DOUGLAS, Wyoming — Watching a computer
screen, Pat Drummond monitors a complex system of pipelines and vats that
produce 55-gallon drums of uranium, weighing 600 to 1,000 pounds each, ready to
be shipped to nuclear power plants across the globe.
Drummond, who began mining at age 16 in his native Scotland, is among a
dwindling number of workers in an industry that has been plagued by low prices
for more than a decade but is finally seeing a rebound.
"Mining's in my blood," Drummond said in a thick brogue during a
recent afternoon at the Smith Ranch-Highland mine in east-central Wyoming.
"I enjoy the challenge of uranium, and given the price wars of the last 15
years, it's been a challenge staying in the industry."
Prices are nearly triple what they were four years ago, and Cameco Corp., a
Canadian firm that owns the last two active uranium mines in the United States,
is stepping up exploration and production. The Saskatchewan firm holds one-fifth
of the world uranium market but may soon be joined by other companies reopening
or starting operations to meet rising demand.
Uranium produced at Smith Ranch is typically yellowish powder, or yellowcake,
which is sent to other plants to be enriched and formed into pellets to fuel
nuclear reactors. About 20 percent of America's electricity comes from steam
created by nuclear fission.
Yellowcake prices were US$7.10 per pound in December 2000 but have risen
steadily and recently surpassed $20 for the first time since 1984.
In the 1940s, the U.S. government began buying large amounts of uranium in the
effort to produce the world's first atomic bomb. After World War II, the Atomic
Energy Commission began examining peaceful uses. The first privately funded
nuclear energy plant came online in 1959 in Illinois.
By the 1970s, about 250 nuclear reactors were planned across the United States
— but then an accident in Pennsylvania changed all that.
"Three Mile Island hit, and starting in the 1980s, utilities started
canceling plants," said David Miller, a Wyoming state lawmaker from
Riverton and geologist with more than 25 years experience in uranium exploration
and consulting. "The investing public, the lay public, everyone kind of
turned on nuclear power at that time. The uranium market collapsed on all those
canceled plants."
A second blow came when the Soviet Union fell apart, and enriched uranium
removed from Russian bombs was blended down to reactor-grade fuel and dumped on
the market. The third jolt occurred when the Clinton administration privatized a
government-owned uranium-enrichment program, and 70 million pounds of yellowcake
was unloaded on the market.
"You basically have had a long period of inventory liquidation, which
pushed prices down to quite low levels, and during this time you also pushed
production down," said Jeff Combs, president of Ux Consulting Co, of
Roswell, Georgia. Exploration also tapered off.
Wyoming once had eight uranium operations, producing 12 million pounds per year.
Now it has one.
After the bottom fell out, the Legislature lowered taxes on the industry, then
exempted uranium producers from paying any severance taxes until the price
stayed at $14 or higher for six straight months. That threshold has now been
reached, and the state began collecting revenue again in June.
"If the markets are there for it, I think they'll mine as much as they can,
and we'll see an increase in tax revenues as a result," said Randy Bolles,
administrator of the state Mineral Tax Division.
Global uranium production is about 90 million pounds per year, while consumption
is 160 million to 180 million pounds by the 435 reactors in the world, Miller
said. Thirty-five more reactors are under construction in China, Taiwan, India,
Brazil, and Eastern Europe, which will further increase demand.
America's 103 reactors are housed in 66 plants that have cranked out more than
700 billion kilowatt hours for five straight years, but American uranium
production peaked in 1980 at 43.7 million pounds, according to the U.S. Energy
Information Administration.
By 1990, U.S. production had dropped to 8.9 million pounds. Last year, it was
only about 2 million, most coming from the Smith Ranch-Highland mine north of
Douglas, Wyoming, and Cameco's other active mine, the Crow Butte operation near
Crawford, Nebraska.
Both use a method more environmentally friendly than conventional open-pit
mining. It is known as in-situ leaching. Water rich in oxygen and carbon dioxide
is circulated through an underground reserve, loosening uranium from sand and
sending it to the surface.
Tiny beads of resin attract and remove uranium from the water. The heavy metal
is then compressed, dried, sealed in drums, and loaded onto trucks for shipment.
The water is reinjected into the ground.
Mine manager Ralph Knode is thankful prices are finally rebounding.
"We just survived 15 years of horrible market," he said. "Now,
it's sort of like a renaissance. Now you're finally starting to see that you're
not just treading water, but you're actually moving forward."
Source: Associated Press