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 120160 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.
Federal officials do not break down Utah uranium reserves separately from those in Arizona and Colorado. If uranium sold for $50 a pound, the Energy Information Administration says, the three states' combined reserves would amount to 45 million tons of ore containing 123 million pounds of uranium. Should the price drop to $30 a pound, the amount worth recovering would be only 8 million tons of ore with 45 million pounds of uranium.
"Utah used to have a lot of uranium mines, but the uranium deposits in Utah are low-grade and small" compared with worldwide resources, said Ken Krahulec of the Utah Geological Survey.
One mine in Canada is believed to have uranium reserves that are twice as large as the entire Utah production so far. "And the grade of that mine is 100 times the grade of our old mines. We have to compete with mine operations like that. In normal circumstances we just can't do that."
Then prices rose and Utah mines became economical again.
"The best of the old mines are going back into production" or are being reclaimed. "The mine with the largest uranium reserves in Utah, the Tony M, is being prepared for production in 2008." The Pandora Mine near Lake Powell is already producing, he said.
How long production continues is "a matter of how long the uranium price is going to be up like it is right now. Because if it goes back to the historic price, Utah's mines won't work."
China, France and Canada are part of the demand for uranium as a nuclear fuel, he said.
In October 2006 the Cameco Corp. of Saskatoon, Saskatchewan, announced that one of its best potential mines, the Cigar Lake Mine, had flooded. Production now is expected to begin in 2010, according to Cameco. With likely high demand for uranium in China, Nusbaum said, "this Cigar Lake issue to some degree alters supply."
Uranium One announced in April 2007 that it had acquired U.S. Energy Corp.'s Shootaring Canyon uranium mill near Tickaboo, Garfield County. The company also obtained 38,763 acres of uranium exploration properties in Utah, Wyoming, Arizona and Colorado, it said.
Denison Mines notes on its Web site that it has five uranium mines in the United States and two in Canada. It estimates that its North American production will reach 5 million pounds by 2011.
Denison received the go-ahead to operate a uranium mine in the Henry Mountains in September. To process ore it will use the White Mesa mill, which Denison owns, near Blanding.
The Energy Information Administration lists White Mesa as the only operating uranium mill in the United States, and it has the capacity to mill 2,000 short tons of ore per day.
Meanwhile, Uranium One's Shootaring Canyon mill, capable of milling 750 tons daily, was listed in "reclamation and standby" status as of the third quarter of 2007.
Utah Uranium Corp., Moab, announced in October that it had signed a joint venture agreement with Consolidated Abaddon to drill up to 50 uranium exploratory holes in the Henry Mountains near Hanksville. By Dec. 7, Utah Uranium said it had completed the first 10 drill holes in the project, known as the Pinto Project, and had sent material to a laboratory in Elko, Nev., for analysis.
Consolidated Abaddon Resources' Web site says it is earning a 50 percent interest "in the drill-ready Pinto Uranium project ... consisting of 6,800 acres in the Henry Mountain Syncline of east-central Utah."
The Web page adds: "Utah Uranium Corp. acquired the Pinto Claims from Ted Murer, PGeo (Professional Geoscientist), who discovered the nearby Tony M Mine, which contains 10,898,000 pounds of U308 (uranium). The Bullfrog Mine was discovered adjacent and north of the Tony M Mine and contains an additional 12,924,000 pounds of U308. These mines are now owned by Denison Mines Corp. and are collectively known as the Henry Mountains complex."
Don Houston, an Abaddon director and the manager for the company's part of the Pinto Project, said, "Our main focus has been to date northern Canada." The Canadian Nuclear Safety Commission notes on its Web site that Northern Saskatchewan is the world's leader in uranium production.
Utah has had uranium production in the past. But what about today? "How significant is it in the world market? Small player, I suggest," said Houston, reached by telephone in British Columbia.
Still, he believes the Moab and Henry Mountains regions may present an opportunity. "It's dependent on the price of uranium, isn't it?" he said.
Many uranium properties are getting a second or third look because price increases make it economical to produce at a lower grade of ore. "If there's enough pounds in the ground to make it viable, somebody's going to do it, whether it be Denison or a small company like myself," Houston said.
Don Myers, another director of Consolidated Abaddon, said Utah's uranium reserves are not as rich per ton as Canada's but the low-grade ore is at or near the surface of the ground. Canada's uranium may be 2,400 feet underground, much more costly to extract, "but because the grades are so spectacular, it's definitely worth going after it."
Utah is starting to become "the next hot place" for Canadian miners and junior miners, he said. "Utah seems to be the next big play area."
According to Myers, many Canadian corporations are going into Utah and negotiating with "mom and pop shops."Smaller operations need equipment, he said, and "there's opportunity for corporations like ours to go in there, help fund them for equipment" and split the profit. Meyers said Denison Mines is starting to accept uranium from such operations.