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While the forecast for increasing demand is having an impact on Australia’s uranium mining industry, the touchy politics associated with the rare earth resource remain in play at the state and federal level. From the disputed ban in Queensland to the Australian government’s steadfast reluctance to deal with India, and now Russia, the future of nation’s uranium sector will be defined by the politics of today.

Queensland Uranium Mining Ban

Two of Australia’s six states and one territory allow for uranium mining. Both South Australia and the Northern Territory are home to uranium producers like BHP’s Olympic Dam and ERA’s Ranger mine. Western Australia joined the fold last year after the Liberal government lifted its state’s ban and miners like Mega Uranium [TSX: MGA] are already advancing projects. However, Victoria and New South Wales both ban uranium exploration and mining.

Queensland, interestingly, allows uranium exploration but not mining and the Labor government has repeatedly rejected calls to end the ban. Those in the industry are pushing for the state’s government to reconsider.

Geologist and managing director of Summit Resources [ASX: SMM], Alan Eggers has said the ban doesn’t make any sense. “It is a political ban that has no basis of science, health or safety or commercial or any other area.”  Eggers has tried appealing to the public by pointing to advantages of the uranium industry in the state, such as job creation and royalties.

Greg Hall, managing director of Toro Energy said the government has made many excuses that just don’t hold up, such as the uranium industry could out-compete the vital coal industry, a fear that Hall says has been proven wrong by “an expensive report.”

It seems the industry is getting no where with politicians, so it may need to bring its case before the public.

Russia to Suffer the Same Treatment as India?

The Australian government’s policy of not exporting uranium to countries who’ve not signed onto the Nuclear Non-Proliferation Treaty has hampered India’s ability to keep up with its Asian neighbours in the race for nuclear fuel supplies.

That same policy may hamper Russia’s possible billion-dollar dealings with Australia’s uranium miners.

In 2007, the Liberal Howard government entered into a supply agreement with Russia. But, the new Labor government under Rudd sees things differently. Last year, “a Labor-dominated committee recommended against ratifying the agreement, against the advice of the Government’s own advisory body, the Australian Safeguards and Non-Proliferation Office (ASNO),” reported Jacob Saulwick of The Sydney Morning Herald.

The committee seemed to disregard ASNO’s “assurance” that Russia is actively working on “separating its civilian and military nuclear operations” and is willing to grant inspectors access to its civilian sites, writes Saulwick. Its reason: The IAEA wasn’t able to discover Iraq and Libya’s attempts at developing nucs, so how good a job could the ASNO do in Russia?

Saulwick quotes Michael Angwin, the executive director of the Australian Uranium Association, who gives some historical and political context for the committee’s decision: ”The [Russian 2008 conflict with Georgia] undoubtedly had some influence on that committee.”

So, “against Russian threats of an economic backlash, the Government has been sitting on the treaty since,” added Saulwick.

Despite politics, Australia still has the potential for a lucrative future in the uranium industry as energy hungry nations like China, Japan and Korea go shopping for nuclear fuel supplies.

Australia is home to nearly 40 per cent of global recoverable uranium and export revenue is expected to increase by over $700 million in 2014, according to the Australian Bureau of Agriculture and Resource Economics.

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