U.S. uranium tailings plan could end trade dispute

The current uncertainty in the U.S. uranium market could be cleared up soon.

Unconfirmed rumors are that the U.S. government is prepared to put up about $1 billion for uranium tailings reclamation work in exchange for not pushing through legislation which would prevent the importation of foreign uranium.

“I have heard the same rumour,” said Robert E. Herztein, a Washington, D.C., lawyer specializing in international trade. “It appears to be reliable, but I can’t confirm it.”

If the U.S. imports are permitted to continue, Canada’s uranium producers — including Rio Algom Ltd. (TSE), Belgian-owned Amok Ltd., West German-owned Uranerz Exploration and Canadian Crown corporations Eldorado Resources and Saskatchewan Mining Development Corp. (which plan to merge July 1) — would then have assurance they can continue to have unrestricted access to the lucrative U.S. electrical utility market.

Speaking at the Sixth Annual Minerals Outlook Conference here recently, Herztein said a decision on a case before the U.S. Supreme Court could be forthcoming as early as this month, before the court recesses for the summer.

“I suspect the court will find the secretary of energy will be unable to assure the viability of the U.S. uranium industry (as a whole) by restricting the importation of enriched uranium into the U.S.,” Herztein said.

Under a U.S. statute, the Secretary must take action to assure the viability of the U.S. uranium industry, but because of the low grade nature of many uranium deposits in that country, Herztein says, it is unlikely the secretary will find there is anything he can do to make those operations commercially viable.

Uranium producers in the U.S. brought the suit against the Department of Energy to take action after higher-grade deposits were developed in Saskatchewan, driving prices down in the U.S. to as low as $15.75(US) a lb.

Estimates are uranium prices in the U.S. would have to more than triple to make some mines there profitable.

Those companies which stand to benefit the most from a settlement of the dispute include uranium producers in Saskatchewan which are not protected by long- term contracts with escape clauses, as is the case with Rio Algom which mines uranium in Ontario.

Denison Mines, another Ontario uranium producer has no clients in the U.S.