Uranium industry in S. Utah is booming again

Southern Utah's long-dormant uranium industry is booming again. Old mines are reopening, exploratory drilling is going on, one mill is operating and another is on stand-by status.

This is the third uranium boom to hit the Beehive State. But unlike the first two, when American prospectors scoured the desert working for the Atomic Energy Commission or U.S. power plants, today's boom is largely a Canadian operation.

It's a boom with an odd link to China. It's also one that could fizzle any day if the price of uranium falls, since Utah's reserves are relatively marginal.

Only the first flurry of activity can be considered a true boom, so far at least. That happened in the 1940s and '50s, when America started building its nuclear arsenal. A short-lived boomlet took off in the middle 1970s as more nuclear power plants went online, according to the Utah History Encyclopedia.

Then after the Three-Mile Island nuclear accident of 1979, investment in nuclear power plummeted, prices slumped and mines closed. Now, a turnaround is occurring.

Despite vast uranium investments in Canada, companies from that country — notably Uranium One and Denison Mines Corp., both based in Toronto, and Consolidated Abaddon Resources Inc. of Vancouver — are acquiring properties in Utah and other states.

The new interest was triggered by a steep rise in uranium prices over the past few years, from about $7.50 a pound in 2001 to today's $90. Prices briefly hit $135 last year.

Roger Nusbaum, a financial adviser in Prescott, Ariz., said the price rise is a matter of supply and demand, with China's swift modernization a major cause. Without nuclear power, China will not be able to access the energy it needs as its economic rise continues and more of its vast population moves into the middle class.

The World Nuclear Association, which represents "the global nuclear profession," says on its Web site that China has 11 commercial nuclear power reactors in operation. Five more are being built, and several are soon to start construction.

"Additional reactors are planned, including some of the world's most advanced, to give a fivefold increase in nuclear capacity to 40 GWe (gigawatts) by 2020 and then a further three- to fourfold increase to 120—160 GWe by 2030."

For a rough comparison, the association says the United States' nuclear generating capacity in March 2004 was about 97.5 gigawatts.

Nusbaum said the prospect of much greater demand for uranium worldwide is a catalyst to the radioactive element's price rise.

"The market is clearly looking ahead to what it perceives to be an obvious path of much more demand as this ebbs and another begins," he said.