Russia and Australia signed a nuclear safeguards agreement on Friday to allow the export of Australian uranium to Russia for use in its civilian nuclear power programme.
Russian President Vladimir Putin and Australian Prime Minister John Howard confirmed the signing after a meeting in Howard's Sydney office ahead of the Asia-Pacific Economic Cooperation (APEC) forum leaders' summit at the weekend.
The deal has raised concerns in Australia that the uranium might be used for military purposes or resold to Iran and Syria, states with which Russia has close ties.
However, Howard told a joint press briefing that he did not believe Australian uranium would be put to military use.
"This new agreement completely updated arrangements for nuclear safeguards for our country," Howard said.
Article 7 of the agreement says: "Nuclear materials, equipment and components which fall under this agreement are used only for peaceful purposes and will not be used to produce nuclear weapons or any other nuclear explosive devices, for research and development of nuclear weapons ... or for any other military purpose."
The agreement also says Australian nuclear materials can not be exported beyond Russia without prior written consent.
The deal was formally signed by Australian Foreign Minister Alexander Downer and the head of Russia's Federal Nuclear Agency Sergy Kiriyenko, Reuters reports.
U.S. Secretary of State Condoleezza Rice said this week that her country had no concerns about an Australian nuclear trade with their former Cold War enemy, the AP reports.
"This isn't an issue for us," she told the ABC Wednesday. "The Russians have plenty of weapons, let's be realistic about it. The Cold War produced more than a surplus."
Putin arrived in Australia fresh from a visit to the world's most populous Muslim nation, Indonesia, where he inked a billion-dollar arms deal.
Under the agreement, Russia is providing a line of credit for Jakarta to buy its helicopters, tanks and submarines.
Putin's trip to the region is breaking new ground. His visit to Indonesia was the first by a Russian or Soviet leader in nearly five decades while for Australia it is the first ever.
Putin, Bush and Howard will join 18 other world leaders at the summit, including China's Hu Jintao, the AFP reports.
London will supply a batch of depleted uranium shells to Ukraine as part of a military aid package, UK's Minister of State for Defence Annabel Goldie said