MISSION: Southwest Research and Information Center is a multi-cultural organization working to promote the health of people and communities, protect natural resources, ensure citizen participation, and secure environmental and social justice now and for future generations

The New U Boom: Speculation or Serious Development?

The first uranium development “boom” in the U.S. began just after World War II and ended with the collapse of the uranium market in 1980-81. During those three decades, millions of acres of land in the Western U.S., including and especially in northwestern New Mexico, were leased or sold for uranium exploration by federal, state and even tribal governments. Big Oil — the Chevrons, Conocos, Gulfs, Exxons, Kerr-McGees, Mobils, Phillipses, SOHIOs and Texacos of the world — joined the hunt for uranium, first for the military’s nuclear weapons program and later, beginning in the late 1960s, for fuel for nuclear power plants. Hundreds of companies delineated uranium ore mineralization with massive drilling programs and intensive mine development. Nearly 350 million pounds of uranium† eventually were recovered from sedimentary rocks in what became known as the Grants Mineral Belt — a 120-mile-long, 50-mile-wide swath of arid and semiarid lands stretching from just west of Albuquerque to the Arizona-New Mexico state line near Window Rock that would become the most prolific uranium-producing region in the U.S. On whole, during the boom period of the 1970s, uranium was produced from mines in more than a dozen states, from Washington and South Dakota on the north to Texas and Arizona on the south.

Along the way, though, government and industry gave little attention to the pervasive, irreversible, and now well-documented impacts of this massive development. Government and industry were at best ignorant, but most often arrogantly dismissive, of the emerging epidemic of lung cancer and respiratory disease among underground miners; the wide assault on the region’s land, water and air quality that continues to command public concern and regulatory attention today; the abandonment of tens of thousands of drill holes, thousands of mines, and several dozen mills with little or no reclamation; and the economic dislocation of communities that had given up traditional, agricultural-based economies for the prospects of massive infusions of cash and employment from uranium development. The “bust” that followed the 35-year “boom” is by now a quarter-century old itself, and the communities that once hosted uranium mining, often with open arms, are now hard-pressed to point to anything, other than a few paved roads, that was sustainable from that era.

The conventional wisdom is that the bottom fell out of the uranium market in the early 1980s (the spot market price dropped from $43.50/pound in mid-1979 to about $17 in 1981) because of the Three Mile Island reactor meltdown and the concomitant collapse of utility and investor confidence in nuclear power. (Indeed, there still hasn’t been a new reactor ordered in the U.S. since 1978.) But the truth is that the uranium industry, intoxicated by the prospect of huge profits from the sale of nuclear fuel, had overproduced uranium, which, combined with utility and government stockpiles, created a world glut that essentially lasted for another two decades. Big Oil and the multinational mining conglomerates abandoned uranium for other more lucrative commodities, selling their expansive mineral data and uranium-rich properties that had not been developed into mines to much smaller companies run by entrepreneurial geologists who could not be dissuaded from dreams of finding the pot of yellowcake at the end of the rainbow.

If the market is any indication, those dreams were not ill-founded. Having bottomed out at $7/pound as late as 2000, uranium spot market prices reached record levels in June, pumped up by declining utility inventories, government policies that are restricting, not promoting, use of “secondary” sources of uranium (see Paul Robinson’s companion article), legislation passed by Congress in 2005 that authorizes massive subsidies to the private sector to build new nuclear power plants, and an almost religious, but unscientific, view that nuclear power is an answer to climate change. The current (September 11) price of $52.00 per pound has investment advisors crowing about uranium being the newest “hot” commodity, and industry executives are now rushing to join the development fray not unlike how their predecessors acted in the 1970s when the market price jumped from $8 a pound in 1973 to more than $43 a pound in early 1979. The rest is history, as they say, but from what we read in the trade press and on Internet investment sites, uranium’s history is either too old or too new to resonate with today’s profit-first, ask-important-questions-later crowd.

