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The Federal Government is in talks aimed at selling nuclear material to China.
Foreign Minister Alexander Downer said the Government was opening talks "on a nuclear co-operation agreement" that would allow China to buy Australian uranium.
He said the deal would "establish safeguards ... to ensure Australian uranium supplied to China is used exclusively for peaceful purposes".
Leading US think-tank Stratfor has warned the plan is likely to face stiff opposition from several quarters.
"Australia is headed for a heated debate pitting an unlikely alliance of anti-nuclear greens and China-phobic nationalists against the Government's desire to assert itself in Asia and to boost its revenue stream in the process," Stratfor said in an analysis today.
"The future of Australia as an Asian nation and the direction of massive Chinese energy consumption hang in the balance."