Union Carbide's toxic Uravan mill

Energy Fuels Inc., a Toronto, Ontario-based company seeking state approval for the Piñon Ridge Mill in far western Colorado, admits in its own financial filings that “there is a significant doubt as to whether the company will be able to continue as a going concern and realize its assets and pay its liabilities as they fall due.”

In a consolidated financial statement for the six months ending March 31, Energy Fuels states: “The company’s cash balances have reached a point where they can support current operations only through early calendar year 2011 without additional financing.”

That lack of cash is a serious concern, say environmentalists and state public health officials. Set against the backdrop of the British Petroleum Gulf oil spill and its astronomical environmental and business costs, they say any company looking to mill uranium in Colorado has to be prepared to pay the enormous costs of catastrophe clean up and reclamation.

Environmentalists and residents of both Montrose and neighboring San Miguel counties bitterly opposed the proposed milling project during special-use permit hearings last fall. News of the thin cash reserves of the company behind the proposal is fueling further opposition.

Frank Filas, Energy Fuels environmental manager, downplayed concerns in an interview with the Colorado Independent:

“So far this company has been able to raise $45 million. A lot of that went into investing in mine properties. A lot has also gone into investing in the mill property and the permitting associated with it,” Filas said.

“So yeah, our cash resources are much smaller than they were, so we’ll be financing this project in phases, and basically the next phase will be to get investments to carry us through the permitting and the final design phase of the project.”

Put up or shut down

Documents obtained by the Independent indicate Energy Fuels is spending between $250,000 and $285,000 a month and had cash reserves of a little more than $2.6 million as of March 31 – or about enough to last through January of 2011, which is when the state must wrap up its permit process for the Piñon Ridge Mill.

Proposed for an 880-acre site in the Paradox Valley about 12 miles west of Naturita, the mill would produce about 770,000 pounds of uranium a year by processing 500 tons of ore each day from surrounding mines in the Uravan Mineral Belt.

The area once supplied yellowcake for Cold War-era weapons but left a toxic legacy that lingers to this day. Still, there is a considerable push for a nuclear-power renaissance to replace carbon-spewing, fossil-fuel-fed power plants. Energy Fuels is banking on that resurgence, first abroad and then domestically.

“Once the permits are approved, that’s going to allow us to go after and get the financing we need for the mill, which we don’t know what exact dollar amount that is, but it’s in the neighborhood of about $150 million if you include the bond with the state also,” Filas said, referring to the company’s proposed $12 million surety bond in the event of a worst-case cleanup scenario.

“That’ll be a big chunk of change that we’ll need to come up with, but we think we’re in pretty good position to do that, and obviously some of it depends on things that are currently outside of our control like the current long-term price of uranium and those types of things.”

The true cost of a uranium disaster

Travis Stills, managing attorney with the Durango-based Energy Minerals Law Center, which is suing Montrose County over the Piñon Ridge special-use permit, said: “$12 million to clean up a $150 million project seems out of line, and with the existing cleanups – the Cotter Mill – the most recent numbers are coming in around $43 million.”

Currently the state’s only uranium mill, Cotter Corp’s Cotter Mill near Cañon City, is an EPA Superfund Cleanup site with its own contamination issues from the 1950s and ’60s. In an April Site Reclamation Plan filed with the state, Cotter put the cleanup price at $23.2 million and the Colorado Department of Public Health and Environment (CDPHE) countered with $43.7 million.

Besides imploring the state to demand a much higher surety bond from Energy Fuels, Stills generally questioned the strategy of using county and state permit approvals as a basis for rounding up more investors.

“[Energy Fuels] suggested that they would be able to raise a lot more money and capital to work with once they got the county permit, and if I’m correct, the stock price has dropped by more than half in that amount of time, so their ability to raise money just by announcing a permit, if that’s what it is, that’s a pretty questionable goal,” Stills said.

Energy Fuels’ stock was trading at 16 cents a share on Tuesday, down from 40 cents a share a year ago.

“It wouldn’t be the first operation that made all of their money by mining investors instead of mining the resource,” Stills added.

Taxpayers on the hook for industry catastrophes

CDPHE spokesman Warren Smith said the state will thoroughly review the Energy Fuels’ bonding proposal and make its own recommendation at the appropriate time.

