Harper relaxes accountability rules for China's use of uranium

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Stephen Harper has chosen to override the qualms of the government's non-proliferation experts to permit a multibillion-dollar business in exports of Saskatchewan uranium to China's nuclear industry.

A deal the Prime Minister announced in China, a protocol amending Canada's nuclear co-operation agreement with China to allow the export of uranium concentrate, seals far closer ties with Beijing than ever seemed possible in Mr. Harper's early days in power.

Saskatchewan Premier Brad Wall lobbied Mr. Harper personally over the past year to reach the arrangement with Beijing. It means Saskatchewan's Cameco Corp. can now use Canadian uranium in two contracts worth up to $3-billion.

"This means new investment in the province. I think it means jobs," Mr. Wall told CTV News.

But the deal with Beijing has raised concerns in Ottawa, because it includes less stringent accounting for how the uranium is used than Canada typically demands, sources said. When Australia made a similar deal with China in 2008 that included less accountability, it faced criticism from other uranium suppliers, including Canada.

China insisted on getting the same sort of accounting requirements for Canadian exports that it got from Australia. As well as using uranium for other purposes, it also has military nuclear programs, which are not subject to accounting or inspection.

"The issue is requiring full safeguards, full accountability," said Ernie Regehr, a fellow at the University of Waterloo's Institute of Peace and Conflict Studies.

In 2010, Saskatchewan's Cameco struck two long-term deals to sell 52 million pounds of uranium concentrate to China, but had to ship uranium from other countries, such as Namibia and Kazakhstan, because exporting Canadian uranium to China was not allowed, and federal officials were uneasy with the idea of easing accounting standards to allow it.

"This agreement has been worked on since then, so this is the culmination of that work," Cameco chief executive Tim Gitzel said in a telephone interview from Zhenjiang, where he and Natural Resources Minister Joe Oliver will be visiting a nuclear reactor under construction.

Now, the booming Chinese market will underpin a planned expansion at Cameco that will increase production to 40 million pounds a year by 2018 from 22 million pounds, with potential for an additional 20 million pounds after 2020.

While the Canadian uranium deal raised questions, there are differences over whether it presents a real risk. China already has nuclear weapons, is believed to have halted stockpiling, and has shown restraint in limiting its arsenal.

Of greater concern is its long support for the civilian nuclear industry in Pakistan, which developed atomic bombs in the 1990s, and whose scientists have sold nuclear-weapons technology to Iran and North Korea. China is supposed to stop nuclear trade with Pakistan, but has argued it should be allowed to continue to supply nuclear material and equipment.

The new Canadian deal with China will rely on general assurances that all Canadian uranium is used for appropriate civilian purposes, although Canada usually requires a more detailed accounting from customers other than the United States.

Australia allowed its uranium to be used only in facilities under the safeguards of the International Atomic Energy Agency, and Canada is expected to follow suit, though details have not been released.

Corey Hinderstein, vice-president of the Washington-based non-proliferation group Nuclear Threat Initiative, said that provides a reasonable level of safeguard in an imperfect system. Countries essentially have to accept lower accounting standards if they sell uranium to a country with nuclear weapons, she said. Because domestic or other uranium can be used for un-inspected military programs, full accounting can never really be possible, she said.