Notwithstanding the nearly sevenfold increase in uranium prices in the last six years, the new “boom” in uranium exploration and development in much of the West, and particularly in northwestern New Mexico in and around Navajo communities, appears to be driven in large part by the existence of uranium mineralization data that many “junior” companies have acquired from the previous generation of mining companies. Based on an extensive examination of publicly available reports, company publications, and government sources, SRIC has determined that at least 11 companies have proposed new uranium mines, undertaken significant uranium exploration projects, announced “acquisition” of uranium-bearing properties in the Grants Mineral Belt (GMB), or initiated plans to reopen and develop previously approved mines and mills. Virtually all of this activity is founded on mineral exploration results from the 1950s-1970s. (See Table 1.) Only one company, Hydro Resources, Inc. (HRI), has advanced its proposed in situ leach (ISL) mines in two Navajo communities through federal licensing. But all of the companies expressing interest in developing GMB uranium have several traits in common:

• They are pursuing development of properties that were first explored in the 1950s, ’60s and ’70s by the likes of Homestake Mining, Kerr-McGee Corp., Pathfinder Mines, Phillips Petroleum and United Nuclear Corp. — none of which are still in the uranium business, except for cleaning up old mine and mill sites.
• At least six of the companies are pursuing development of properties located in as many as 20 chapters of the Navajo Nation, but the properties themselves are on located on federal (U.S. Bureau of Land Management (BLM) and U.S. Forest Service), state or private lands — a practice that is widely viewed by Navajo Nation officials as intended to circumvent the Nation’s 2005 legislative ban on uranium mining and processing in “Navajo Indian Country.”
• Five of the companies are developing properties on private and Forest Service lands on or at the base of Mt. Taylor, or Tsoodzil, the southernmost of the Four Sacred Mountains of the Diné.
• About half of the companies have no experience actually mining, but have hired former mining industry technicians and executives to guide mineral acquisition and exploration programs; these are the junior or “start-up” companies that, with a few notable exceptions, now characterize the uranium industry (see Table 1 below).
• A few, like Laramide Resources, Inc., and Trans America Industries, Ltd., are involved in gold mining projects in other states and countries.
• About half are Canadian-based companies.

TABLE 1. Companies Pursuing Uranium Development in Northwestern New Mexico ‡
Company	Former or Other Name	Corporate Office Location	Selected Navajo and New Mexico Projects	Other Mining Properties / Locations	Has Actual Mining Experience?
Energy Metals Corp.	Quincy Energy Corp.	Vancouver, BC, Canada	Nose Rock	Uranium in AZ, CO, UT, TX, WY	Recently acquired an existing ISL mine in TX
Hydro Resources, Inc.	HRI, Inc.; subsidiary of Uranium Resources, Inc.	Albuquerque, NM	Church Rock, Crownpoint, Roca Honda	Uranium in south TX	HRI: None; URI: Yes
Laramide Resources, Inc.		Toronto, Ontario, Canada	La Jara Mesa (Mt. Taylor)	Gold in Queensland, Australia; uranium in SE Utah	Yes, but in gold only
Neutron Energy, Inc.		Phoenix, AZ	Grants area (Mt. Taylor)		None
Rio Grande Resources	Subsidiary of General Atomics Corp.	Albuquerque, NM, and San Diego, CA	Mt. Taylor Mine and Mill	Uranium in TX	Yes
Strathmore Minerals Corp.		Kelowna, British Columbia, Canada	Roca Honda, Church Rock Ram Claims	Uranium in Saskatchewan	None
Trans America Industries, Ltd.		Vancouver, BC, Canada	Joint venture w/ NEI on Grants area projects	Gold in China, iodine in Chile	Yes
Urex Energy Corp.	Lakefield Ventures, Inc.	Reno, NV	La Jara Mesa (Mt. Taylor)	Rio Chubut, Patagonia, Argentina	None
Western Uranium Corp.	Western Energy Development Corp.	Vancouver, British Columbia, Canada	Treeline Project on La Jara Mesa (Mt. Taylor)	Gold in NV	None

That companies like Laramide Resources, Inc., and Western Uranium Corp. are serious about their intentions to mine cannot be denied: they have or are actively conducting exploration to “prove up” previously located uranium mineralization to meet current U.S. and Canadian laws that require mining companies to make available to potential investors mineralization reports prepared by qualified geologists or mineral scientists. But on whole, are these companies really serious about producing uranium, or are they simply raising capital for exploration programs to take advantage of the high market prices in hopes of reselling the mineral estates to other firms at a profit?

