Virginia Uranium – Waiting Patiently to Create 325 Family Wage Jobs In Southside
My wife has known for many years that I have rather eclectic tastes in tourist destinations, but even with that history, she gave me a rather odd look when I suggested that we spend my day off by driving to Chatham to visit Virginia Uranium. When I pointed out how close Chatham is to our home in Forest, she started to come around. Once I promised that we would stop for lunch before coming home, she agreed to accompany me.
Virginia Uranium is a unique company; it is a locally-owned business in a formerly prosperous area that would like to provide approximately 325 jobs that will pay family sustaining wages (averaging in excess of $65,000 per year) for at least 30 and perhaps 60 years. The company owns a 119 million pound uranium deposit that is worth about $6 billion dollars at current world prices ($50 per pound). That is the largest single deposit in the United States and the seventh largest in the world.
Uranium has a large, growing international market. The world’s current fleet of 430 nuclear power plants consume about 40% more uranium each year than is currently produced by mining; the difference is coming out of gradually depleting inventories of material originally extracted for weapons programs for the Cold War. Though nuclear energy growth is not assured, there are about 65 new reactors under construction today with many more that are still in the planning stages.
Though the United States was once the world’s leading uranium producer and is still the world’s largest uranium consumer. We produce about 3% of the world’s total supply and depend on imported uranium to supply 92% of our needs. That shift from producer to consumer did not happen because we ran out of uranium; we still have enormous uranium resources that can be economically and safely mined.
Unfortunately, Virginia Uranium cannot use or sell its valuable property because uranium mining is not currently allowed by Virginia state law. Soon after the deposit was located in the late 1970s, the state passed a temporary moratorium because it did not have any existing regulations for uranium mining. The moratorium was designed to provide time to study the issue and to develop the necessary regulatory infrastructure. The studies recommending lifting the moratorium were completed in the early 1980s, at about the same time that the world uranium market collapsed and the price fell from more than $30 per pound to less than $10 per pound.
The owners decided to continue with their lives and wait for the uranium market to recover. That has taken a lot longer than expected, but the owners in this case can be patient. The uranium deposit is located under Coles Hill, a 3500 acre farm that has been owned and occupied by the same family for more than 200 years. Coles Hill used to produce tobacco; now it is the comfortable, scenic, and historically significant home for the family and several hundred well pastured cows.
June 8, 2012, day that my wife and I chose to visit Chatham and Virginia Uranium, was a gorgeous day for exploring Southside Virginia. The pastures and forest patches that cover the rolling hills of the Piedmont between Lynchburg and Chatham were intensely green due to plenty of recent rain. The air had that refreshingly clear quality of the day after a cold front came through and washed all of the pollen out.
When we first approached the Virginia Uranium (VUI) building, I thought that my Google map program had steered us wrong. (It has done that occasionally, by putting us on the wrong side of a shopping center or by directing us to the opposite side of the river from a large park.) The VUI is a nondescript metal building with construction that is typical of many small industrial businesses; but it is located at the end of a decidedly residential street that becomes progressively more narrow and then ends at a farm right next to Virginia Uranium’s building.
We located the building about 45 minutes earlier than my appointment, so we decided to explore Chatham.
We drove up and down US 29 business (Main Street) and out State Route 57 (Depot Street). We noticed a large, new sign for the local welcome center, but found out that the center has not yet opened. It will be housed in a carefully restored train station; we saw workers putting some of the finishing touches on the parking lot and grounds. We looked around and found our way into the building.
Though the Chatham downtown looked like it was several decades past its prime and contained several vacant buildings, there are several blocks of large, nicely landscaped, Victorian era homes at either end of the downtown part of Main Street. The area had seen some prosperous times from farming tobacco; some of the old money was still in circulation. Even after driving through what appeared to be every part of town and walking around the restored train station that is going to be the new visitor center, we only managed to kill a half and hour and arrived back at the Virginia Uranium building 15 minutes before my appointment.
The first thing that a visitor sees after entering the Virginia Uranium office is a large poster that mentions the value of uranium as a fuel and the potential employment that mining the Coles Hill deposit can bring to the area where it is located. As Patrick Wales, my contact at VUI pointed out, the company will, by definition be a local company that provides employment and revenue locally. It cannot move its uranium somewhere else.
