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ECONOMIC IMPACT OF URANIUM MINING ON COCONINO & MOHAVE COUNTIES, ARIZONA


Prepared for:
American Clean Energy Resources Trust (ACERT)
Pam Hill, Director
 
 
Submitted by:
Tetra Tech
Andrew P. Schissler, PE, PhD
350 Indiana Street, Suite 500
Golden, CO 80401
(303) 217-5700

September, 2009

Copyright ©2009 American Clean Energy Resources Trust - ACERT. All rights reserved.


2007 Airborne geophysical survey in northern Arizona

Executive Summary

This analysis [1] was prepared to estimate the potential economic impact of mining uranium contained in 1,069,000 acres in northern Arizona (Figure 1), in an area known as the Northern Arizona Uranium District (NAUD). The lands are being considered for withdrawal from mineral entry and claim processing by the U.S. Department of Interior.
Mining the NAUD uranium would have enormous economic impacts to businesses and households in Coconino and Mohave Counties, Arizona, nearby counties in Utah, the State of Arizona, regional mining service suppliers, and the federal government.

Coconino and Mohave Counties are the region of influence (ROI) for this analysis, which also addresses impacts on neighboring counties in Utah and on regional mining service centers. The economic impacts are based on estimates by the United States Geological Survey and private companies that 375 million pounds of uranium oxide could be derived from uranium ore in the NAUD. This analysis uses a conservative sales price of $50 per pound for uranium oxide; higher prices in the future would yield greater economic benefits.

Economic Impacts
The northern Arizona uranium mining operations would provide a significant long-term benefit to the area, state, and region: a direct total sales impact of $18,900 million over the 42-year duration of the project, with indirect impacts of $10,508 million, for a total impact of $29,408 million, or an average annual impact of $700 million.[2]

Summary of Economic Benefits

[1] This report was prepared by Tetra Tech, Inc., an internationally known environmental consulting firm. Tetra Tech’s qualifications are found in Section 9, List of Preparers. The report was commissioned by the American Clean Energy Resources Trust (ACERT), and ACERT and its members have provided production and employment estimates. The analysis is also based on other information obtained from other sources deemed to be reliable (see Section 8, References). Although funded by ACERT, the report is an independent assessment of the potential value of the uranium resource and the economic impacts of mining the resource. The report was prepared for use by third parties (legislative bodies and government agencies of the United States, Arizona, and Utah) to assist in policy decisions.

[2] These estimates are based on a conservatively assumed constant price of $50 per pound for uranium oxide, with six mines in operation per year over a 42-year period, except for start-up and close-out, when not all six mines would be in production. The analytical methodology is discussed in Section 4, Methodology & Definitions.

Earnings and employment are expressed in terms of annual impacts. Annual wages of $25 million would generate indirect impacts of $15 million, for a total of $40 million annually. The companies expect to employ a total of 390 workers annually during the years when all six mines are operating; this total includes miners, geologists, engineers, managers, and other professional and support staff. These workers are projected to generate an additional 688 jobs in the ROI, for a total increase of 1,078 jobs during the years of full operation. A portion of these benefits would occur in neighboring Kane and San Juan Counties, Utah, where some workers would likely reside.

Impacts would be lower during the initial years of the proposed project and at the end, but benefits would still be substantial. Again, this would be a significant benefit to workers, families, and businesses, and to the local, state, and federal governments.

The proposed project would lead to other area and regional economic benefits as well.
Ore mined from the NAUD would be taken to the White Mesa Mill, in Blanding, Utah, for processing, and would ensure the continued operation of the mill, along with the substantial benefits it provides to San Juan County and its residents, and would improve the economic opportunities for suppliers in Blanding, the surrounding areas, and the region.
Mining companies contract with trucking firms to ship ore from mines to processors. The economic impact is local, as contract firms typically hire personnel and build service shops locally.  Over the 42-year operating period, transporting the ore would generate about $1.6 billion in revenues for trucking firms, long-term stable employment for their workers, and a steady stream of revenue for their suppliers.

