Uranium Heats Up

April 10, 2007 - Deep in the snow-dusted hills along the Colorado-Utah border, George Glasier arrives to inspect the refurbishing of his Whirlwind Mine, a 3,500-foot sloping hole that is as unremarkable as it is remote. Inside, past the mine's rusted gates, Glasier's small crew has been working to shore up critical support beams left to decay after Union Carbide Corp. abandoned the operation more than 20 years ago. The work, he notes, is slow going. "Uranium has been down so low, for so long," Glasier says with a cowboy's patience, as he points to rotting wood. "Well, you just can't bring it back very fast."

Refurbishing the Whirlwind Mine may take time, but the commodity Glasier is aiming to bring to the surface is blistering hot. Uranium--the natural ingredient of nuclear reactors and bombs--is back, and bigger than ever. From Namibia to New Mexico, thousands of abandoned uranium mines are being reopened as billions of dollars pour into a decrepit industry that just a few years ago was left for dead. Still, since 2004, the number of individuals and companies that have acquired uranium-mining and -exploration rights to new or abandoned claims with the U.S. Bureau of Land Management has skyrocketed from just under 5,000 to more than 32,000 today. In Colorado alone, claims soared to more than 8,000 last year, from an annual average in the late 1990s of about a hundred. (The Bush administration has helped fuel the surge, with a tax break in the 2005 energy bill that included efforts to streamline the process for approving new reactors.)

The lure? The chance to make fast money. “Two years ago, I could've fit all the CEOs of uranium companies into a conference room," says Ron Hochstein, president of the Uranium Producers of America and chief operating officer of Canada's Denison Mines Corp. "Now, we can't fit them all in a theater."

The simple laws of supply and demand are breathing energy back into the business. Sixteen percent of the world's power is nuclear--and that percentage is growing fast. With 440 civil reactors around the globe, annual demand for uranium ore runs about 175 million pounds, but global production is only about 100 million pounds, with Australia and Canada supplying nearly half. Add into the equation more than 160 nuclear reactors under construction or on the drawing board (mostly in Asia), the instability of oil supplies and the fact that nuclear energy emits virtually no greenhouse gases, and--boom--uranium goes hot. (Just this week, The Wall Street Journal reported TXU Corp., the largest power generator in Texas, will be scrapping plans to construct eight coal-fired plants for nuclear power plants.) The global spot price for mill-processed uranium ore, or "yellowcake," has soared, from an industry-crippling low of $7.10 a pound six years ago, to a record-breaking $113 late last week. In 2007, the price has increased 52 percent alone, with the biggest price jump ever recorded in the past few weeks. Analysts say it will likely go higher. "The market is frothy," said Patricia Mohr, vice president and commodities specialist at The Bank of Nova Scotia. "But there is a renaissance of nuclear power in the world."

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