MONTROSE – Mining geologist and economist Pete Winn of Grand Junction told a Montrose audience last week that the numbers don’t support building Energy Fuels’ proposed Piñon Ridge uranium mill in the county’s West End.
“I’m not opposed to uranium mining,” said Winn, who consulted for the industry in Canada and the American West for 30 years. “The question is whether or not building the Piñon Ridge mill is a good idea.”
His conclusion: At current uranium prices, it would not be a good business decision.
The July 18 forum, billed “The Economics of Uranium,” was sponsored by the Uncompahgre Valley Association, the League of Women Voters and Western Colorado Congress.
The proposed Piñon Ridge mill, already approved by the Montrose County Commissioners, was issued a radioactive materials license by the Colorado Department of Public Health and Environment last year.
But Toronto-based Energy Fuels was handed a setback in June when a federal judge, responding to a lawsuit filed by Sheep Mountain Alliance, the San Miguel County environmental group, found that the state had not conducted the required public hearings. Until the hearings transpire, the license is on hold.
The project has always had supporters and detractors: supporters who see another uranium boom coming to the Uravan Belt, and critics who either disparage the nuclear industry or say the numbers don’t add up.
Winn is one of the latter. He drew on Energy Fuels’ own public documents for his financial facts. But first he gave a primer on uranium supply and demand.
We’re not fighting the Cold War any longer, Winn said. The U.S. and Russia used to produce most of the world’s nuclear fuels, but now it’s a global market, with over a dozen countries producing cheap uranium. Two of the biggest, Canada and Australia, are staunch U.S. allies. “We’re still using up our Cold War stockpile,” Winn said, of uranium supplies. “There’s no shortage of supply for the foreseeable future,” he said.
Unlike the 1950s and 60s, when the U.S. government guaranteed a high price, prices now determined on a global market have “plateaued out,” Winn said, at around $50/lb.
He estimated the price would have to climb to about $80/lb. for Energy Fuels to make a profit.
But Energy Fuels’ spokesman Curtis Moore disputed Winn’s assessment.
“Piñon Ridge could make money right now,” Moore said. After the meeting, he explained that the company is anticipating stronger demand – and higher prices – in the future, as new nuclear plants come online worldwide.
According to Winn’s reading of the Energy Fuels prospectus, the company has raised about $25 million from investors, and needs $150 million to build Piñon Ridge. And low uranium prices, relative to production costs, are due to a slowdown in demand.
Since the Fukushima accident following an earthquake and tsunami in Japan in March 2011, a number of nuclear countries, including China, India, Great Britain and Japan, are looking at converting their power plants to a different radioactive fuel, thorium, which is readily available and produces very little waste.
“We have enough thorium to last hundreds of years,” Winn said. (There are major deposits in southeast Colorado, which come bundled, geologically speaking, with rare earth minerals used in smartphones and other modern electronics.)
“The reason thorium hasn’t been developed before is it doesn’t explode; you can’t use it for making bombs,” Winn said.
With future demand uncertain, the Uravan Belt – with its relatively small and low-quality reserves – is not the best place to try to make a go of uranium production, Winn suggested.
That, alongside Energy Fuels’ small size and incomplete financing, Winn said, led to his less-than-optimistic assessment.
From the audience, Montrose County Commissioner Ron Henderson asked if Winn’s bottom line was going to be negative. “Is the end of your talk going to say that uranium mining and milling is not economically viable in the Uravan Belt?”
Winn answered: “At current prices, yes,” at which point, Henderson stood up and walked out.
Sheep Mountain Campaign Coordinator Jennifer Thurston described Energy Fuels as “trying to go from a small, speculative junior miner to a real player.”
But Energy Fuels has acquired the U.S. assets of the much-bigger Canadian company, Denison Mines, which include the only operating uranium mill in the U.S., the White Mesa mill, in Blanding, Utah, and several mining complexes in Utah and Arizona, plus the Sunday Complex of five small mines in the west end of San Miguel County.
Energy Fuels could use the White Mesa mill, currently operating below its capacity of 2,000 tons per day, to process ore from its newly acquired mine properties, Winn said. The Proposed Piñon Ridge mill – a “boutique mill,” Moore called it – is designed to churn out only 500 tons/day.
Audience member Bob Larson, a mining engineer and outdoorsman in Ouray, spoke up. “There are some of us in Colorado who don’t agree with you. There’s another side to this, and I haven’t heard it [from you].”
Of those in the crowd who disagreed with Winn’s assessment, Thurston said, “It’s easy to understand the hopefulness of West Enders. Uranium mining is an important heritage for them, culturally, historically and economically.
“But the numbers just don’t work out.”
As a resident of San Miguel County, I have limited say in this project which could bring some profound effects on my life from a neighboring county. Thus, I have to trust the elected officials in the deciding jurisdiction to do the right thing. But if the childish actions of Mr. Henderson are any indication of the state of open and honest debate in Montrose County, I fear my trust is misplaced.