The rough and rocky terrain of southwest Colorado is once again luring miners with its promise of yellow wealth — not gold, but uranium.
Three uranium mines, shuttered in the mid-1980s, were reopened in the past two years. The revival of another two is on the anvil this year. And many prospectors are scoping out the Colorado Plateau in hopes of striking rich ore deposits.
This resurgence in uranium mining is being triggered by skyrocketing prices brought on by soaring global demand for the radioactive mineral.
From trading at about $9 per pound in 2001, the price of raw uranium has nearly tripled and currently trades at about $25 a pound. Industry experts predict prices will climb to between $30 and $35 a pound during the next few years.
The raw material is called yellowcake, a coarse reddish-yellow powder made up of oxidized uranium that is milled from mined ore. It contains scant radioactive elements and is put through various milling processes and eventually turned into fuel rods, which are used in nuclear power plants.
The price spike in the mined uranium is attributable to a shrinking supply of yellowcake as European and Asian countries switch to nuclear reactors for power generation in the face of rising oil prices and global warming.
In the United States, 103 nuclear reactors in 31 states provide electricity to one of every five homes and businesses.
World demand for uranium will be 185 million pounds in 2013, estimates the Nuclear Energy Institute in Washington. But supply likely will be significantly lower, at about 130 million pounds, said Clifton Farrell, NEI’s senior project manager.
“With this impending shortage, the outlook for the uranium market is very positive,” Farrell said. “I think we are going to see reactivation of mines in the U.S. in the next few years.”
The uranium ore grade mined in Colorado is much lower than the ore grades mined in Australia or Canada, Farrell said, which is partly why production stopped following the 1980s. Given the prices, it makes more sense to open previously shuttered mines in Montrose County along the Western Slope.
The Cotter Corp., which owns Colorado’s four operating uranium mines in Montrose County — near the town of Naturita — is set to produce 525 tons of ore per day. That would be nearly five times the 110 tons a day it produced in 2004.
Another company, Little Maverick Mining Co., recently submitted a plan to mine 500 tons of uranium per month from a site near Gateway. The Bureau of Land Management is reviewing its application.
Based in Lakewood, Cotter is a subsidiary of San Diego-based General Atomics. It employs 126, 37 of whom work at the mines. The majority work at Cotter’s mill in Canon City, and the remaining people are employed at its corporate office.
The mined ore, covered in canvas and marked, is trucked by highway to the mill, where it is processed to separate the uranium and the vanadium from other minerals. Vanadium, which is used to harden steel, is shipped for further processing and distribution.
The ore is put into 55-gallon drums and trucked to ConverDyne, a uranium enrichment company in Metropolis, Ill. In Illinois, it is converted into uranium hexafluoride, a form that makes it easier to further enrich the uranium for nuclear reactors at power plants.
The Bush administration’s push to include nuclear power in the debate on the looming energy crisis also is helping give the uranium mining industry a second lease on life.
“As our energy needs increase, we need to diversify our fuel mix and maximize the use of uranium for nuclear energy, along with the use of coal, natural gas and other energy fuels,” said Stuart Sanderson of the Colorado Mining Association. “That only makes sense.”
Preliminary data show the nation’s nuclear power plants produced a record 786.5 billion kilowatt-hours of electricity in 2004, surpassing the previous high of 780 billion kwh in 2002.
And nuclear plants are extending their lives.
Thirty reactors received 20-year license extensions, 18 reactors have filed for license renewals and another 22 are likely to seek renewal in the next six years, the NEI reports.
Three industry consortia have applied to the Energy Department to design and test new nuclear power plants, although they have not committed to build one.
Globally, India has 14 reactors and is planning to add 24 more. South Korea has 19 and has plans for another eight, while China — which has nine reactors — is proposing to build 18 more. Mexico is seeking to reactivate its nuclear energy program.
Responding to this bullish outlook, Cotter plans to hire more workers this year, bringing its work force to 157. Still, U.S. production won’t be enough to satisfy demand.
At the height of the nuclear arms race in the 1960s, the Atomic Energy Commission was paying approximately $40 a pound for yellowcake, making uranium mining and milling a profitable business. Until 1968, only the federal government could buy or sell uranium, then designated as a strategic mineral.
In 1968, the U.S. market was deregulated by Congress so that uranium could be bought and sold in the open market. Buoyed by demand from nuclear power reactors, the price of yellowcake jumped to $50 a pound by the late 1970s; however, it slid dramatically in the following years, falling to about $9 a pound in 2001.
The decline in uranium prices was the result of a couple of factors. The meltdown at the Three Mile Island reactor in Middletown, Pa., in 1979 and the 1986 explosion at the Chernobyl plant in what is now Ukraine stunted the growth of new nuclear power plants across the United States.
In addition, the end of the Cold War stopped the nuclear arms race. The United States and Russia agreed to dismantle their nuclear stock piles, and the domestic market saw a supply glut.