San Juan County uranium producer seeks federal bailout, copper mine loses its state permits

(Zak Podmore | The Salt Lake Tribune) Earth moving equipment at the Lisbon Valley Mining Company's copper mine facility in eastern San Juan County in October 2019.

As the coronavirus pandemic ripples through the global economy, San Juan County’s mining sector is feeling the impact.

Utah’s second largest copper mine, which is located northeast of Monticello, has forfeited its permits with state regulators after it abruptly shut down its operations in mid-March.

And Energy Fuels, a uranium company with operations in San Juan County, is asking President Donald Trump to make good on a February budget proposal to set aside $1.5 billion over 10 years to create a stockpile of domestically mined uranium, warning that the industry could be “permanently lost” in the U.S. without assistance from the federal government.

‘Cusp of complete collapse’

Energy Fuels and Ur-Energy, another uranium producer, have spent over two years lobbying for government support. Last week, the CEOs of both companies sent a letter to Trump, asking for “immediate relief” and arguing that the pandemic has driven the domestic uranium industry to “the cusp of complete collapse.”

U.S. nuclear power plants provide roughly 20% of the electricity in the country, but the vast majority of uranium fuels used in power generation are imported from Canada, Australia, Russia and Kazakhstan. Energy Fuels and Ur-Energy argue this reliance on foreign imports puts national security at risk.

Secretary of State Mike Pompeo seemed to agree last week when he said of uranium producing, “We’ve got to get back our mining, processing, enriching cycle.” (Pompeo went on to inaccurately state the United States was dependent on China for uranium imports, according to E&E News.)

Curtis Moore, an executive at Energy Fuels’ Colorado headquarters, said the outbreak has further exposed “supply chain risks."

“As the U.S. (and Canadian and Australian) industries decline, U.S. utilities are becoming dependent mainly on Russia for uranium and nuclear fuel,” Moore said.

But conservation groups suggested the industry is exploiting the coronavirus outbreak. “It's unfortunate that two uranium companies are using a global health crisis to amplify their own interests,” said Amber Reimondo, energy program director for the Grand Canyon Trust.

She pointed to a recent letter sent to the Arizona Corporation Commission by the Arizona Public Service utility, which operates the country’s largest power plant at the Palo Verde Nuclear Generating Station. "APS is confident that it is prepared to provide reliable service throughout this pandemic to support the needs of our customers," the utility wrote.

“It's notable that the nuclear utilities themselves are not saying their supply chains are at risk,” Reimondo said.

Western Values Project Director Jayson O’Neill pointed out that several members of Trump’s Cabinet have ties to the companies behind the letter. Interior Secretary David Bernhardt previously provided legal services to Ur-Energy and acting Environmental Protection Agency Administrator Andrew Wheeler worked as a lobbyist for Energy Fuels in 2017 to pressure Trump to reduce the size of Bears Ears National Monument.

“Between the two Trump Cabinet members that lobbied and represented the same multinational corporations making the request, uranium mining has enough undue influence amongst Trump’s swamp team,” O’Neill said in a statement.

Federal support has been slow to materialize for the companies, however. In July, the Department of Commerce declined to implement uranium quotas as requested by the mining industry, and instead created a Nuclear Fuel Working Group to find alternative ways to “revive and expand” the industry. A report from the task force was expected in October, but as of Friday it had still not been released.

Energy Fuels, which is among the largest private employers in San Juan County, laid off a third of its workforce in January due to low global uranium prices.

In February, the Trump administration proposed to set aside $150 million annually for 10 years to buy domestically sourced uranium as part of its 2021 budget.

Energy Fuels and Ur-Energy requested the immediate implementation of the budget proposal and the release of the working group’s report in their letter to the president last week. They also suggested Trump use his power under the Defense Production Act, which Trump invoked in March in response to the pandemic.

“[The law] enables you to purchase strategic stockpiles of critical minerals and doing so is the likeliest way to save the faltering domestic capacity,” the CEOs told Trump. Moore downplayed that part of the letter, calling the Defense Production Act the “‘flavor of the day’ for some reporters.”

Despite the warnings about the long-term prospects of domestic uranium production without federal intervention, Moore said the virus has not yet impacted operations in San Juan County besides “taking the normal precautions.”

Copper mine’s permits are terminated

Lisbon Valley Mining Company, which operated the copper mine, has not been so fortunate. The company laid off the majority of its 65 employees when a loan agreement was withdrawn on March 13 and it was unable to meet payroll. The sudden shutdown left an unstable environmental situation and several staff members stayed on without pay to avert a dangerous breakdown of the mine’s leaching facilities.

Company executives reached out to the state for help one week later, a move that triggered a rare emergency order from the Utah Division of Oil, Gas and Mining (DOGM).

The state agency terminated the company’s active mining permits, which allowed it to access the company’s $6.1 million surety bond to pay for the beginning of reclamation efforts. Environmental consultants who until recently worked for the mining company said the situation at the mine has since stabilized in a report to the state.

But it was not clear whether the company executives understood that the moves limited their ability to resume mining.

“It has come to my attention that Lisbon Valley Mining Company (LVMC) is considering resumption of mining operations in the near future if financing becomes available,” DOGM director John Baza said in a March 31 email to company director George Shaw, adding “LVMC no longer has a valid permit to operate the Lisbon Valley Mine.”

Neither Shaw nor Sompo International, the surety company, immediately returned a request for comment.

Eric Weisbrot, a spokesperson for JW Surety Bonds, a bond company not associated with LVMC, reviewed the state’s letter for The Salt Lake Tribune.

“When a company fails to fulfill their obligations," the one who required the bond "can file a claim on the bond,” Weisbrot said. “The claim will be investigated by the surety who wrote the bond, and if valid, will pay out in order to resume the work. It sounds like another bond will be required in order to resume the work on this job.”

LVMC was planing a massive expansion project at the mine as recently as December.

Zak Podmore is a Report for America corps member and writes about conflict and change in San Juan County for The Salt Lake Tribune. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.