Wyoming missed out on last uranium boom, but planning for the future

May 31, 2013

Uranium yellowcake powder
Uranium yellowcake powder

Wyoming Public Radio has for years reported that the state is on the verge of a uranium boom. It turns out the state missed the peak of that boom, and is now betting on slower, more conservative growth. Wyoming Public Radio’s Irina Zhorov reports. 

IRINA ZHOROV: At a Legislative Minerals Committee meeting a couple of weeks ago in Gillette, the President of Cameco Resources, Paul Goranson, testified about the uranium industry in Wyoming. What he said was a bit of a downer for the committee; he said uranium prices plateaued around ten dollars per pound for years before they started going back up in 2004. Prices peaked at almost 140 dollars around 2007. But Wyoming, said Goranson, missed that boom.

PAUL GORANSON: The most recent peak is past. But we may have another one in the future, I just don’t know. But yes, it missed the peak, and so the other companies that got up and running were able to take advantage of that peak and those happened in other states.

ZHOROV: Right now, prices for uranium are just over an ultimately unimpressive $40.

GORANSON: Several of the companies were expecting to see growth of probably another 50% of the production total over that period of time, if not more. And the reason why that didn’t occur is because of being caught up in regulatory timeline. 

ZHOROV: Goranson says operators in Wyoming missed out on the high prices because they couldn’t get their mine permits fast enough. Goranson says regulatory agencies were not prepared for the spike in new activity and it showed. At the meeting, most of the blame was attributed to the federal agencies, like the Nuclear Regulatory Commission, but Wyoming’s Department of Environmental Quality was also understaffed.

David Miller has long been affiliated with the uranium industry in Wyoming. He says the permitting delays made planning hard for producers.

DAVID MILLER: The problem was companies were anticipating getting permits in 3 or 4 years, they designed their fundraising programs around that, they go to the marketplace to raise money expecting a return on their investment somewhere 4, 5, or 6 years down the road. They could also lock in contracts at the higher uranium prices. But the uncertainty with the regulators made it impossible to predict when you would be able to go into production.   

ZHOROV: The permitting process is taking double what was anticipated. And since uranium sales normally work through long-term contracts, up to 10 years, it was hard to negotiate those at the higher prices not knowing when the producers would actually start delivering the product. 

MILLER: It’s not a simple thing, a buy and sell on the spot market, no one tries to do that. That’s not a way to survive very well.

ZHOROV: So what did Wyoming miss out on when it missed the boom?

There’s a 4-percent severance tax, an ad valorem tax, property taxes. There’s the jobs that would have come with the mines. One study estimated that for every uranium mining job there is another 1.7 jobs scattered throughout the state with an average income of $56,000. The same study said that for every five drums of yellowcake produced in the state, there was one job created and $9,000 in state taxes and royalties paid.

Miller says that a decade ago Kazakhstan was producing as much uranium as Wyoming, about 4 million pounds per year. But it concentrated its resources to drive production when prices soared and now Kazakhstan produces nearly 40% of the world’s uranium. State Senator Eli Bebout says it’s the same companies working in Wyoming as in Kazakhstan. 

ELI BEBOUT: These international mining companies, if they have an opportunity to invest their capital someplace where they can get responsible, predictable time elements in terms of when they can put a mine or an oil and gas well into production, they’re going to go where they know there’s predictability, and those monies and that capital will be taken out of our state and spent someplace else, possibly even out of our country, and that’s going on as well.

ZHOROV: Meanwhile, companies like Cameco are being more conservative, tempering their growth or deferring it, and looking at restructuring how they operate in order to save money.

Wyoming hopes to turn things around by undergoing a study to evaluate the pros and cons of becoming an agreement state. Right now both the federal and state government have permit processes that operators must complete; if it becomes an agreement state that will be streamlined into one, state process, one that could perhaps react quicker to market trends. While the transition would be expensive for the state, Cameco’s Goranson says it would be good for industry.

GORANSON: The beauty of having a state agreement program, one, the state takes over the program, but also our regulators, we’re based in Cheyenne, it’s only 4 blocks away from our office. So there’s instant contact, instant communication, you don’t get wrapped around the federal state jurisdiction issue, it all becomes one jurisdiction.     

ZHOROV: A first draft of that study should be available in July.

And while uranium producers did miss their chance to make good deals while the prices were hot, prices are expected to rise steadily in the near future and mines which started their permitting process years ago will come online. Goranson is the first to admit that you have to stay optimistic.

GORANSON: I’ve been through these cycles enough times that you get a feel that it’s going to get better. But you got to take the long view, you can’t take the short term view, otherwise you’d’ be putting your head in your hands. 

ZHOROV: Cameco’s North Butte mine finally got its permits and started operating this month.