At the dawn of the atomic age, U.S. government incentives and trade barriers sparked a gold rush for uranium, the chemical element that was fueling the nuclear arms race at the time.
Now, 60 years later, American uranium miners want the government to use similar tools to prevent the collapse of the industry — and the few remaining U.S. companies still producing uranium for the nation’s fleet of nuclear power plants.
The numbers tell the tale. At the height of activity in 1980, U.S. companies produced nearly 44 million tons of uranium concentrate and provided most of the supplies purchased by nuclear power plants. Last year, American miners produced 2.4 million tons and supplied just 7 percent of the uranium bought by domestic plants.
The industry, which once supported nearly 22,000 jobs, now employs just a few hundred people each year.
The story of uranium mining in the United States is little known, but it’s intertwined with some of the defining events of the 20th century: the Cold War, the dawn of nuclear energy, the fall of the Soviet Union and the rise of globalization.
The latest chapter dovetails with the re-emergence of Russia as America’s primary political adversary and a revolution in the U.S. energy industry.
Last month, the U.S. Commerce Department opened an investigation to determine whether the nation’s growing dependence on foreign uranium supplies poses a risk to national security. The outcome of the review could result in the government restoring trade barriers — torn down more than 30 years ago — to ensure U.S. miners remain involved in servicing the nation’s nuclear weapons stockpile, submarines, aircraft carriers and power plants.
The two miners that petitioned Commerce to conduct the review, Energy Fuels and UR-Energy, want the United States to take steps to ensure U.S. producers control 25 percent of the market. They say they can’t compete with subsidized supplies from places like Russia, Kazakhstan and Uzbekistan.
To be sure, nearly half of the uranium used in the United States comes from allies like Canada and Australia. From the moment they lost trade protections, U.S. miners had trouble competing with these foreign supplies.
“One of the main problems beyond the U.S. industry’s control is that the richest and most accessible uranium deposits are not found in the United States. The resources of Canada and Australia have higher uranium content and a lower production cost per unit,” the Commerce Department said in 1989 after concluding a so-called 232 investigation, the same type of review the Trump administration just opened.
That report found imports had indeed hurt domestic miners, but the incoming President George H.W. Bush didn’t take action. Since then, U.S. uranium output has bumped around historic lows, and the question of whether to lend a hand now rests with a president fond of tariffs, angered by trade deficits and eager to bail out the mining industry.
The U.S. uranium mining industry is relatively young. It went through a brief golden age between about 1955 and 1980, beginning when the United States offered generous incentives to shore up its stockpiles of the nuclear weapons fuel during the Cold War.
“It’s been government-sponsored, government-subsidized just since the beginning. Trying to sort that out and find where there’s a free market in uranium — I find that very questionable,” said Luke Danielson, an attorney and minerals consultant who closely follows the uranium industry
In the early days, the government offered a 10-year price guarantee for certain kinds of uranium ore. It also paid out a $10,000 discovery and production bonus for each new source of supplies, which pencils out to roughly $95,000 in today’s dollars.
That set off a gold rush in the nation’s vast Western region.
“It was crazy around this part of the country. Everyone with a jeep and a Geiger counter was out trying to get rich,” said Danielson.
By the 1960s, the program had packed U.S. storehouses so full of uranium stockpiles that the government stopped paying the incentives. However, it left in place rules barring the use of foreign uranium until 1975, when it began to allow a growing percentage of overseas supplies into the market.
That opened the door to high-quality, low-cost supplies from Canada and Australia. By 1987, the United States was importing nearly 15 million pounds of uranium, and domestic output fell by about a third to roughly 13 million pounds.
While competition weighed on U.S. uranium production, the excitement around nuclear energy in the 1970s kept mines busy. However, the American love affair with atomic power proved short-lived. The 1979 meltdown of a reactor at Three Mile Island in Pennsylvania sparked fierce backlash against nuclear energy. Seven years later, the Chernobyl nuclear disaster turned a Ukrainian city into a ghost town.
Utilities were also growing wary of the cost and time required to build and permit nuclear power plants. Fewer reactors were built than originally envisioned in the 80s, depressing demand for uranium. By the time the last wave of facilities came online in 1990, U.S. uranium production was at a 35-year low.
Miners got some good news in 1992, when the Commerce Department determined the Soviet Union had been dumping cheap uranium onto the U.S. market prior to the dissolution of the bloc. The department put restrictions on the supplies, but the relief didn’t last long.
One year later, the United States struck a deal with Russia to buy 500 tons of weapons-grade uranium that would be converted into low-enriched uranium to fuel U.S. nuclear power stations. Over the course of the 20-year Megatons to Megawatts program, the Russian uranium provided about a third of the fuel for U.S. power plants.