“The worst case scenario would be, say, the company goes out of business and walks away and the state has to clean it up,” Smith said. “They have to have enough financial assurance that the state wouldn’t have to bring money to the table to do that.”

Smith also said there is precedent for the state rejecting an application on socio-economic grounds.

“Several years ago Cotter Corp. had an application for a radioactive materials license where they wanted to accept out-of-state waste to put into their impoundment, and we rejected that application due to the information that we had about the potential socio-economic impacts on the town,” Smith said. “Yeah, we can do that, and we have done that.”

Again, Energy Fuels’ Filas downplayed the financial concerns.

“It’s a moot point actually,” he said. “The bottom line is that, assuming the state approves our license, they are not going to give us the go-ahead until we place that bond money in their hands. It’s not like they have to worry about it too much; it’s just not going to happen without a reclamation bond in place for whatever amount that they think is necessary.”

A series of meetings on the project will be held in southwestern Colorado in June, starting with a CDPHE public-input session from 6 to 9 p.m., Tuesday, June 8, at the Montrose Pavilion in Montrose and followed by a special session of the San Miguel County board of commissioners from 4 to 7 p.m., Wednesday, June 9, at the Telluride Firehouse in Telluride.

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Paradox Valley, Montrose County

According to the Telluride Daily Planet, documents challenging the completeness of the Energy Fuels’ application were sent by the Sheep Mountain Alliance in time for state consideration but, according to state officials, they were never received.

The Piñon Ridge mill proposed for the Paradox Valley sparked a massive debate before the Montrose County commissioners this past fall, deeply dividing economically strapped locals and residents of nearby San Miguel County.

The area produced some of the first yellowcake enriched for nuclear weapons during World War II and the Cold War and is now being eyed to supply a potential nuclear-energy resurgence supported by Colorado Sen. Mark Udall. But uranium mining in Colorado also has a checkered environmental past.

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Late last week, Interior Secretary Ken Salazar received nearly 100,000 public comments supporting a permanent ban on new mining claims on the 1 million acres of national forest and Bureau of Land Management land surrounding the park.

And H.R. 644, floated by House National Parks, Forests and Public Lands Subcommittee chairman Rep. Raul Grijalva (D-Arizona) and cosponsored by 40 House members — including Colorado Rep. Jared Polis (D-Boulder) — would make permanent a temporary moratorium Salazar imposed in July.

The yellowcake rush mentality has in part been stoked by growing speculation the nuclear power industry will enjoy a resurgence as a carbon-free source of energy – a view supported by Colorado Sen. Mark Udall – but environmentalists warn the front end of nuclear power is a dirty business and that uranium mining should not be allowed near cherished national parks.

They also warn the Colorado River, over-apportioned from Colorado to California, would be endangered as a drinking water source for 25 million people downstream from the Grand Canyon. Locally, the upper Colorado is under stress from residential development and increasing energy production.

There’s a concurrent effort to reform the 1872 Mining Law, which allows claim-staking without royalties for hard-rock mining, often putting the burden of toxic cleanups on taxpayers.

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Photo: Colorado College

Key Republicans like Arizona’s John McCain, whose state is also a hotbed of uranium mining, and South Carolina’s Lindsey Graham are big backers of a nuclear-energy revival suddenly popular in some circles for its promise of nearly carbon-free power. Their votes may be needed to give Democratic co-sponsors Barbara Boxer of California and John Kerry of Massachusetts 60 filibuster-proof votes.

As the Senate this week commences three critical committee hearings on the Boxer-Kerry bill, Colorado’s Mark Udall has repeatedly made it clear nuclear needs to be a bigger part of the nation’s electrical-power mix, although he acknowledges uranium mining needs to be done much more safely than it was in the state’s not-too-distant past.

“You can’t consider expanding nuclear power without uranium mining, but that does not mean supporting irresponsible mining,” Udall told The Colorado Independent in an earlier statement. “It’s important that the state — which is the delegated agency for permitting authority for uranium mining — ensures that uranium mining is done safely, responsibly and with the full input of the affected communities.”

The Montrose County commissioners late last month approved a controversial uranium mill proposal for the far western end of the county, and the state will now take up to a year to issue its own permits. Some residents of the area that produced yellowcake for the first atomic bombs view a nuclear energy revival as the likely salvation of the local economy; others see it as another looming environmental disaster. Yellowcake is used to produce nuclear fuel rods.