The walls of the converted office building are covered with topographical maps of Virginia and charts of the deposit at Coles Hill. After the deposit was initially discovered, the company that made the discovery spent tens of millions of dollars to fully characterize the boundaries and depth of the deposit so there is no mystery about the available resource. I was particularly taken with a plexiglass model that showed the deposit in three dimensions; that really helped me to understand how it was going to be mined and why it was going to take 30-60 years to do the job correctly.
After an informative slide presentation, Patrick drove us out to the farm, which is about 10 minutes away from the office. Though I am aware of very large ranches in western states, it is quite rare for a single piece of property in the eastern US to cover 3500 acres (more than 5 square miles). The deposit itself lies beneath about 200 acres, but there is an enormous buffer between what would be industrialized for the mine and milling operations and any neighbor.
After driving for more than a mile from the property boundary over the dirt farm road, we got out of the car so that Patrick could show us how the deposit reaches all the way to the surface – which is what made it easy to find for the initial prospectors. Patrick pulled out his scintillometer and showed me the display, which was reading normal background of about 300-320 counts per minute. He walked along the road with the detector held close to the ground and we heard the variation in the audible clicks.
At one point, the clicks got so close together that the scintillometer provided a constant tone and the display indicated 4300 counts per minute. Here is a short video of Patrick explaining what he found.
While at the farm, Patrick, who holds a master of science in geology, explained the features of the land, and showed us the natural barriers that would prevent any material from leaving the farm. We talked about the possible impact of heavy equipment for creating the mine and the truck traffic that would be needed to move the product from the mine to the market. Though there is certainly going to be some impact during the construction phase of the project, Patrick noted that the planned extraction rate would require shipping just one tractor trailer load of product each week; one local dairy already ships two tractor trailer loads of milk every day.
The fact that impressed my environmentally conscious wife the most was learning that the Coles family intends to remain in their historic home throughout the construction and operating phases of the project. The family members feel very strongly about historic and environmental preservation and intend to ensure that all necessary measures are taken to prevent permanent damage to their family farm. After visiting the company and the site of the deposit, I can see no reason why they should not be allowed to take full advantage of their private property, provide family wage jobs in an area where there are not many other opportunities for employment, and extract valuable fuel material that can help to power the US economy without producing any greenhouse gases.
Uranium Working Group
The state of Virginia has formed a Uranium Working Group to “provide a scientific policy analysis to help assess whether the moratorium on uranium mining in the Commonwealth should be lifted, and if so, how best to do so”. That group is going to be holding a series of four public meetings during the next six months as they draft a statutory and conceptual regulatory framework.
The first of those meetings will be held on June 18, 2012 at 6:00 pm at the Chatham High School, 100 Cavalier Circle, Chatham, VA. It is already on my calendar; if you live in or near Lynchburg and are interested in carpooling, please contact me.
You can read more about the issue of uranium mining in Virginia at Uranium Working Group: Study Links.
Frankly with the uranium market as soft as it is at the moment I would be inclined to leave it in the ground too if I owned a exploitable deposit. It will still be a buyer’s market for some time even when the surplus is absorbed as existing producers have lots of room to ramp up.
The market usually wakes up one year before a real shortage is to occur. The HEU program with Russia ends in December 2013.
Expect upward pressure on Uranium prices around December as 20% of the world U supply is going the be taken off the market come December 2013.
Of course if Japan starts a few reactors we could see movement soon. By the way, Japan’s Prime Minister is sleeping on the job. He has the power to open the Oi reactors and shows no leadership. Power shortages are to be expected in Japan again this summer and this situation puts life in danger.
The HEU program provides 40% of the world electricity, not 20% as per my post.
If you expect the Japanese prime minister to exert autocratic or fascistic power, then you are extremely & willfully ignorant of Japanese mentality.
From what I saw, the last prime minister was kicked out precisely because he abused (used) his “authority” in the way you’re advocating. Not because of what happened at Fukushima (either the disaster or the NPP) but because he unilaterally overthrew energy policy in Japan. Something which is JUST NOT DONE in Japan and evidently the reason why he “resigned”.
Way back when this was happening, I saw a meeting held between government bureaucrats and ordinary citizens on the subject of the Daiichi NPP. Idiotic (willfully ignorant) Western commentators like you (who just happened to be anti-nuclear) were talking about how guilty the bureaucrats appeared because they looked on with blank faces while the citizens were demanding answers to their questions. But the Japanese don’t do guilt the way Westerners do.