Some companies admit that their business of uranium exploration and development is “highly speculative.” For instance, in an August quarterly report to the U.S. Securities and Exchange Commission (SEC), Urex Energy Corp. of Reno, Nevada, stated flatly, “Because of the early stage of development and the nature of our business, our securities are considered highly speculative.” Urex, which says it intends to begin an exploration program on an unidentified tract on La Jara Mesa north of Grants, N.M., on the west flank of Mt. Taylor in the second half of 2006, bluntly described the substantial risk that investors in mining and mineral development companies face:

“Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting from not only the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by our company may be affected by numerous factors which are beyond the control of our company and which cannot be accurately predicted . . .”

Speculative or not, the current interest in uranium development in the Grants Minerals Belt in general and in Navajo communities in particular is being taken seriously by local communities, grass-roots groups, and tribal, state and federal regulatory agencies.

Church Rock Chapter of the Navajo Nation, which has witnessed the boom-and-bust cycle and persistent environmental contamination from past uranium development (see, Voices, Vol. 6, No. 3 and Vol. 7, No. 1), is taking new uranium mining proposals very seriously. The Chapter not only has adopted three resolutions opposing HRI’s proposed ISL mines, but recently asked the Navajo Nation Department of Justice (NNDOJ) to investigate plans by Strathmore Minerals, Corp. (SMC), to explore for uranium on a tract of BLM land located inside the chapter’s boundaries. The Chapter noted that Strathmore, a British Columbia-based firm, opened a regional office in Santa Fe, N.M., in 2005, and issued press releases in February indicating that it was “on schedule” for permitting an ISL mine on its Church Rock property. The Chapter said such mining would appear to violate the Diné Natural Resources Protection Act (DNRPA), the law enacted by the Navajo Nation Council and signed by President Joe Shirley, Jr., in April 2005 that prohibits uranium mining by an means and uranium processing anywhere in Navajo Indian Country. (See Voices, Vol. 6, No. 2, or visit www.sric.org to read the legislation.)

In response, NNDOJ lawyers told Church Rock officials in April that they would doing everything in their power “to make sure that the . . . ban on uranium mining and processing on Navajo lands is enforced.” Later, on June 30, Navajo Nation Attorney General Louis Denetsosie wrote separate letters to Strathmore and HRI echoing their commitment to Church Rock. In his letter to Strathmore Chairman and CEO David Miller, Denetsosie said,

“The DNRPA reflects the position of the Navajo Nation Council and Executive Branch that uranium mining and processing contravenes Navajo public policy, a position based on decades of human suffering and environmental degradation in the Navajo Nation caused by such activities. The Navajo Nation intends to use all lawful and appropriate means within its power to enforce the DNRPA and to ensure that parties do not enter Navajo Indian Country for any purposes in any way connected with any activity relating to uranium mining and processing.”

The letter went on to request that Strathmore provide information on how it intended to access its federal mineral estate. Navajo Nation officials said that Strathmore has not responded to the letter in writing, but has made verbal contact with tribal officials. Coincidentally or not, SMC on July 14 withdrew an application for a “minimal impact exploration permit” it had filed with the New Mexico Mining and Minerals Division (NMMMD) in June, seeking permission to begin the exploration program on the BLM tract in Church Rock. BLM officials in Albuquerque told SRIC that their understanding was that Strathmore withdrew the application because it wanted more time to respond to questions raised by NMMMD, not because of concerns raised by the Navajo Attorney General.