Frank Filas, environmental manager for a U.S. subsidiary of Ontario-based Energy Fuels Inc., which proposed the Montrose County mill, said he understands the public trepidation given the industry’s checkered past.

“If you go back to the ’40s and ’50s and you look at our industry, well, we were doing a lot of things that weren’t necessarily best for our people, but we didn’t know any better — very similar to all the other industries at that time,” Filas said. “And when you had scares like Three Mile Island, and obviously Chernobyl was a horrible disaster, people see that and basically they wanted a safe supply.”

Those nuclear reactor meltdowns and explosions in the 1970s and 1980s put a halt to the expansion of the industry in the United States, basically leveling off nuclear power’s share of the nation’s electricity base load at about 20 percent.

According to The Associated Press, 104 reactors in 31 states currently provide that 20 percent of the nation’s electricity — amounting to about 70 percent of the nearly carbon-free power that doesn’t contribute to global warming. The goal of climate change legislation is to cut greenhouse gas emissions 80 percent by the year 2050, which would require, according to an EPA report, 180 new reactors.

The Nuclear Regulatory Commission is reviewing applications for only 30 new reactors, but 85 percent of the uranium used for nuclear power production in the United States is currently imported from abroad, according to the Department of Energy’s Energy Information Administration.

That agency recently reported that so far in 2009 coal-fired plants contributed 44.7 percent of the nation’s electrical power; natural gas-fired power plants 22.3 percent; nuclear 20.6 percent; hydroelectric 7.4 percent; other renewables combined (biomass, wind, solar, geothermal) 3.7 percent; and petroleum-fired power plants 1.1 percent.

Coal belches by far the most carbon of all of those sources, and some say the duration of the nation’s coal supply is rapidly waning. Udall is also big backer of upping incentives for the natural gas industry in the Boxer-Kerry bill given Colorado’s abundance of gas, and that’s a sentiment Gov. Bill Ritter shares.

But Ritter also told The Denver Post he backs nuclear power and expanding uranium mining and milling, as long as modern technology ensures safe production: “Today’s standards for a new mill … are far, far more protective of health and the environment. We believe it is possible to construct a mill today that fully protects workers as well as the air and water.”

Energy Fuels’ Filas said nuclear wouldn’t even be on the radar right now if not for the global climate change debate.

“Let’s face it, if we weren’t worried about carbon dioxide right now and the burning of fossil fuels [nuclear wouldn’t be expanding],” he said. “Fossil fuels, whether it’s coal or natural gas or oil, are all very inexpensive forms of power. They’re a little less expensive than nuclear and obviously less expensive than renewables, so from a supply and demand point of view, those types of power sources made more sense over the last 30 years.”

But the potential public health risks of uranium mining are still far too high for some critics of the industry, including Keith Hay, energy advocate for Denver-based Environment Colorado. Hay disputes the notion that nuclear should be grouped in with other forms of clean energy: “Anyone who has seen the front end of uranium mining for nuclear knows that it is in no way clean.”

Travis Stills, managing attorney for the Durango-based Energy Minerals Law Center, says the environmental legacy at Uravan — a toxic ghost town cleaned up at taxpayer’s expense — mandates any new milling operation in the area must be required to post an enormous bond in the event the company goes out of business but leaves behind a radioactive mess.

“The starting point for any launch should be the amount of cleanup that was actually spent at Uravan. That should be the absolute floor [for a bond], and then we should start talking about what to do from there,” Stills said, adding the county commissioners seemed to have their minds made up long before the approval process began.

“[County commission chairman] David White attempted to run the best process that he could, but they fell way short of providing anything fair and balanced – maybe they did provide fair and balanced the way that means now – but they certainly didn’t provide anyone with the hours of PowerPoint presentation opportunity that they provided to Energy Fuels. [The mill] was a done deal when they met privately March 25, 2008, and it sort of remained that way all the way through.”

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Paradox Valley in western Montrose County. (Creative Commons photo by Iversonic via Flickr)

MONTROSE — Actress and environmental activist Daryl Hannah says all the heated rhetoric over who should have the most say about the proposed Piñon Ridge uranium mill — western Montrose County mining families or affluent residents of Telluride and surrounding San Miguel County — is a moot point to Mother Earth.