It took a long time to figure out what was actually happening at that meeting. Simultaneous with their prime minister unilaterally announcing a seismic shift in energy policy, was that the government had NO CONSENSUS. The government bureaucrats at the meeting had on blank faces and were staring silently because they simply DIDN’T KNOW WHAT TO SAY. In such a situation in the West, the meeting would never have been held at all. But the meeting HAD to be held because it was POLITE and you CAN’T BURN BRIDGES.
And you know what? It wouldn’t surprise me one bit to learn that the Japanese government still doesn’t know what to say.
Considering what Merkel did in Germany and what the Americans are not doing. Considering the cesspool that is America’s economy thanks to the “leadership” of Alan Grenespan and George Dubya Bush. To say nothing of such stalwart “leaders” as Pinochet, Stalin and Hitler. I really want you to SHUT UP instead of cheerleading “go go Captain Fascism”.
Once the Megaton for Megawatt program ends in a year or so, the US will only produce about 5% of the Uranium it consumes.
I expect consolidation in the Uranium US assets so that one large company can have the ressources to fight the Sierra Clubs of the world when time comes to secure US sourced Uranium.
I also think the price per pound of Uranium is going to touch 200$ sooner than we think.
Some think that Russia will extend the HEU program beyond 2013. Don’t bank on it. Russia wants the price of Uranium to go up. They will cut the HEU supply to the US and keep it for securing nuclear plant construction on a closed loop basis, ie the Uranium will be free for Russia plants that they will build in foreign countries.
Production from mines in Kazakhstan, Canada, and Australia can ramp up faster than you seem to think and it will be a while before demand will outstrip the capacity of these countries to supply. Companies like Cameco and Rio Tinto have been sucking rocks since the Megaton for Megawatt program cratered the market and they to will be looking to recover costs prior to running the price up too high.
There are good intrastructure and permitting reasons why new mines in the three countries mentioned cannot ramp up faster, if at all, than new operations in the USA. Sitting here in Perth Australia, I can see the proposed new low-cost mines in Virginia, Wyoming, Oregon and Colorado well on their way before we have got to first base on building new roads, towns and support infrastructure, and solving our native title disputes. I imagine the same goes for Canada.
@George – The infrastructure issue is a big one. Though Coles Hill is suitably isolated and has a rather large buffer zone (3500 acres with just two houses on it is a huge piece of land) it is only 10 minutes or so from a major road (US 29) and not far at all from a substantial power grid. There is plenty of water available for the processing. (Note: any water used in processing will be put through a reverse osmosis treatment system before being released back into the environment – cleaner than when it came into the process.)
Coles Hill is also within spitting distance of a natural gas pipeline and pumping station.
In Canada there are existing mines not working to capacity and deposits like Cigar Lake, the world’s largest undeveloped high-grade uranium deposit. This property has reserves of more than 216.7 million pounds U3O8 at an average grade of 18.3% The mine is currently in development with a target to begin commissioning using a jet boring mining process by mid-2013 with the first packaged pounds being sent out in the fourth quarter of the same.
Then there are producing mines like Eagle Point which has reserves of approximately 24.0 million pounds U3O8, Collins Bay, and McArthur River which alone has probable reserves of 324.0 million pounds U3O8. And all this in in Saskatchewan only.
While the 119 million pounds at the Coles Hill ore deposit is nothing to sneeze at one is still forced to wonder why anyone is in a rush to exploit this deposit at this time.
I just don’t see it as a high return play at the moment given the market, working reserves elsewhere, and the resistance that a mine there will face.
Your comment: I just don’t see it as a high return play at the moment given the market, working reserves elsewhere, and the resistance that a mine there will face.
From Gitzel – the CEO of Cameco – June 12 2012:
… ‘Keep you eyes on supply because it is not obvious to me where the future supply will come from’
… We could see a significant supply/demand gap ”sooner” than expected
Daniel, I’ve been watching this market for almost two decades now and I am basing my remarks on how I have seen it work, and you are taking Gitzel’s remarks out of context.
He is referring to the fact that production at existing mines has not been what it could be due to the depressed price brought on by drawing down surplus material through Megatons-to-Megawatts and such. The issue is what sort of gap is going to occur between this surplus drying up and full production ramping up at existing centers; he is not talking about a long-term shortage.
