India-Australia Nuclear Energy Cooperation

India and Australia recently announced the start of nuclear negotiations for a civil nuclear deal that will allow the sale of uranium from Australian Capital city Canberra to New Delhi. Australian Prime Minister Julia Gillard announced this on her visit to India. The deal is expected to boost in India’s civilian nuclear ambitions and will also make stronger bilateral ties between both the nations.

Earlier in 2011, the Australian Prime Minister Julia Gillard, Australian Labour Party denied selling uranium to India by stating that India had not a signatory to the Nuclear Non-Proliferation Treaty.

Both the nations inked four other agreements, the most signigficant of which is agreement on Student mobility and welfare in which they agreed to hold annual meetings at the summit level either bilaterally or during multilateral events. Both countries also agreed to launch a Ministerial-level Dialogue on Energy Security, establish a Water Technology Partnership and start negotiations for an Agreement on Transfer of Sentenced Persons.

Here are some observations:

• Australia had overturned a legislation in December 2011 that banned uranium sales to India. The legislation said that Australia will not seel to a country that has not signed the Nuclear Non-proliferation Treaty.
• The world is aware of India’s rising energy needs. The natural gas consumption rose nearly 30 percent between 2009 and 2010 and domestic production of coal, natural gas and oil are declining, thanks to poor management, lagging infrastructure and a difficult regulatory environment.
• Nuclear energy has recently become one of the central government’s key policy initiatives, despite significant local protests, a lack of domestic uranium supplies and the possession of only rudimentary nuclear technology.
• India currently has a power-generation capacity of more than 206 gigawatts, among the highest in the world. More than 56 percent of the country’s power generation relies on coal, while hydropower and natural gas contribute 19 percent and 9 percent, respectively.
• Thus, India is dependent upon coal and a significant part of coal is imported. The dependence on coal and the difficulties associated with its production, transport and land acquisition for mining are just some of the challenges in implementing energy goals for the Indian Government.
• It is not that India is not dependent on imports for Uranium. Although India possesses significant reserves of thorium, the country as of now lacks the technological expertise to take advantage of those domestic reserves.
• At present, India’s 20 nuclear power plants currently about 2 percent of overall domestic electricity consumption, but India hopes to add 63 gigawatts of nuclear power within the next two decades. This increase would raise nuclear power’s overall share of domestic electricity production to 8 percent by 2030.
• However, India’s status as a non-signatory nation of the Nuclear Non-proliferation Treaty has complicated its efforts not only to source nuclear fuel, but also to attract large-scale investment into the government-controlled nuclear power sector. Then, Nuclear power cannot meaningfully reduce India’s reliance on coal-based electricity production, due to its high cost and the lack of substantial domestic
  uranium reserves.
• In 2008, after years of negotiations, USA and India signed the U.S.-Indian civilian nuclear agreement. With this agreement, Washington sought to facilitate India’s entrance into the global nuclear market and lay the groundwork for a deeper strategic partnership with New Delhi. However, that deal has run into several political obstacles. The reasons were:
• India did not fulfil the United States’ expectation of allowing U.S. firms to corner the Indian nuclear market, preferring instead to entertain multiple bidders.
• The deal was also hampered by Civil Nuclear Liability Bill to make foreign suppliers, manufacturers and operators liable for any accidents.
• U.S firms Westinghouse and GE Hitachi still signed memorandums of understanding with New Delhi for projects such as the proposed Mithivirdi nuclear power plant in Gujarat, but the Indian market did not turn out to be as friendly as Washington had hoped.
• Australia has around 40 percent of global uranium reserves. But this country has its own difficulties supplying India’s civilian nuclear fuel needs. Australia first refused to sell uranium for peaceful fuel purposes to New Delhi because India is not a signatory of the Nuclear Non-proliferation Treaty and due to concerns about the India-Pak / India-China relationship.
• Last year, the Australian government of Gillard successfully passed legislation allowing sales of uranium to India as part of a larger initiative to develop a strategic partnership with New Delhi.
• Australia is doing so not because of any change in the foreign policy but because it is attempting to shift its economic reliance away from iron ore and coal, which are its two primary export commodities.
• Australia expects that the Chinese long-term demand for these resources may decrease and production costs would be rising. At the same time, Germany and Japan would also diversifying away from nuclear power, and that is why Australia has been seeking new export markets for uranium.
• At the same time, Japan’s nuclear power firms have been seeking export markets for their nuclear technology with the recent changes in Nuclear Policy of Japan. Thus, India with a massive demand for power, can be a great market for not only Australia but also Japan.

Thus we conclude that the political and security concerns that surround nuclear power, along with the India’s need to import uranium fuel and nuclear technology, has created a situation in which India, Japan and Australia can strengthen regional cooperation.