Other beneficiaries include national mining equipment companies; suppliers for items such as tires; oil companies providing fuel; and a host of other firms that employ workers across the United States, in areas far removed geographically but not economically from Arizona.
Federal, state, and local governments would receive a variety of tax revenues over the 42 year life of the proposed project, including corporate income taxes, severance taxes, payments to county governments, and income taxes from workers. The mining companies project payments of $2 billion in federal and state corporate income taxes and $168 million in state severance taxes over the life of the project. Local governments would receive $9.5 million in claims payments and fees. All of these payments would represent sizable benefits to the governments involved.
Local property tax bases would increase as workers moved into the area and purchased homes. Existing residents would see their incomes increase with better jobs, and could purchase larger homes or improve existing ones.
Local and state sales taxes would increase from purchases by the mine operators and their suppliers, by workers and their families, and by other local residents who see their incomes rise as an indirect impact of the mining operations.

Proposed Project
The economic analysis is based on the following operating scenario assumptions:
The mines would be operated under a “rolling” schedule that extends over 42 years. Except
for the initial and closing years, six mines would be in production during any given year.
Operations would include the following over a 5-year cycle for each set of six mines:
Year 1: Planning and permitting;
Year 2: Development, and installation of machinery and infrastructure;
Years 3 & 4: Production; and
Year 5: Reclamation.

There are several advantages of the rolling schedule approach:
The 42-year schedule would ensure a long-term, stable workforce in the project area, avoiding the undesirable boom-and-bust” impacts that can stress communities.
The project’s longevity would allow local workers to work many years in an industry that provides higher-than-average wages and benefits.
Workers who moved into the area would bring their families and settle into the community, contributing to long-term healthy growth and strengthening the local tax base and growth of services.
Suppliers and other businesses could feel confident about opening or expanding in the project area, given the long-term nature of the project.
Impacts related to transportation of machinery and ore would be minimized, thus reducing traffic and the wear and tear on the transportation network.

The Project Area
The mining operations would take place in Coconino and Mohave Counties, Arizona, defined as the region of influence (ROI). The adjacent Utah counties of Kane, San Juan, and Washington are also addressed. Population in Coconino and Mohave Counties is heavily concentrated in the southern portion of those counties. The region near the potential mining areas, especially in the northern portion, is sparsely settled with low populations, but has experienced moderate growth during this decade. The population of the project area is largely white (Caucasian) except in San Juan County, where Native Americans comprise over 56 percent of the population. In the remaining counties, Native Americans are the predominant minority.
The ROI economies were reasonably diversified as of 2007, while the adjacent Utah counties reflect a more rural character. Tourism associated with the Grand Canyon and other regional attractions is an important economic factor. Average 2008 unemployment rates were close to the national average of 5.8 percent. By May 2009, all five counties had seen increases in unemployment, but only Mohave County equaled the national unemployment rate of 9.1 percent. See Section 3 for a more detailed description of the project area.
Northern Arizona Uranium
The NAUD represents an important domestic supply of low cost uranium. The US consumes approximately 50 million pounds of uranium annually. Uranium in fuel assemblies loaded into U.S. civilian nuclear power reactors during 2008 contained 51 million pounds of U3O8 (uranium oxide), yet only 12 percent of the U3O8 was U.S.-origin uranium, and 88 percent was foreign origin uranium.

The U.S. Geological Survey Circular 1051: The 1987 Estimate of Undiscovered Uranium Endowment in the Solution-Collapse Breccia Pipes in the Grand Canyon Region of Northern Arizona and Adjacent Utah, gives the 1,069,000 acre- (1,670 square mile-) area subject to the proposed withdrawal a calculated mean endowment of 112.4 tons of U3O8 per square mile and a total mean endowment of 187,690 tons (375 million pounds) of uranium oxide, equivalent to about 42% of the total uranium resources in the United States.

