Uranium company purchase could boost production
December 23, 2021
BUFFALO — Uranium production in the Powder River Basin could be on the upswing after Uranium Energy Corp. acquired Uranium One Americas, in a deal closed on Monday.
The sale consisted of U1A's assets in the Powder River Basin, including the Irigaray and Christensen Ranch projects in Johnson and Campbell counties. The deal could mean renewed uranium production and processing in the Willow Creek area, resulting in jobs and additional tax revenue, according to Scott Melbye, executive vice president of the Texas-based UEC.
Melbye said the company plans to begin producing in the Johnson County mines once uranium market prices increase, with existing workers staying on board.
"We've had really positive developments on uranium prices, from $20 to $30 a pound, to it's been trading in the $40 to $50 dollars a pound more recently,” Melbye said. "We need sustainably, $45, $50 or better to make the decision to restart operations. We're confident that's going to happen, but we're not there yet."
Currently, 10 employees work at the mine and three work in U1A's Casper office, as the Willow Creek area has been in care and maintenance since mid-2018, according to Donna Wichers, U1A vice president and chief operating officer.
Domestic uranium production plummeted after cheap foreign uranium — primarily from Russia, Kazakhstan, Uzbekistan and China - flooded the market and made production unprofitable, according to previous Bulletin reporting.
Congress recently passed legislation that makes $75 million available to the Department of Energy to create a uranium reserve program. That would mean that the department would purchase uranium from domestic producers to stockpile.
“In a strong uranium market of $50 or better, I can see us advancing our production plat - forms in both South Texas and Wyoming," Melbye said.
Bill Novotny, Johnson County commission chairman, said the Willow Creek mining area contributes roughly $145,000 in personal property taxes each year. If uranium production resumes in the area, the facility could contribute a lot in ad valorem taxes.
In 2014, he said, U1A paid $1 million in ad valorem taxes. In 2020, the company had no recorded ad valorem, because it wasn't producing uranium.
"Anything we can do to get folks out there and producing is great," Novotny said.
Producing uranium would require additional staffing, including workers to drill, fit pipe, mine uranium and more. And as job opportunities in oil and gas decline, those skill sets are valuable in situ recovery mining, Melbye said.
"A whole range of skill sets will be needed to get back into production," he said. "I'm reticent to give a number at this stage because I think that one of our first tasks on closing is to really take inventory of where we're at and come up with a plan going forward to see what the employment impact could be."
As of press time Monday, uranium was priced at $33.75 a pound. Uranium is an element essential to producing nuclear fuel, which is becoming an increasingly viable form of clean energy, according to the Department of Energy. And Wyoming's Powder River Basin is known as the most productive ISR uranium mining district in the western hemisphere, according to a UEC press release.
Terrapower, a nuclear energy producer, announced in November that Kemmerer would be the site of a new power plant. The plant is expected to be operational in seven years, according to a press release.
"I'm optimistic with this nuclear power plant slated to be built in Kemmerer that there's a potential we can see uranium from Johnson County being used there," Novotny said. "I hope that there is a really hard look in this country at the potential of using nuclear energy, because it is clean and safe."
Producing in Wyoming is also a plus thanks to the state's regulatory climate, Melbye said. Wyoming is an agreement state, which means the state is authorized by the U.S. Nuclear Regulatory Commission to regulate certain uses of radioactive materials.
UEC acquired all shares of U1A for a total purchase price of $112 million in cash and the replacement of $19 million in reclamation bonding. The Willow Creek area has an estimated 15.5 million pounds of uranium, according to a press release from UEC.
"We're proud to be in Wyoming," Melbye said. "It really positions us to be the largest American-based uranium mining company, and that's pretty exciting at a time where uranium is being viewed as a clean, carbon-free source of energy for electricity going forward.”