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Beyond Fukushima: Uranium set to Boom

Local workers drill an exploratory well for Black Range Minerals at Taylor Ranch in western Fremont County. Cyprus Mines Corp. received permits to mine and mill uranium at the site in 1981 and planned to operate a 3,000-ton-per-day uranium mill near the butte in the background. Black Range officials have said they plan to use an ablation process to concentrate the uranium ore before shipping it offsite for milling into yellowcake.

Local workers drill an exploratory well for Black Range Minerals at Taylor Ranch in western Fremont County. Cyprus Mines Corp. received permits to mine and mill uranium at the site in 1981 and planned to operate a 3,000-ton-per-day uranium mill near the butte in the background. Black Range officials have said they plan to use an ablation process to concentrate the uranium ore before shipping it offsite for milling into yellowcake.

photo by Joe Stone

With Japan’s Fukushima nuclear crisis pushing uranium prices to two-year lows, uranium might not seem like a hot commodity right now, but market analysts like David Sadowski of Raymond James argues just the opposite. It’s a simple matter of supply and demand, and Sadowski believes, “Prices will climb
quickly once they’re set in motion.”

On the demand side, 435 nuclear reactors generate electricity around the world. Data from the World Nuclear Association indicate sixty-one new reactors are under construction, and nine more reactors are planned for construction than before the Fukushima accident. Based on these and other data, Sadowski expects a six-fold increase in installed nuclear capacity by the end of the decade.

On the supply side, surplus U.S. government stockpiles—which supply fifty million pounds of uranium a year—are expected to drop by fifty percent. Additionally, the Russian Highly Enriched Uranium Agreement, which provides reactor fuel from “down-blended” nuclear warheads, will expire this year, further reducing global uranium supplies by thirteen percent.

The United States generates more electricity from nuclear power than any other country in the world, and since we import 85 percent of the uranium used to fuel our power plants, dwindling supplies and growing demand will definitely affect the U.S. market. Those effects are already being felt in Colorado, where price forecasts have mineral companies eyeing a return to profitable mining operations.

One of those companies, Black Range Minerals Colorado, has acquired the rights to 13,500 acres in the Tallahassee Creek Uranium District, encompassing “arguably the largest uranium deposit in the country,” according to Rod Grebb, Black Range vice president of regulatory affairs. Grebb says the company’s mineral rights encompass more than 90 million pounds of triuranium octoxide ore (U3O8) trapped in sandstone 800-900 feet beneath the surface.

Following discovery of the deposit in the late seventies, Cyprus Mines Corp. identified several sites with higher concentrations of ore. In 1981, Cyprus obtained permits to operate an open-pit mine and uranium mill at one of those sites—the 40-million-pound Hansen deposit. But the mine and mill never materialized because of the Three Mile Island incident. In the aftermath, more than 300 U.S. nuclear reactors were put on hold. The reactor cancellations reduced demand for uranium and prices dropped.

With worldwide demand now growing and supplies dwindling, uranium prices will increase. Once prices reach $70 a pound, Grebb says, the Hansen deposit will become profitable to mine. He points to the $6.5 million that Black Range has already invested in Fremont County as evidence of the company’s optimism about the uranium market. Investment firms like JPMorgan are also bullish on uranium, forecasting prices of $80 a pound by 2014.

Initial work at Hansen by Black Range includes a scoping study that calls for an innovative borehole mining process to be used at the site. The process uses standard drilling equipment to reach the ore zone then employs high-pressure water jets to break apart ore-bearing sandstone, which is brought to the surface in slurry. Specially designed ablation equipment then directs slurry jets into a central area where they impact, breaking the uranium ore loose from the sandstone. The remaining sandstone and water are subjected to an ion treatment, mixed with cement and then pumped back underground to fill the voided area. Workers then move the drilling rig and repeat the process.

Black Range is currently in the permitting phase, and Grebb, who has worked in the uranium industry for more than 30 years, says he does not foresee any problems. “The borehole mining process we plan to use is very low impact compared to traditional hard-rock and open-pit mining.”