The worldwide market demand for uranium used in power generation was 114 million pounds in 2008. Annual demand is expected to rise to 170 million pounds by 2030, with a total of an additional 599 million pounds required over the next 22 years. The NAUD can provide 50% of this additional demand.

During the 1980s, seven mines in the NAUD produced 19 million pounds of uranium, the energy equivalent of approximately 676 million barrels of oil, with a temporary surface disturbance of less than 20 acres per mine—an area smaller than a Wal-Mart parking lot. The mine reclamation left the disturbance undetectable and provided a positive example of environmentally effective mining under the nation’s current mining and environmental laws.
 
The uranium mineralization in the NAUD is hosted in cylindrical, vertical columns of broken and re-cemented rock referred to as breccia pipes. The structures are 200 to 500 feet in diameter (Figure 2). The mineralization occurs at a depth 1,100 to 1,700 feet below the surface and the lowest occurrence is approximately 1,100 feet above the water table.

All mining is conducted by (hard rock) underground methods since neither open pit or insitu leach methods are applicable to the mineral extraction within the district.

A typical breccia pipe uranium mine produces 3 million pounds of uranium oxide in 231,000 tons of ore, at an average grade of 0.65% by weight.
The average producing life of an underground breccia pipe uranium mine is two years, with an average production rate of 1.5 million pounds of U3O8 per year, compared to, for example, a surface copper mine with a life span of 40-50 years and beyond.
Modern uranium mining operations are operated under strict regulations enforced by 10 federal and state agencies. The uranium industry has over 40 years of experience in applying international radiation safety regulations at uranium mines, and there are few ill effects for the miners that have been working in such mines.
Uranium is a highly productive fuel. It is easier to understand uranium’s high level of efficiency by comparing it to other fuels. 
For example, one pound of uranium oxide, known as “yellowcake” (U3O8), is equivalent to 35.6 barrels of crude oil (a barrel of oil is approximately 42 gallons).
America’s 104 nuclear power reactors provide 20 percent of U.S. electric power—clean-air electricity for one in five homes and businesses.

The Complete Report

Section 1
Background & Project Introduction
The Nuclear Fuel Cycle—Mine to End User
Uranium as a Fuel
Project Introduction
Breccia Pipe Morphology and Origin
Breccia Pipe Uranium Mine Characteristics
Breccia Pipe Resources in the Project Area

Section 2
Uranium Pricing & Demand
Uranium Pricing
Uranium Demand

Section 3
Project Area

Section 4
Methodology & Definitions
Regional Input-Output Multipliers
Data
Tax Definitions

Section 5
Estimated Output Impact Analysis
Operating Scenario Assumptions
Impact Analysis
Economic Impact on Neighboring Counties
Regional and National Impacts
Other Local Impacts
Fiscal Impacts

Section 6
Estimated Earnings Impact Analysis

Section 7
Estimated Employment Impact Analysis
Conclusions

Section 8
References

Section 9
List of Preparers

Appendix
Socioeconomic Charts and Graphs as follows:

Figure A-1.   Demographic Characteristics of Project Area and Comparison Regions, 2000
Figure A-2.   Unemployment Trends in Project Area and Comparison Regions, 1999-2008
Figure A-3.   Employment by Industry, Coconino and Mohave Counties, Arizona, 2007
Figure A-4.   Employment by Industry, Arizona, 2007
Figure A-5.   Employment by Industry, Kane, San Juan, and Washington Counties, Utah, 2007
Figure A-6.   Employment by Industry, Kane and San Juan Counties alone, 2007
Figure A-7.   Sector 21, Mining, as Percent of Total Private-Sector
Figure A-8.   Sector Employment by Residence, 2000
Figure A-9.   Mining Sector Employment by Residence, 2000
Figure A-10. Median Housing Value, 2000, Project Area and Comparison Regions
 
 

SECTION 1

Background & Project Introduction

Tetra Tech, Inc.[3] (Tetra Tech) has prepared this independent analysis to estimate the potential value derived by mining the uranium contained in 1,069,000 acres in northern Arizona (the Northern Arizona Uranium District, or NAUD) (Figure 1). Coconino and Mohave Counties are defined as the region of influence (ROI) for this analysis, which assesses the economic impacts to businesses and households in the ROI if these uranium resources were be mined. The report also qualitatively addresses impacts on neighboring counties in Utah and regional mining service centers. The region lying north of the Grand Canyon is generally referred to as the Arizona Strip.

