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Chinese-Australian deal one step closer

China is poised to sign a safeguards agreement paving the way for uranium exports from Australia, Premier Wen Jiabao (溫家寶) said yesterday as Canberra insisted it was not granting the Asian powerhouse special privileges.

Wen, in Perth on the first leg of a four-day tour of Australia, confirmed that the two nations would sign the agreement in Canberra today -- the first step in helping energy-hungry China satisfy the needs of its rapidly expanding nuclear power industry.

He said the agreement would ensure uranium was used for peaceful purposes.

"In our bilateral cooperation we should establish a long-term, stable and fundamental institutional and systematic safeguard," Wen said through an interpreter.

"Our energy and resources cooperation is ensured by such a safeguard and during my visit to Australia this time the two governments are going to sign the agreement for peaceful use of nuclear energy and safeguards of nuclear energy," he said.

Wen also hinted that uranium exports could be subject to price-capping after Asian steelmakers were last year hit by soaring prices of iron ore imports.

"We are also going to set up a price formulation mechanism that is up to international norms and I believe this will provide a long-term benefit to our two countries," the Chinese premier said.

Speaking on commercial television, Australian Prime Minister John Howard said that Canberra would ensure the safeguards were strict but there would also be an element of trust.

"The safeguards that we have adopted are very rigorous and unless we are going to declare to the world that we're not going to deal with anybody, then ... in relation to uranium we have to assume a certain degree of good faith," he said.

But Howard stressed that any Chinese investment in uranium projects in Australia, which has some 40 percent of the world's known uranium, would be subject to the same constraints as other foreign investment.

"We're not talking about having a special deal for Chinese acquisitions in Australia," he said. "I'm not going to telegraph in advance, it would be improper to do that, I simply would say to our Chinese friends, as I do to our Japanese and American and British friends, if any of your companies ... want to buy assets in Australia, they're subject to the foreign investment policy of this country."

Resources Minister Ian Macfarlane said it could still be years before the first shipments arrive in China, with commercial negotiations to be completed and the need to expand uranium mining to meet China's demands.

"There have been no discussions in regard to contracts and tonnages and I think there has been an unrealistic expectation that with tomorrow's signing of the safeguard agreement we will see a situation where tonnages will be exported the next day," he told reporters.

Leading environmental group, the Australian Conservation Foundation, said the sale of uranium could lead to regional insecurity.

"No matter how strong and how valid the assurances that China or any other country gives us, once we export uranium it's outside of our control, so we're making the world a dirtier and more dangerous place by exporting uranium," president Ian Lowe told ABC radio.
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