DOUGLAS, Wyo. (AP) - Watching a computer screen, Pat Drummond monitors a complex system of pipelines and vats that produce big drums of uranium, weighing more than 300 kilograms, 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 company (TSX:CCO) that owns the last two active uranium mines in the United States, is stepping up exploration and production. The Saskatoon-based company holds a 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 per cent of America's electricity comes from steam created by nuclear fission.
Yellowcake prices were $7.10 US a 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 the Second World War, 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 administration of former president Bill Clinton privatized a government-owned uranium-enrichment program, and about 25 million kilograms 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, Ga. Exploration also tapered off.
Wyoming once had eight uranium operations, producing more than five million kilos per year. Now it has one.
After the bottom fell out, the state 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 40 million kilos a year, while consumption is up to 75 million kilos 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.
The 103 reactors in the U.S. 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 about 20 million kilos, according to the U.S. Energy Information Administration.
By 1990, U.S. production had dropped to about four million kilos. Last year, it was less than one million, most coming from the Smith Ranch-Highland mine north of Douglas, Wyo., and Cameco's other active mine, the Crow Butte operation near Crawford, Neb.
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."
© The Canadian Press 2004