“The earth doesn’t know about these sorts of lines that we draw,” said Hannah, who didn’t want to reveal what town in San Miguel County she lives in, but did say it isn’t Telluride. “These boundaries and these borders are manmade, but the air and the water and the soil and the wildlife don’t really recognize those boundaries.”

Supporters of the Piñon Ridge mill, proposed by Canada-based Energy Fuels for the Paradox Valley on the western edge of Montrose County, say the plan will revive the area’s long-dormant uranium-mining industry and provide a much-needed economic boost. But determined opposition cites health risks, environmental issues and transportation problems in seeking to block the mill.

In a special meeting this morning, Montrose County commissioners will have to weigh the potential risks against the possible rewards of reviving the yellowcake boom in the area around the toxic ghost town of Uravan, which produced some of the uranium ore for the first atomic bomb produced by the Manhattan Project. The commissioners have to decide on a special-use permit for Piñon Ridge because the land is currently zoned agricultural.

“It’s kind of mindboggling to me to hear people say I worked at the Uravan mill, and it was a booming economy at the time and I wish that we could go back to it,” Hannah said of the EPA Superfund site, which she said she lives closer to than most Montrose County residents.

Uranium mining holding ponds near Uravan in Montrose County in 1972. (Photo courtesy National Archives via Wikimedia)

“But you look at Uravan now and it’s completely fenced off and it says, ‘Radioactive, do not enter, dangerous, use caution.’ The whole thing was torn down and you can’t even climb around in there, you can’t even go for walk in there. It’s a completely toxic waste site now.”

Proponents say technology and government regulation have improved dramatically since the atomic heyday of the 1950s and ’60s, and they point to growing demand for nuclear power as a carbon-free power source to combat global warming.

Even Democratic U.S. Sen. Mark Udall of Colorado, once hesitant to push for a full revival of the nuclear power industry, joined a Republican colleague, John McCain of Arizona, in calling for nuclear as a “part of the mix” that will reduce dependence on fossil fuels and hopefully reverse climate change. The two addressed the topic together late last month in Estes Park.

Udall on Tuesday clarified his position to The Colorado Independent as it relates to a revival of Colorado’s uranium-mining industry:

“You can’t consider expanding nuclear power without uranium mining, but that does not mean supporting irresponsible mining,” Udall said. “It’s important that the state — which is the delegated agency for permitting authority for uranium mining — ensures that uranium mining is done safely, responsibly and with the full input of the affected communities.”

Energy Fuels is expected to apply for a permit from the Colorado Department of Public Health and Environment by the end of next month. Environmentalists want the county commissioners to put off their decision until the state has fully analyzed the Piñon Ridge plan.

“We would prefer that they would deny this altogether, but I don’t think that’s going to happen, so we would like them to delay their decision until there’s more information available from the state,” said Hilary White of the Telluride-based Sheep Mountain Alliance. “Our organization is considering a legal challenge of any approval [the commissioners] issue.”

Meanwhile, a front page story in the Montrose Daily Press on Tuesday focused on federal litigation aimed at forcing the U.S. Department of Energy (DOE) and other agencies to perform comprehensive environmental impact studies (EIS) on expanded uranium mining in the area under the National Environmental Policy Act (NEPA).

In 2007, the DOE’s Office of Legacy Management Uranium Leasing Program assessed no impacts from extending leases for 13 existing uranium mines and up to another 25 mines in western Colorado. On behalf of a coalition of environmental groups, the Durango-based Energy Minerals Law Center and managing attorney Travis Stills filed suit against the DOE.

“Travis Stills doesn’t want to see any uranium mining or milling of any kind. He’s out to stop us,” Energy Fuels CEO George Glasier told the Montrose Daily Press. “If DOE, [the Bureau of Land Management] and [U.S. Environmental Protection Agency] end up having to do EISes on whatever facilities the courts or agencies decide, then the final output of that is one more regulatory process we will comply with, but it is a federal problem and not Energy Fuels.”

Stills told the paper: “I’m waiting for a mill that is totally responsive to protecting the environment and workers and that recognizes the great risks involved. So far Energy Fuels is a back-of-the-envelope project. We have to see what they really plan to do.”

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