MAC: Mines and Communities

Treaty ruins uranium safeguards

Published by MAC on 2005-03-02

A trade treaty has the potential to overrule safeguards the Australian government has put in place regarding the export of uranium.

Treaty ruins uranium safeguards

Robert Gottliebsen,

March 02, 2005

If Swiss-based Xstrata wins WMC, Australia's restrictions on uranium sales and bans on nuclear waste imports may be overridden by treaty obligations.

When Peter Costello allowed the bid to proceed, he placed great emphasis on government controls on uranium export and waste. He did not tell Australians that one of our most important trade treaty sign-ups is the Energy Charter Treaty, under which we have undertaken to allow energy exports to take place without restriction.

If WMC is bought by Australian-based BHP, or the Australian arm of Rio Tinto, the treaty will not apply to Olympic Dam uranium.

But Switzerland is one of the most enthusiastic members of the ECT organisation and it is empowered to protect any of its companies.

When I was alerted to our ECT obligations by Sydney barrister Ludmilla Robinson, I couldn't believe such a treaty existed and that we could be in danger of making such a mistake over uranium.

But further investigation confirms Robinson's contention that the treaty provisions "make nonsense of Mr Costello's pronouncement that the exploitation and sale of Australian uranium is controlled by strict government regulation".

In his defence, the Treasurer would argue that, although Australia was a signatory, it did not ratify the treaty and is not bound by it. There are also possible escape clauses and Xstrata's undertakings.

But Robinson's work, reviewed by former High Court chief justice Sir Anthony Mason, shows we are very likely to be bound by the signature. If we ratify the treaty, our energy companies that operate in signatory countries may gain the same protection as Xstrata.

Costello should explain why he didn't alert Australians to the dangers of this treaty.

Robinson says the ECT is a multilateral agreement covering economic activity in energy resources and products, including waste products. Most of the countries that signed it in 1994 were European, because it was designed to protect EU investors in energy-rich countries formerly in the Soviet Union.

Accordingly, it places onerous conditions on host states to protect foreign investment in energy resource exploration, production and trade. No one is quite sure why the 1994 Labor Government signed the treaty.

The nuclear non-proliferation treaty overrides the ECT, but if ECT is binding, Australia will not be able to impose other restrictions on the export of uranium and must take waste products if required to do so by the Swiss.

Robinson says ECT could also allow oil tankers to travel through the Barrier Reef.

Costello is looking like the next prime minister. Apart from John Howard, the possible fallout from his Xstrata decision is the only thing standing between Costello and the Lodge.

Costello rejected the good advice of Trade Minister Mark Vaile and others to take 90 days to look hard at the implications of Xstrata owning 38 per cent of the world's uranium.

The early fears concerned US press reports about Swiss involvement in the Iraq food-for-oil scandals. Swiss traders control 40 per cent of Xstrata.

Costello relied on statements from the current board and management that were no doubt made in good faith. But in five or 10 years, these people will have retired and the Swiss traders will appoint new people to key posts and they might find the ECT treaty much more enticing.

Costello should tough it out, saying he is advised that Australia is not bound by the treaty and/or there are escape clauses. That is a high-risk legal view.

To be certain of avoiding the treaty obligations on uranium, Australia must repudiate the treaty immediately. If Xstrata wins WMC, it will be too late, because then Xstrata will have 20 years to act freely under the grandfathering clause.

Mick Davis might not have known about the treaty, but you can be sure that the Swiss controllers of 40 per cent of his capital know the implications of every word of the ECT, because they are experts at smashing government-imposed trade restrictions.

They already have Cuba, South Africa, Iran and possibly Iraq under their belt.

Australia's uranium restrictions would make a nice sequel.


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