Denetsosie’s letter to HRI was more to the point. Knowing that HRI, a wholly owned subsidiary of the Texas-based Uranium Resources, Inc. (URI), had been pursuing state and federal permitting for its proposed Church Rock and Crownpoint ISL mines since 1988, and in specific instances had opposed federal and tribal jurisdiction over its proposed mining operations in Church Rock, Denetsosie reminded URI Chairman and CEO Paul Willmott that “Church Rock Chapter is within the jurisdiction of the Navajo Nation, as is the Navajo Reservation proper and much of the rest of the Eastern Navajo Agency . . . in northwest New Mexico. The DNRPA prohibits all uranium mining and processing within this territory.”

As of mid-September, HRI had not replied to Denetsosie’s letter, NNDOJ officials said. This lack of response is typical not only of HRI and its parent firm, URI, but also of most of the companies showing interest in developing uranium resources in the off-reservation, “checkerboard” area of northwestern New Mexico where Indian lands are interspersed with federal, state and private lands — a remnant of the Federal Government’s expropriation and opening of traditional Diné lands to non-Indian settlers after 1848. The firms generally do not reveal to stockholders, investors or the general public that their uranium properties are located in dependent Navajo communities or are on lands that are sacred to the Diné people and many of their native neighbors, including the Acoma and Laguna Pueblos. Energy Metals Corp. (EMC), for instance, notes on its web site that “none of the leases” for its Nose Rock Project property “are on the Navajo Indian Reservation.” EMC, which earlier this year acquired Quincy Energy Corp. and all of its uranium properties in the Eastern Navajo Agency, fails to note that the Nose Rose mine, which was developed but never completed by Phillips Petroleum in the early 1980s, is located in L Becenti Chapter of the Navajo Nation and surrounded by Navajo tribal trust and allotted lands. Neither does EMC nor any of the other companies pursuing projects in Navajo Country acknowledge enactment of the DNRPA.

With spot market prices now topping the $50/pound level, even bigger companies are sounding serious about developing large-scale, conventional underground mines and mills. Rio Grande Resources Corp. (RGRC), for instance, a unit of the nuclear giant General Atomics, has applied to the New Mexico Environment Department to renew previously approved groundwater discharge permits for its Mt. Taylor Mine and associated 4,000-ton-per-day uranium mill. Operated between 1984 and 1990 by Chevron Resources, the 3,300-foot-deep Mt. Taylor Mine is the deepest underground mine in the U.S. containing an estimated 100 million pounds of yellowcake. Its associated mill and tailings disposal facility were approved by NMED’s predecessor agency in 1981, but was never built. If RGRC goes forward with the mill project, it would also be required to obtain a source materials license from the U.S. Nuclear Regulatory Commission. Although the Mt. Taylor Mine and Mill are not in a Navajo Nation chapter, they are located at the base of the northern flank of Mt. Taylor, and Diné and Pueblo activists have indicated they intend to oppose the project on the grounds of preserving sites sacred to Native Peoples. RGRC does not disclose on its web site (http://www.ga.com/riogrande.php) the fact that Mt. Taylor holds spiritual significance for the Indigenous communities that surround the mountain.

Another measure of the seriousness of companies involved in the new uranium boom is the degree to which they are willing to pay communities for the right to explore and develop local uranium resources. Neutron Energy, Inc., a Phoenix-based firm engaged in joint mining ventures with the Vancouver-based multinational Trans America Industries, Ltd., earlier this year offered heirs of the Cebolleta Land Grant $1 million to sign off on a 20-year uranium lease. Uranium mining and its impacts are not new to the residents of Cebolleta, located about 50 miles west of Albuquerque and adjacent to Laguna Pueblo, the home of the now-reclaimed Jackpile Mine, which once was the largest open-pit uranium mine in the world when operated by Anaconda Corp. between 1953 and 1982. The Land Grant already hosts two open-pit mines and an underground mine that were abandoned in the early 1980s, but are only now being studied for reclamation by their former operators, United Nuclear Corp. and SOHIO Western Mining Co., respectively. Cebolleta is also home to the L-Bar Uranium Mill, which is now closed and reclaimed after operating between 1975 and 1983. Residents of the grant are largely Hispanic descendants of the original Spanish settlers, of low-to-moderate income and lacking employment. Predictably, some heirs are supportive of the proposed lease for its potential economic benefits; others are opposed because of the negative impacts of past uranium mining in the area. As of mid-August, the heirs had not made a decision on NEI’s offer.