Expansion of production at mines like Olympic Dam in Australia, and Cigar Lake and several others that have been doing little more than tread water will always be the better bet than a new start in iffy political situations. As it stands existing mines will be able to meet rising demand in the short term due to the end of surplus stock long before any new mine without a licence.
Treading water is an interesting turn of phrase when it comes to uranium mining. Please correct me if I am wrong, but wasn’t the last extreme peak in uranium prices enabled when Cigar Lake, admittedly an incredibly concentrated uranium deposit, flooded and was unable to produce ANY uranium for several months (or was it a couple of years of uncertainty)?
As I noted, it is going to take a lot of time and steady effort to enable production from Coles Hill. There is always uncertainty in any mining activity; part of the uncertainty is technical, part is regulatory, and part is market. Good businessmen work to reduce uncertainty wherever possible.
I understand why the people who own Coles Hill want to see that particular deposit made available to the world market. Believe it or not, but they happen to think that mining that uranium would produce good jobs for the area where their family has lived since 1800. They think that the jobs from that mine might help to spark a rejuvenation of what used to be a prosperous economy, one that is based on something more healthy and sustainable than growing tobacco.
Sure, the world might not need another large uranium deposit being mined to meet current and near term needs. However, it also does not need another video game producer, another television manufacturer, another restaurant chain, or another social network. Would you fight against a businessman with particular skills or resources useful in those areas from trying to start a business and carving out a place in the market for his production, even if it is not “needed”?
I want to tread carefully here so as not to expose ether myself or Rod but it looks to me like there is more to this story than meets the eye at first glance.
First the parent company involved is not American, but Canadian. Virginia Uranium Ltd. merged with Santoy Resources Ltd. to form Virginia Energy Resources Inc and this company is incorporated in and under the laws of British Columbia trading on the TSX Venture exchange in Vancouver, a stock exchange that has been compared unfavorably with a casino in the past, the latter often providing a better risk to the players than the former. The exchange has had a chequered past and was implicated in several pump-and-dump stock schemes, and while I am <b<NOT suggesting this is the case here, the junior mines section there is not a place for the faint of heart or one’s life savings.
Virginia Energy Resources Inc is noted for its involvement in several uranium mining ventures located on properties with considerable regulatory issues including the Blizzard uranium deposit in British Columbia which is subject to a ban on uranium mining imposed by the Government of British Columbia, the Otish Basin area in Quebec, currently facing high local opposition, flaky government support, and possible court challenges, as well as the Central Mineral Belt Uranium District (CMB) of Labrador has several unresolved native land claims and a just lifted ban on exploration. The Coles Hill deposit fits nicely into this profile. The likelihood of any of these assets going into production in the foreseeable future is low.
In fact all of the leases that have come from these areas have had several owners, and will likely have several more before they are actually exploited.
This is why I see the project under discussion as a long-shot at best and one that should be considered very, very high risk, potential social good like job creation notwithstanding. This is particularly true when the mine in question doesn’t look like it will have anything in the way of a significant competitive edge over existing ones, which is at least hoped for when starting a new business in any crowded sector.
There is much more I could write on the matter, but I am unsure of the legal issues that might come of publishing too detailed a description of my suspicions, however I would strongly suggest that anyone looking to adventure their capital in this project to spend the time to research the matter very carefully and not commit funds that you cannot afford to lose.
Hope these newly enriched mine employees will be eager to purchase homes near this mine for a fair price. I also hope the milk from this dairy right next to the mine will not be co-mingled with that in standard distribution, but marketed exclusively to the nuclear families of the community. Most agricultural producers in the community will be put out of business, and as you see, that is the primary revenue for the area unless these mining families are so confident they will buy meat grazed on grass dusted with uranium. I suspect most employees will move to Lynchburg or Danville wishing to keep their families safe from the the radon exhaust and elements released into the local wells. You and your family can feel a whole lot more confident up there in Forest, than those in the sacrifice zone. It’s gonna take a whole lot more than a few blackberry and poison ivy bushes to contain an industrial complex of this magnitude, take you family on a trip to a pulp mill town, smell the caustic aroma that envelops the community for miles? That’s the smell of prosperity! For some. This mill will suffuse the quaint little towns of Chatham and Gretna with that God awful stench 24/7. Sad thing, the majority of citizens will receive zilch for their loss of quality of life, just stink and noise to supply China with yellowcake and Canada and a few local investors that spend most of their lives at Hilton Head and other resorts, with dividends. I know those that profit from this venture care nothing for the local community, and neither do you, but this is just so you understand why we so vehemently object.