“That did have a big impact on our market from production levels,” said Paul Goranson, chief operating officer at Energy Fuels, who characterizes the 90s as a period when “uranium was victim of government policy.”
A wave of deregulation also set in motion the creation of competitive power markets in many parts of the country that would eventually push nuclear power out of power markets.
The decade also saw the government privatize the Department of Energy’s uranium enrichment operations, in the process transferring 45,000 metric tons of uranium to the new company. That flooded the market, according to Goranson.
By the early 2000s, U.S. uranium production was at its lowest in a half century.
Around that time, the former Soviet state Kazakhstan was ramping up uranium mining. In just a few short years, it would become the world’s top uranium producer and the second biggest supplier to the United States.
The Central Asian nation accomplished that feat in large part by exploiting a process called “in situ leaching” increasingly being used to extract uranium.
Along with countries like Niger, Mali and Mongolia, Kazakhstan has an advantage: lax regulations that allow it to process uranium cheaply from in situ leaching, which involves pumping chemicals into uranium reserves and carries serious risks to the environment if it’s not carried out responsibly, said Danielson, who consults developing nations on mining through his company Sustainable Development Strategies Group.
“Those are countries where their environmental institutions are very weak, their legislation is non-existent, so if you’re competing with in situ leaching in essentially low-governance areas of the world it’s going to be really, really hard,” he said.
In the first years of the 21st century, something strange was happening: Uranium prices were soaring. Falling stockpiles and renewed interest in nuclear energy both in the United States and in growing economies like China and India was creating a second gold rush for uranium.
Both Energy Fuels and Ur-Energy, the companies that petitioned for the Commerce Department investigation, got their start during this period. They were formed in Canada, but their mines were located in the United States.
“I would say at that time it was pretty frothy and in Canada particularly, there was just a lot of venture capital entering the uranium space for investment,” Goranson said.
But again, the dream was short lived.
Financial crisis gripped the globe in 2008, and the drop in economic activity weighed on electricity demand. At the same time, U.S. drillers figured out how to unlock natural gas from shale rock, unleashing a torrent of cheap fuel that made U.S. nuclear power less competitive. Nuclear energy faced added pressure as prices for wind and solar power projects fell, especially in the unregulated markets established in the late 90s and early 2000s.
The industry took another hit from government policy in 2009, when the Department of Energy started bartering excess uranium to pay for cleanup at a government enrichment plant.
And then in 2011, the Fukushima nuclear disaster in Japan created a backlash unlike anything seen since Three Mile Island and Chernobyl. In the aftermath, Japan shut down all of its nuclear reactors, and Germany decided to phase out nuclear energy by 2022.
Watch a mining executive discuss the uranium market in 2012 in the wake of the Fukushima disaster
“It’s slowed down the growth of nuclear globally and led to some countries cutting back or ending their nuclear program. Supply was not as quick to react to this huge loss of demand,” said Nima Ashkeboussi, director for fuel cycle programs at industry trade group the Nuclear Energy Institute.
The U.S. nuclear renaissance has also fizzled as flagship projects have turned into costly boondoggles. The venerable Westinghouse Electric Company filed for bankruptcy last year under the weight of billions of dollars in losses tied to its troubled nuclear power plant projects in Georgia and South Carolina.
“There’s such a glut of inventory in the market that it’s just not profitable for some of the mines to produce, so the price has just really plummeted as a result of that,” said Sean Davis, a research analyst at IHS Markit who tracks the chemicals used in uranium mining.
Since their peak in 2007, uranium prices have crashed from nearly $140 per pound to $20-$25.
That has heaped pressure not just on U.S. miners, but on Canadian companies as well. Canadian mining giant Cameco announced last month that it was shutting down the world’s biggest uranium mine indefinitely. The company had initially anticipated it would shutter the mine for 10 months while it waited for the market to recover.
Energy Fuels and Ur-Energy warn that with American allies under pressure, too, U.S. nuclear power plants could find themselves increasingly reliant on uranium from Russia and other countries with state-controlled industries. This comes at a time when the United States has imposed energy sanctions on Russia over its annexation of Crimea and its alleged meddling in the 2016 presidential election.
The potential collapse of the U.S. industry also raises questions for the military, which relies on stockpiles of weapons-grade uranium to fuel its nuclear submarines and aircraft carriers and to service its atomic arsenal. The U.S. Energy Department estimates that the military won’t need new supplies until 2060.
However, John Cash, vice president of regulatory affairs at Ur-Energy, says that’s a moving target. As mines shut down, the industry is losing the technical expertise it will need if and when the Defense Department comes knocking, he said.
“The industry, at the rate we’re going, we’re not going to be there to respond to it,” Cash said.