The new uranium boom is not confined to Navajo, Pueblo, land grant or New Mexico communities; it stretches from Texas to Wyoming, where uranium ISL operations have continued through the recent market downturn. Most of the companies eyeing uranium properties in New Mexico have also acquired leases and lands in other states, from South Dakota and Colorado and from Utah to Arizona. Companies in Utah and Colorado are talking about reopening underground mines in the Arizona Strip north of the Grand Canyon and in the uranium-rich sediments of the Paradox Basin in southeastern Utah-southwestern Colorado. That capital-intensive underground mining, and not the cheaper ISL mining method, is being given serious consideration by some companies speaks loudly about the industry’s confidence that the current high price for uranium will be sustained, if not substantially increased, in the coming years.

Because the new boom is so widespread, grass-roots organizations and local communities are beginning to organize to resist another era of adverse environmental impacts, health threats, economic fluctuations, and attacks on traditional practices and Native religion. They also fully expect to find that industry’s new promises of local benefits from “environmentally benign” mining — the industry’s euphemism for in situ recovery — will be broken just as easily as the promises made in the 1950s, ’60s and ’70s. Potential impacts from new mining were high on the list of topics at the Indigenous Environmental Network’s annual gathering in Minnesota in July. The Western Mining Action Network, an association of U.S. and Canadian community groups and organizations that work on mining impacts, is holding its annual meeting and strategy session at Acoma Pueblo in September, and response to the new boom is high on the agenda.

Activists and groups from throughout the region and the world will be gathering in Window Rock, Ariz., on November 30 to December 2 for the Indigenous World Uranium Summit, a conference intended to bring together native people impacted by uranium mining and nuclear waste disposal for information exchanges and strategy development while recognizing and honoring the Navajo Nation for its historic legislation banning uranium mining and processing. (More information on this gathering will be posted soon on the SRIC web site.) The Summit’s goal is to generate and distribute a declaration of indigenous peoples’ responses to both existing mining in Canada, Australia, Kazhakstan and Namibia and proposed new mining in the U.S. and India. Perhaps the real “boom” of the coming years will be the voices of Native people resisting new uranium mining.

Trouble in U-ville Even though the recent rise in uranium prices allowed URI to commence uranium production from its Vasquez ISL Mine in Duvall County, Texas, not all news reported by the company in recent SEC filings was rosy. First, production at Vasquez was lower than anticipated and delayed by the lack of drill rigs to develop new well fields. Second, after announcing that the company had entered a proposed joint venture with Itochu Corporation of Japan in which Itochu, the world’s ninth largest corporation, would fund all $32 million in development costs for HRI’s Church Rock ISL mines, Navajo Nation President Joe Shirley, Jr., rifled off a letter to Itochu’s CEO recommending that the company reconsider its deal with URI in light of the Navajo Nation’s determination to enforce the DNRPA. And third, URI disclosed that the company, one of its subcontractors, and Richard Van Horn, its senior VP for Operations, had been indicted by a state district court in Duvall County for alleged felony theft of dirt (actually, caliche) and water from a property through which URI was accessing its Vasquez leases. URI said it compensated the property owner for the value of the dirt and water and that it intends “to vigorously defend the [theft] charges” on behalf of itself and Van Horn.

---

†In this article, the word “uranium,” and its synonyms, “yellowcake” and “uranium oxide,” or U3O8, refers to the refined product of the processing of uranium ore. Uranium “mining” is the act of extracting uranium ore from the earth by open pit, underground, or leaching methods. Uranium “milling” is the processing or refining of ore to remove and concentrate uranium for later conversion, enrichment and fabrication into fuel for nuclear reactors.

‡A more detailed list of the actual locations, land statuses, and mineralization of properties controlled by these companies can be viewed at www.sric.org/Uranium.