Gillard Wins Bid for Uranium Sales to India

Australia’s ruling Labor Party ended a ban on uranium exports to India, approving Prime Minister Julia Gillard’s proposal to strengthen diplomatic ties with the South Asian nation and open a new market for suppliers.

“We need to make sure that across our region we have the strongest relationships we can, including with the world’s largest democracy, India,” Gillard told the party’s conference in Sydney yesterday before delegates voted 206 to 185 in favor of her motion, which was opposed by left-wing members.

Gillard, Australia’s first female prime minister, proposed the policy shift last month to spur the economy and tap increasing energy demand in India, the country’s fourth-biggest export market. Australia, holder of the world’s biggest uranium reserves, banned sales to India because it hasn’t signed the Nuclear Non-Proliferation Treaty. Shares of uranium companies Energy Resources Australia Ltd. and Deep Yellow Ltd. gained.

“The prime minister did take a political risk and I think the narrowness of the vote confirms that,” Rory Medcalf, director of the international security program at the Sydney- based Lowy Institute and a former Australian diplomat in India, said in a telephone interview. “This removes a fundamental obstacle to normal relations with India.”

Getting the ban lifted was her second political victory at the party conference, which may boost her standings after months of slumping ratings. Delegates voted on Dec. 3 to back her plan to allow lawmakers to vote personally on whether to support gay marriage.

Rio, BHP

Shipping uranium to India would benefit producers such as Energy Resources, controlled by Rio Tinto Group, and BHP Billiton Ltd. (BHP) Australia, the world’s third-biggest uranium supplier behind Kazakhstan and Canada, exports to countries including China, Russia and Japan.

Energy Resources rose 5.2 percent to A$1.505 at 10:17 a.m. in Sydney. Exploration company Deep Yellow surged 10 percent to 16 cents, and Peninsula Energy Ltd. climbed 8.3 percent to 3.9 cents. BHP added 1.5 percent and Rio advanced 0.5 percent.

Reversing the policy would help efforts to establish an economic and security agreement with the U.S. and India, Australian’s Foreign Minister Kevin Rudd told the Australian Financial Review newspaper on Nov. 30.

The decision clears the way for the two countries to negotiate a nuclear-safeguards accord, which may take as long as a year, the institute’s Medcalf said before the conference. It may be five years or more before Australia realizes economic benefits, he said.

Rock Star

Lifting the ban brings Australia in line with the U.S., which has a civil nuclear accord with India. The country’s atomic energy program got a boost in September 2008 when the 46- nation Nuclear Suppliers group lifted a three-decade ban on exports to India, which then signed nuclear agreements with countries including Russia and France.

“Where is our vision here? Where is our commitment to a nuclear free future?” said Peter Garrett, minister for school education, early childhood and youth and a former rock star and an anti-nuclear campaigner. India had been given “a tick for exempting themselves from the international disarmament framework and I’m very disappointed in that decision,” he said.

The Greens Party, which Gillard’s minority government relies on to pass legislation, has condemned the plan, saying mining interests are dictating foreign policy. It’s “a pursuit of money at the expense of global safety,” Bob Brown, the Greens senator and party leader, said Nov. 15. The new policy doesn’t require parliamentary approval.

Two-Way Trade

Two-way trade between Australia and India reached A$18.4 billion in 2010, according to the statistics bureau. Uranium exports are expected to have been A$960 million in the year ended June 30, 2011, according to Australian government data.

Energy Resources, which operates the Ranger Mine in the Northern Territory, exports uranium to power utilities in Japan, South Korea, China, Europe and North America. Melbourne-based BHP sells uranium to Japan and China.

Australian uranium explorers may attract investment from Indian companies after the policy change, Greg Hall, managing director of Adelaide-based Toro Energy Ltd. (TOE) said Nov. 22.

To contact the reporters on this story: Michael Heath in Sydney at mheath1@bloomberg.net; James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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