On a recent morning, the Nichols Ranch mine was quietly leaching uranium from rock formations buried hundreds of feet beneath the surface of the Powder River Basin.
A handful of employees slept in a trailer outside the plant after their 12-hour shifts as mine manager Bernard Bonifas pulled up at the main office to oversee operations. The haze from recent forest fires hid the dark ridge of the Big Horn Mountains on the western horizon.
On the surface, uranium mining at Nichols Ranch is surprisingly simple. Hundreds of little boxes pepper the hills about 70 miles north of Casper. Under each of those boxes, a solution is being pumped down into the rock to dissolve uranium, a dense metal that when enriched packs an enormous amount of power. A uranium-rich solution is pumped back to the surface and carried to a small central plant.
Producers from the U.S. will tout the value of operations like those at Nichols Ranch, which operators say can be economical even when prices are low — though not as low as they’ve been over the past year.
Economics are everything for Wyoming’s uranium companies as they wait out the downturn.
The Wyoming Mining Association recently approached lawmakers requesting a tax break until prices rise. Without it, they couldn’t start to build up production, and they would be faced with more layoffs, companies argued. That request was denied.
Nichols Ranch, owned by Energy Fuels, went from 38 employees about a year and a half ago to 27 today, said Paul Goranson, executive vice president of in situ recovery operations, as he toured the mine with Bonifas.
Low prices in the uranium market have driven down production, and the mine is just operating to fill contracts and keep the infrastructure running, Goranson said. He’s been in the industry for three decades.
The hopeful — including Goranson — predict a rise within the next three years thanks to new nuclear power plants in Asia that will increase demand, while production hopefully slows from operations in places like Kazakhstan. More modest expectations see the price coming back with the increased demand within five years.
Wyoming likely can’t tap much of that international market. It’s simply too hard to get uranium overseas.
“When it comes to nuclear material, it’s very difficult to export it,” Goranson said. “Your primary market is China, India, and even though Russia can send a lot of uranium to us … we have zero access to their market. It’s all one way.”
But increased demand and lower production worldwide means higher prices, and that’s what Wyoming companies need.
They are filling contracts they made years ago, with no new ones on the horizon.
Electricity demands have changed and continue to evolve, with cheap renewable power pulsing onto a grid built to sustain base load power. Like coal plants, nuclear power operations can’t ramp up and down as other sources of power come on and off the electricity grid.
And natural gas, one of Wyoming’s core industries, continues to take more of the electricity sector. It’s cheap and plentiful, and it’s changed the way power companies buy up fuel, Goranson said.
Building up stockpiles of uranium isn’t the business plan for power companies anymore, Goranson said.
“Used to be 80 percent of uranium was bought long-term and 20 percent spot market. We expect it will be 50-50 in the next five years,” he said. “I would say that in general practice, everybody’s building around the assumption that we won’t be able to rely on long-term contracts.”
Some are taking advantage of the downturn to build up. Two years ago the previous owner of Nichols Ranch, Uranerz, merged with Energy Fuels. The former CEO just launched a new uranium company to restart some brownfield operations in the state. By the time initial exploration has taken place, the market should be on the rise, CEO Glen Catchpole told the Star-Tribune recently.
Back at the plant on Nichols Ranch, a batch of uranium solution was being treated to leach out the energy-soaked metal. The resulting fine slurry would be trucked down to Utah, dried and processed into the saffron powder known as yellowcake to be sold.
Though prices are weak and companies are strained, business goes on. And the veterans of the uranium industry are looking for better day in years to come for Wyoming.
Source: Energy Journal | trib.com