CANON CITY, Colo. — It's dead silent at the Cotter Corp. uranium mill outside this southern Colorado prison town just one driveway down from a golf course. Steam should be rising from the boiler. A loader should be moving ore to the mill to be turned into yellowcake.
But the mill is shut down and there are just 34 employees here instead of 115. Trucks that once hauled ore 300 miles from southwestern Colorado have been idled. The mines are on standby, despite a growing interest in uranium across the West and around the world.
While uranium prices have roughly tripled from $15 per pound in 2002, Cotter officials figure the price will have to reach $60 before the mill is up and running again.
Uranium potentially could hit that price as soon as early next year, if prices keep rising at the same pace as they have been, said Nick Carter of The Ux Consulting Co., a consultant to the uranium mining industry.
Industry observers say everything from world events to uranium production and expansion worldwide will affect how high uranium prices go, but for now demand is outstripping supply. Given how much time it can take to ramp up production, demand is expected to stay strong at least for the next year or two.
Cotter Corp. President Amory Quinn, vice president of uranium operations for Cotter parent General Atomics, said the Canon City mill has aging equipment that needs tens of millions of dollars in upgrades — work that won't be done any time soon.
"Today the price of uranium is not high enough to make it profitable," Quinn said.
The surge in demand for clean, inexpensive electricity, particularly in Asia, has led to the sudden new interest in uranium. New mining claims are being staked, old mills are being revived and the government recently licensed what will be the nation's second uranium enrichment plant in New Mexico.
But as old uranium hotspots like Uravan, Colo., Jeffrey City, Wyo., and Ticaboo, Utah, get another look, veteran private companies like Cotter are on the outside looking in. Public companies like International Uranium Corp. and the juggernaut Cameco Corp. — along with their eager investors — are going full speed.
The hundreds of new, small companies trying to get in on the uranium boom are mostly led by entrepreneurs raising cash through the stock market, said Tom Pool, an industry consultant with International Nuclear Inc. in Golden.
Those companies either have to acquire old uranium assets or start from scratch, meaning it could take years for them to begin recovering or processing ore.
Cotter's mill and mines have been around for decades, finding and processing uranium and an accompanying metal, vanadium, that is used to harden other metals.
Uranium was selling for above $60 per pound in today's dollars when Cotter's mill began running in 1958. Uranium prices plummeted to the single digits in the 1980s and 1990s amid a recession and the end of the Cold War, before they rebounded and Cotter reopened four mines in Colorado in 2003 and 2004.
In 2005, the mines produced 255,000 pounds of uranium and 1.37 million pounds of vanadium found in the same ore, said Jim Cappa, chief of the mineral and mineral fuels section of the Colorado Geological Survey. As recently as last fall, there were 115 workers here processing uranium and vanadium, mill manager John Hamrick said.
But vanadium prices have been volatile. The average price was $17.52 a pound in 2005 but was hovering around half that earlier this summer. And rising gasoline costs took their toll, making it more and more expensive to haul ore from mines in the Uravan area of southwest Colorado.
"Any time you transport ore by truck 300 miles and fuel costs are $3 per gallon, it's a problem," Quinn said. "We know uranium is going up and the boom is near, but we're not going to jump on the bandwagon and lose another $30 million or $40 million."
Cotter closed its mines in November. The mill got its last shipment of ore in February.
Mayor Bill Jackson remembers when Cotter first put up the mill about 50 years ago. Tourism and state prisons drive the local economy now, but back then, the town had 14 operating coal mines, he said.
"As time goes on, why, things change. We no longer have coal mines operating, so the mining aspect to the community has diminished," Jackson said. "When you get that kind of job fluctuation, it's bound to have some economic effect. Most of those jobs are better-paying jobs."