@K Patrick – I think you missed something in the post. The uranium already exists on that farm and is already at the surface. Did you watch the video? What you did not see was the fact that you can take that scintillometer all over the fields and find similar spots where the concentrated uranium ore is detectable on the surface. It has probably been there for millions of years.
Cows have been grazing on the grass and crops have been grown in the fields for a couple of hundred years.
@K Patrick – you seem completely unaware of the technology differences between a mill associated with a uranium mine and one used to process millions of tons of wood products into paper.
I happen to be well aware of the stench that you refer to – I grew up in the southeast and visited lots of family members in northeast Florida and southeast Georgia. I also deployed on a submarine out of St. Mary’s, GA, home to the Gillman Paper Company.
However, my experience with stenches is not limited to industrial activities. I had friends in western NC who lived a few miles away from a pig farm. If the wind was blowing in the wrong direction… I’ve also lived near cattle ranches off and on – they are not exactly pristine neighbors and they occasionally make life a little less than pleasant. They have been known to have severely negative effects on local water conditions – unlike humans, cows make no attempt to process their waste products.
Fortunately, conditions at all of those types of facilities have gotten better with time, technology, and reasonably applied regulations. I am certain that you will never be able to smell or see any residues from the Coles Hill operation. I hope that you attend the information seminars and really listen to the people who are explaining their plans.
@DV82XL – The process for licensing a new uranium mine in the US and then building out the infrastructure required to begin extracting the mineral means that no one should be making any production decisions based on today’s prices. It will be 8-10 years before any VA uranium starts entering the market.
If the market conditions are not especially favorable at that time – and who knows what they will be – the company can always start producing and storing its material in inventory. Unlike other types of fuels, uranium holds up very well in a warehouse and does not take up much space.
Rod’s absolutely right. The current discussion that is going on in Virginia is not about whether a particular company should start mining uranium today, but rather whether the politicians in Richmond will get their act together and put in place a regulatory structure so that somebody can eventually mine uranium.
The National Academy of Sciences (NAS) has already weighed in on this and recommended that Virginia legislators talk to places in North America that have had uranium mining for decades (e.g., Canada and Colorado) and adopt their best practices. Of course, this process will take years, but if you’re ever going to get there, you have to start the process first.
Nobody, particularly Virginia Uranium, believes that they will start mining tomorrow. The time line that Rod gives is probably a reasonable guess, assuming that Virginia’s legislature and the UWG is wise enough to follow the road map put forward by the NAS.
I’m not so sure the investors would be very happy to see the uranium mined, milled and then stockpiled. This is not a formula to realize a return on one’s investment.
I am from across the pond and I wonder whether rising uranium prices would make reprocessed uranium a more attractive alternative in the USA, especially with “Yucca Mountain” being such a contentious issue. I guess it would also be good for the PR of nuclear energy as it would show the public that it is possible to recycle/reuse the “waste”.
If you can’t mine uranium in Virginia, then you shouldn’t be able to mine coal, because coal mining is uranium mining. Uranium in leached out of the soil by slightly acid water that flows down into the ground until it reaches an organic solvent (coal) at which point uranium is extracted from the aqueous solution and deposited in the coal layer. Who would’ve guessed that mother nature was a nuclear chemical engineer? I wonder if she has a copy of Benedict, Pigford, and Levi that I can borrow?
Nice to see you last week Rod! I just wanted to give you a more updated statistic. As of 2011, the Coles Hill deposit is ranked the 15th largest deposit in the world. It used to be #7, but a few new discoveries have bumped it back. (Ux Consulting Company 2011).
Though nuclear energy growth is not assured, there are about 65 new reactors under construction today with many more that are still in the planning stages.
The latest news from China – Listing of China National Nuclear Power Co.,
The public listing is relevant for the uranium mining industry because of the commitment to nuclear power that it represents. In relative terms, the market capitalization of this IPO is expected to surpass the largest enterprise previously launched in the Chinese market, the Agricultural Bank of China.
Guys, it’s happening. With or without the US.
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