West Australia to Keep Labor Party, Uranium Ban, Bookmakers Say

By Jason Scott

Sept. 5 (Bloomberg) -- Western Australia, the state with as much as 10 percent of the world's known uranium reserves, may return the incumbent Labor Party in tomorrow's election, helped by its policy against mining the metal.

Bookmakers in Australia today had Premier Alan Carpenter's Labor Party, pledging to enact a law to ban uranium mining, as the favorite to win the election since it was called Aug. 7. To take power, the opposition Liberal Party needs Labor to lose nine seats, without gaining others.

Western Australian uranium reserves are worth about A$40 billion ($33 billion), according to an estimate from the federal government last year. The Liberals want to open the state, which accounts for more than a third of the nation's exports, to uranium miners such as Cameco Corp., the world's biggest producer, and BHP Billiton Ltd.

``I don't understand why the government would adopt a policy'' of banning uranium mining, said Warwick McKibbin, an economics professor at Australian National University and member of the Reserve Bank of Australia policy-setting board. ``Even if you think Australia shouldn't have a nuclear industry, there's no reason why the world shouldn't be powered by our uranium.''

McKibbin says he has no political affiliation.

Sportingbet Australia has Labor at 1.3-1 favorites and the Liberals at 3.4-1 outsiders, while Lasseters Sportsbook has Labor at 1.25-1 compared with 3.75-1 for the opposition. Should it lose its nine-seat majority, Labor may be forced to either seek a coalition government with independents and the Greens or hand over power.

Australia, the world's second-largest uranium producer, gives states control on whether to mine the metal, used as fuel in nuclear power plants.

Gold, Iron

The winner will be in charge of managing more than A$160 billion worth of investment projects planned for the state, which has 10 percent of Australia's population. Western Australia, about four times the size of France, produces 75 percent of the nation's gold and a third of the world's traded iron ore.

Opposition leader Colin Barnett replaced Troy Buswell one day before the election was called. Internal polls leaked by Labor have since shown a swing toward the Liberals.

Carpenter yesterday said he could lose.

``There's a loud message in the electorate that we've got to do better,'' Carpenter said in a radio interview yesterday. ``They want to make sure they get some benefits from these good economic times. As soon as you allow uranium mining and exporting out of Western Australia, the pressure will be on us to establish a nuclear waste site.''

Western Australia has never mined uranium, mainly due to political and community opposition, even though the state's reserves are worth A$40 billion, according to former federal Resources Minister Ian Macfarlane.

`Bewildering Decision'

While Australia has almost 40 percent of the world's known low-cost uranium reserves, it supplies less than a quarter from three mines in South Australia state and the Northern Territory.

``The premier's bewildering decision to outlaw uranium mining has produced a great deal of uncertainty in the uranium industry and disquiet in the wider resources industry,'' the executive director of the Australian Uranium Association, Michael Angwin, said in a Sept. 2 statement.

Cameco, based in Saskatoon, Canada, in July agreed to buy a majority stake in the Kintyre exploration project in Western Australia from Rio Tinto Group for $346.5 million.

``We're disappointed that he's taken this extreme position,'' Lyle Krahn, a spokesman for Cameco, said. ``We're proceeding with the investments as we had planned regardless of the rhetoric in the political campaign.''

Mega Uranium Ltd., another Canadian miner, said Carpenter's pledge to legislate against mining the metal may lead it to sell its entire Australian asset portfolio, the Australian newspaper reported Aug. 29. The Toronto-based company said it had been prepared to invest as much as A$200 million.

BHP, Toro Energy

BHP Billiton's Yeelirrie resource and Toro Energy Ltd.'s Lake Way/Centipede project are probably the most advanced in the state, while Uranex NL and Energy & Minerals Australia Ltd. have earlier-stage projects, according to analyst John Wilson at Sydney-based Resource Capital Research Pty.

Labor has been in power in Western Australia since February 2001, with Carpenter taking the helm in January 2006. The state's electoral boundaries were redrawn last year, adding two seats apiece in the lower house Legislative Assembly, which now has 59, and the upper house Legislative Council, with 36.

Should there be a swing away from the government, the Liberals could form a coalition government with the National Party or independents, said Professor David Black, a politically unaligned professor emeritus in history and politics at Perth's Curtin University of Technology.

``Labor is trying to create traction from issues such as uranium,'' Black said. ``Most people still seem to think Labor will win, but to me it's still up in the air.''

To contact the reporter responsible for this story: Jason Scott in Perth at Jscott14@bloomberg.net.