Coming of the Giants

Stomping into the office of Four Corners Uranium Co. in Grand Junction, Colo. last week, a dog-tired amateur prospector from Missouri tossed a bundle of papers to a vice president. "I've had it," he said. "Here are my location certificates. They're all yours." As late as last winter, uranium claims sold for as much as $1,500. But last week small operators were glad to get a few hundred dollars, and some were even turning their claims over to bigger companies for nothing but an agreement to do the assessment work ($100 a year) needed to keep them.

Everywhere, small uranium outfits, even those with producing mines, were going out of business or struggling to stay alive. The troubles were symptomatic of the change coming over the U.S. uranium industry. Instead of a headlong scramble for a quick million, uranium has grown into a tough, mature business where the survivors are those big enough to find and mine enough high-cost ore to come out ahead.

Last week, for the first time, the Atomic Energy Commission's Director of Raw Materials Jesse Johnson revealed exactly how big a business uranium has become. In testimony before a congressional subcommittee, Johnson reported that ore shipments from the four-state Colorado Plateau area (90% of U.S. total output) will hit 1.5 million tons worth $46.5 million in fiscal 1956. He predicted that within two years Plateau production will increase to 2,500,000 tons annually. Said Johnson: "During the past two months, the AEC has received and is actively considering more proposals for processing mills than it did in any two-year period before." In 1955, the U.S. had only nine mills operating, with contracts for five new ones. As of last week, there were ten formal mill proposals before AEC, eight for new mills and two to expand existing plants.

The Awakening. But few marginal operators will share in the business. Of 1,000 uranium mines in the U.S., say Colorado uranium men, only a handful like Charles Steen's rich Mi Vida Mine are making money, have sewed up 90% of all production. Says Millionaire Steen himself: "The public has found out what we've known for a long time--that it's a damn hard job to find a good uranium mine. It isn't the bonanza that a lot of promoters led the public to believe. The crooked promoters and brokers killed their own market."

Mining and exploration costs have gone up 51.6% between 1951 and 1955. At current prices, even big outfits run into serious cost problems. Estimates are that a 2,000-ton ore deposit becomes unprofitable at depths of 90 ft., that even a 10,000-ton deposit cannot be mined successfully below 240 ft. By 1960, say miners, costs will have climbed until exploration alone will cost $13.92 per ton. The Four Corners Uranium Co., which grossed $1,160,000 in 1955, spent $716,000 to mine $653,000 worth of ore, would have been deep in the red had it not made a big profit selling some of its leases and securities.

Capital from Oils. Despite the outlook, more and more big companies are going into uranium, either buying up the marginal operators or providing them enough capital to keep going. Two small companies, New Mexico's Pinon Uranium and Sabre Uranium, with big ore reserves but no money for production, are planning to merge, get $4,500,000 in new capital by selling a 25% interest to American Metals Corp. Texas Zinc Minerals Co. (Texas Co. and New Jersey Zinc Co.) is working out a $15 million deal to acquire Southern Utah's promising Happy Jack Uranium Mine, also hopes to put up a processing mill. Phillips Petroleum, Cities Service, Ohio Oil, Humble Oil are all moving into uranium.

One of the main worries of uranium producers is the price AEC has set on their ore. With spiraling costs, says Millionaire Steen, the current average price of $31.00 per ton is "too low for all but the bonanza mine. The industry needs a price increase from AEC to get prospectors interested in a renewed search for ore." If more prospecting is not done, says Steen, the U.S. is likely to run out of known deposits in a few years.

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