty years. Additionally, the UAE is the first Gulf Arab state to begin building a nuclear power plant.

Although rich in oil, the UAE wishes to preserve its reserves for export. Currently, the emirates use gas to generate electricity. In recent years, however, as demand has risen, the state has become an energy importer. Energy security has an added significance in the Middle East, with much of the region relying on desalination plants for water supply. In addition to its strong energy security credentials, nuclear power is also commercially competitive and without the emission considerations that stem from carbon-based fuels.

In contrast to Iran, the UAE’s programme has been transparent, with rulers voluntarily implementing a number of safeguards and controls. As a signatory to the Nuclear Non-Proliferation Treaty, the UAE has re-emphasised its commitment to a peaceful nuclear programme.  Moreover, in accordance with a recent deal with the United States, it will not enrich uranium or reprocess spent fuel for plutonium; steps required in the development of a nuclear device. Additional measures have also been drafted to strengthen nuclear safety, a continuing concern impacting global confidence following Fukushima.

Importantly, provisions for fuel leasing and the return of radioactive waste were not agreed. The UAE hoped to agree on a fuel leasing framework, which makes the supplier liable for spent fuel, but this was rejected. Similarly, the Australian Government will not accept waste, with Australian Foreign Minister, Bob Carr, suggesting domestic public opinion would not allow this option. It is therefore likely that Abu Dhabi’s waste management system will include an underground storage facility in a remote area within its own borders. Alternatively, greater co-operation in the Gulf Co-Operation Council may lead to a shared regional repository. Given the problems surrounding the safe disposal of radioactive waste, however, it is unlikely that any of the member states would welcome the opportunity to host such a facility.

Looking ahead, the UAE’s energy strategy is likely to be replicated across the region, with all states conscious of the need for cheap, sustained power supply, but unwilling to tap into valuable domestic reserves. For Australia, which boasts the largest global reserves of uranium, this bodes well. The UAE deal could be the first of many.

Liam McHugh

Research Manager

Northern Australia & Energy Security Research Programmes

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