While the world's nuclear power generators will require more than 66,000 tons of uranium this year, current global mine production is only 55,000 tons, the minister, Gary Gray, told the Australian Uranium Association Thursday.
Gray said the shortfall is largely being met by secondary sources, such as the reprocessing of highly enriched weapons-grade uranium from the former Soviet republics.
"This program is set to end this year, and it will be interesting to see the effect this will have on the market," Gray told Mining Weekly, adding Australia was well-positioned to meet the demand.
Australia has nearly 40 percent of the world's recoverable uranium resources, but supplies only 19 percent of the world market, AUA said. Uranium exploration and mining is permitted in South Australia, the Northern Territory and Western Australia, but only exploration is allowed in Queensland, Victoria and New South Wales.
If the uranium sector was able to reach its full potential, AUA said, exports would increase from 9,000 tons a year to 28,500.
Gray noted worldwide, 66 nuclear reactors were under construction, two-thirds of which are in Asia.
As key markets, "the significance of China and India cannot be overlooked," the minister said.
Gary stressed Australia has stringent bilateral safeguards agreements with other countries under which Australian uranium, and nuclear material derived from it, must be used exclusively for peaceful purposes.
"These agreements ensure that countries to which Australia sells uranium are committed to International Atomic Energy Agency safeguards and international nuclear security standards," he said.
"Under these agreements, countries receiving uranium must also report on their use of Australian nuclear material, and seek Australian consent for any enrichment, reprocessing or third-party transfer."
In 2011, Australia dropped its longstanding ban on selling uranium to countries outside the Nuclear Non-Proliferation Treaty. India is not a signatory.
During a visit to India last November, Australian Prime Minister Julia Gillard and her Indian counterpart Manmohan Singh agreed to begin talks on the sale of uranium to India for its nuclear power program.
Gillard Monday said discussions to put a safeguards agreement in place were "under way."
"The progress is as we expected it," Gillard told Press Trust of India of Australia's plans to sell uranium to India.
But it is likely to be at least two years before the actual sale of uranium from Australia to India would start, PTI said.