Uranium Boom Part II

By: Elliot_H_Gue

Charles Steen was born in Caddo, Texas in 1919. He went on to study at John Tarleton Agricultural College in Stephenville and in 1940 transferred to the Texas College of Mines and Metallurgy at El Paso, receiving a bachelor's degree in geology in 1943. Ineligible for the draft because of his poor eyesight, Steen spent World War II working as a geologist in Bolivia and Peru. Returning to the US in 1945, he married and took a job doing field work for the Standard Oil Company of Indiana .

Down on his luck after losing his job, Steen read an article in the December 1949 issue of the Engineering and Mining Journal which discussed how the US federal government had issued incentives for prospectors to locate domestic supplies of uranium.

As part of the Atomic Energy Act of 1946, the US Atomic Energy Commission had the authority to withdraw lands from the private sector in order to examine them as possible sites for uranium mining. During World War II, the Manhattan Project received most of its uranium from foreign sources in Canada and the Belgian Congo.

However, it also received some from vanadium miners in the American Southwest where uranium was often a by-product of mining (before the first use of the atomic bomb, uranium wasn't seen as a terribly valuable metal).

As the Soviet Union was reportedly seizing uranium mines in Czechoslovakia and East Germany at the beginning of the Cold War and running them with slave labor consisting of political prisoners, there was anxiety throughout the federal government that the US wouldn't have enough uranium for its budding nuclear weapons program. A domestic supply of uranium would enable the government to maintain a nuclear self-sufficiency with control of all aspects of the nuclear fuel cycle.

Despite the fact that his three sons were all less than four-years-old, and his wife was expecting a fourth child, Steen borrowed $1,000 from his mother and headed for the Colorado Plateau determined to strike it rich. He couldn't afford the standard equipment used by uranium prospectors such as the Geiger counter, which could detect sources of radiation in ore. Instead, he used a secondhand diamond drill rig and his geologic training for his prospecting.

At the time, each individual prospector had his own idiosyncratic theory on where to find uranium. The uranium industry was composed primarily of individual prospectors and geologists who would attempt to find a large claim and either mine it for themselves or for a large company (such as Union Carbide ) which would then transport the ore from the mine to the uranium mill where it could be converted into yellowcake. Steen's theory on uranium deposits was that they would collect in anticlinal structures in the same manner as would oil. Others on the Plateau dismissed the theory as "Steen's folly."

After Steen's fourth child was born, he moved his family into a small trailer at Dove Creek, Colorado, and then later into a tarpaper shack near Cisco, Utah. He fed them on poached venison and cereal--it was a highly marginalized state of existence that lasted for two years. But on July 6, 1952, Steen hit it big--he found a massive, relatively highly-enriched uranium deposit in the Big Indian Wash of Lisbon Valley, southeast of Moab, Utah. He named it the "Mi Vida" mine (My Life), and it was the first big strike of the uranium boom. Steen made millions off his claims, and provoked a "uranium rush" of prospectors into the Four Corners region, similar to the Gold Rush of the 1850s in California.

In Moab, Steen built a $250,000 hilltop mansion--to replace his tarpaper shack--with a swimming pool, greenhouse and servants' quarters. He formed a number of companies to continue his uranium work, including the Utex Exploration Co , Moab Drilling Co , Mi Vida Co , Big Indian Mines and Uranium Reduction Co .

He made his wealth known by inviting the entire population of Moab to annual parties in a local airport hangar, having his original and worn prospecting boots bronzed and flying to Salt Lake City in his private plane for weekly Rumba lessons. In his later years, Steen was elected to the Utah State Senate and became a philanthropist, donating money for a new hospital in Moab and giving land for churches and schools.

It's Deja Vous All Over Again

The first Western uranium boom answered a call in 1948 for domestic uranium stockpiles for atomic bombs, making millionaires and overnight towns.

Now, suddenly, nuclear power is back in demand as a relatively cheap, reliable and emissions-free solution to the world's insatiable demand for energy. Even some leading environmentalists have endorsed nuclear power as an antidote to global warming. More than 50 nuclear plants are planned or under construction in a dozen countries, according to US and international nuclear agencies.

The nuclear comeback has reinvigorated a North American mining industry that, during the 1950s, was the stuff of legends. Uranium claims--which grant an exclusive right to mine a piece of federal land--were bought and sold like stock.

The federal government dumped its uranium stocks on the market, depressing the price in the early 1980s. After bottoming out at $7 in 2001, the spot price for milled uranium yellowcake has jumped sharply to over $110 a pound recently.

The Nuclear Regulatory Commission says US utilities are looking at building as many as 27 reactors, and it just licensed a $1.5 billion uranium enrichment plant near Eunice, New Mexico, where a groundbreaking ceremony was held last summer.

Louisiana Energy Services , a subsidiary of Urenco, is building the first US installation that will use modern centrifuge technology. USEC , formerly the United States Enrichment Corporation and an arm of the federal government until 1998, operates a gaseous diffusion plant in Paducah, Kentucky, where pumps and filters separate lighter uranium atoms from heavier atoms in a slower, more power-intensive process.

The nation's 103 operating nuclear power plants already are experiencing dwindling stockpiles of uranium--some of it converted from Russian bombs--while energy-hungry China and India are rushing to build their own nuclear power plants.

Uranium concentrate is in short supply with world consumption of 180 million pounds outpacing annual production of 100 million pounds, according to industry and government estimates. For now, the difference is being made up by dwindling stockpiles--and the shortage is expected to get worse as new plants come online.

US utilities looking at building or adding reactors are motivated partly by the escalating cost of natural gas, and partly by fears the government may tax coal-fired plants for the carbon emissions they release into the air.

Outside of the US, the Nuclear Energy Institute says 27 nuclear plants are under construction in 11 other countries, adding to the world's 442 nuclear plants.

Federal policy, meanwhile, is changing to expedite development of nuclear power.

The Nuclear Regulatory Commission is streamlining licensing and operating approvals for a standardized--and vastly improved--new generation of reactors. The Energy Act of 2005 offered loan guarantees, production tax credits and partial reimbursement against regulatory delays for builders of nuclear plants.

By Elliott H. Gue
The Energy Letter

© 2007 Elliott H. Gue
Elliott H. Gue is editor of The Energy Letter , a bi-weekly e-letter as well as editor of The Energy Strategist , a premium bi-weekly newsletter on the energy markets. Mr. Gue is also associate editor for Personal Finance , where he contributes his knowledge of the energy markets.

Mr. Gue has a Master's of Finance degree from the University of London and a Bachelor of Science degree in Economics and Management from the University of London , graduating in the top 3 percent of his class. Mr. Gue was the first American student to ever complete a full degree at that university.

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