South Australian Royal Commission heads developments in uranium sector

In brief

The South Australian Government has released the draft terms of reference for the recently-announced Royal Commission to inquire and report on the potential for South Australia to deepen its involvement in the nuclear fuel cycle. Partner Richard Malcolmson, Managing Associate Hilary Birks and Senior Associates Anna Vella and Emily Gerrard report on the scope of the Royal Commission and other recent developments in Australia's uranium sector.

The South Australian Royal Commission

South Australia is home to 80 per cent of Australia's known uranium deposits and hosts four of the five currently operating uranium mines in the country.² Currently, Australia's involvement in the nuclear fuel cycle is limited to the mining and export of uranium and does not extend to uranium enrichment, the operation of nuclear power stations or the storage of nuclear waste.

South Australia's Premier Jay Weatherill has broadly described the purposes of the Royal Commission as being to:

1. consider the opportunities and risks of the mining, enrichment, energy and storage phases of nuclear energy for South Australia³; and
2. ensure that the people of South Australia have an informed debate and make a reasoned decision about the issues associated with a further involvement in the nuclear fuel cycle.⁴

The Premier has announced that the former South Australian Governor, Kevin Scarce, has been appointed to head the Royal Commission.⁵

The draft terms of reference direct the Royal Commission to inquire into and report on:⁶

• whether there is any potential for the expansion of the current level of exploration, extraction or milling of radioactive materials in South Australia;
• the feasibility of the further processing of minerals, and of processing and manufacture of materials containing radioactive and nuclear substances, including conversion, enrichment, fabrication or re-processing in South Australia;
• the feasibility of establishing, and advantages of operating, facilities to generate electricity from nuclear fuels in South Australia; and
• the feasibility of establishing facilities in South Australia for the management, storage and disposal of nuclear and radioactive waste from the use of nuclear and radioactive materials in power generation, industry, research and medicine (but not for, or from, military uses).

For each line of inquiry, the Commission is to consider any circumstances that may be necessary before any of the above options are pursued, any risks and opportunities associated with each activity, and any measures that might need to be taken to facilitate and regulate future activities.

The draft terms of reference specifically require the Royal Commission, when considering the above matters, to consider (where appropriate) the impact of that activity upon the economy,⁷ the environment and the community (including regional, remote and Aboriginal communities).

The federal landscape

The South Australian Royal Commission comes at a time when the Australian Federal Government is reviewing its own energy agenda. The Energy White Paper is expected to be released later this year.⁸ The Energy Green Paper, released in September 2014, has identified nuclear energy as an option warranting serious consideration in a low-emission, carbon constrained future.⁹

The Federal Government has a longstanding role in the regulation of nuclear matters, and South Australia (as with any other Australian state or territory) would require the Commonwealth's cooperation if it is to further expand its involvement in the nuclear fuel cycle.

Federal legislation either currently tightly controls or expressly prohibits a variety of nuclear activities. For example, section 140A of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) prohibits the construction or operation of nuclear fuel fabrication plants, power plants, enrichment plants and reprocessing facilities. Similarly, the Australian Radiation Protection and Nuclear Safety Act 1998 (Cth) places restrictions on a range of activities dealing with radioactive materials. Such legislation and supporting safeguards would need to be amended before any proposals for nuclear enrichment or power generation could be realised in Australia.

Politically, nuclear issues remain divisive in Australia.¹⁰

The question of nuclear waste storage

According to the Australian Nuclear Science and Technology Organisation, about 45 cubic metres of radioactive waste is produced domestically each year in medicine, research and industry. Following the withdrawal of Muckaty station (on Aboriginal land in the Northern Territory) as a potential site for nuclear waste disposal in mid-2014, the Federal Government is searching for a new site, with tenders due to reopen sometime in 2015.

In 2001, a site within the Woomera Protected Area in South Australia was identified by the Commonwealth¹¹ as the preferred site for a storage facility and underwent environmental assessment. Legal action by the South Australian Government and local opposition led to the project being abandoned. In light of the draft terms of reference for the Royal Commission, it may be that the current South Australian Government would be prepared to reconsider the position in relation to identifying suitable locations for a nuclear waste site, although South Australia's Nuclear Waste Storage Facility (Prohibition) Act 2000 would need to be amended or repealed should the position change. Interestingly, s14 of this Act currently requires a public inquiry if a licence, exemption or other authority to construct or operate a nuclear waste storage facility in South Australia is granted under a law of the Commonwealth. In particular, the Act requires Parliament to inquire into, consider and report on the likely impact of that facility on the environment and socio-economic wellbeing of South Australia.

Developments elsewhere

The announcement by the South Australian Government comes at a time of other developments and media in relation to uranium mining in Australia.

• Last month, media reported Rio Tinto's expectation that Australian uranium exports to India could commence in the next two years, once final safeguards are in place under the Agreement between the Government of Australia and the Government of India on Cooperation in the Peaceful Uses of Nuclear Energy, signed last year.¹² The agreement was tabled on 28 October 2014 for consideration of the Joint Standing Committee on Treaties.¹³
• While final technical studies are being undertaken at two uranium deposits at Wiluna in Western Australia, Toro Energy Limited has indicated¹⁴ that it expects uranium production to commence (in the areas where approvals have already been obtained) in 2017. Toro's expanded proposal at Wiluna is still undergoing regulatory environmental assessment¹⁵, as are the various other uranium mining proposals at Mulga Rocks¹⁶ , Kintyre¹⁷ and Yeelirrie¹⁸ in Western Australia.
• Mining of uranium in Queensland is now less certain with the recent change of Government. As reported in our recent update on the result of the Queensland election, the Queensland Labor Party's policy position is that uranium mining in Queensland should be prohibited. It is therefore expected that the assessment and approval framework for the recommencement of uranium mining in Queensland, put in place by the previous coalition administration, will be revoked.

Looking ahead

South Australia's establishment of a Royal Commission is an interesting development that has been applauded by some areas of government, industry and the community, but criticised by others. We will continue to monitor developments in this important area, including the scope and progress of the Royal Commission's inquiries and the conclusions of the Commonwealth Government's Energy White Paper.