In preparing this analysis, Tetra Tech has relied on projected operations, production, wages and benefits, and employment data provided by the American Clean Energy Resources Trust (ACERT), a consortium of mining companies, and on information from other sources deemed to be reliable, primarily federal agencies.

The Nuclear Fuel Cycle—Mine to End User [4]

Mining
Uranium deposits are found in rocks around the world and in all three major rock types (igneous, metamorphic, and sedimentary). The breccia pipe uranium ore in the NAUD is sedimentary. Uranium ore around the world varies in “grade,” which refers to the percentage of mineral found in the rock. Uranium from northern Arizona is the highest grade ore in the United States.

Uranium can be recovered by conventional mining methods of excavation via surface pits or underground mine plans, or by dissolution by fluids pumped down drill holes to the resource. However, because both surface pits and dissolution mining are inapplicable to the Arizona breccia pipe deposits, these deposits would be mined by underground (hard rock) mining methods, with small amounts of water used for dust suppression and underground operations. Underground mining leaves a smaller surface footprint or disturbance.

In the case of underground uranium mines, the mine plan addresses three parameters: production, mine ventilation, and roof control. Modern uranium mining operations are operated under strict regulations enforced by 10 federal and state agencies. The uranium industry has over 40 years of experience in applying international radiation safety regulations at uranium mines, and there are few ill effects for the miners that have been working in such mines. Due to advances in safety program management and mine design, U.S. underground mining of all minerals is now one of the safest industrial professions, nearing the safety records for low risk industries such as retail, banking, and insurance.

Milling
When recovered from the breccia pipe, uranium mineralization is contained within rock, which is transported to the mill where the ore is further crushed and then ground to a fine slurry. Sulfuric acid or a strong alkaline solution is used to dissolve the uranium, to allow the separation of uranium from the waste rock. It is then recovered from solution and precipitated as uranium oxide (U3O8) concentrate. This concentrated form is sometimes referred to as “yellowcake” and generally contains approximately 90 percent uranium. After drying and usually heating it is packed in 55 gallon drums as a concentrate. Yellowcake is not categorized as a hazardous material.

Mills cannot separate all of the mineral from the waste. A small percentage (less than 10 percent) of the rock containing uranium, and a large percentage of the rock not containing uranium, exit the mill as waste or tailings. This waste is placed in engineered facilities near the mill. Substantial engineering design goes into the tailings disposal site so that it has long term geotechnical stability and allows for eventual revegetation of original biota (unless the mine permit allows for alternative post-mined land use). The engineering design also ensures that the refuse, which may contain low radioactivity, is isolated from any groundwater and other ecosystems.

[3]Tetra Tech’s qualifications are found in Section 9, List of Preparers. This report was commissioned by the American Clean Energy Resources Trust (ACERT), and ACERT has provided some production estimates. However, the report is an independent assessment of the value of the resource and the economic impacts of mining the resource. The report was prepared for use by third parties (legislative bodies and government agencies of the United States, Arizona, and Utah) to assist in policy decisions.

[4] The fuel cycle discussion was adapted from the World Nuclear Association web site (WNA 2009a).

View map of Northern Arizona Uranium Breccia Pipe Resources

Conversion, Enrichment and Fuel Fabrication
The yellowcake is shipped to fuel preparation facilities that further concentrate and convert the uranium to fuel quality. Most reactors use fuel enriched in the U-235 isotope. The solid uranium oxide (yellowcake) from the mine is converted into the gas UF6, which is then enriched in the U-235 isotope by one of two physical methods of enrichment. Diffusion enrichment works by exploiting the different speeds at which U-235 and U-238 pass through a membrane. Centrifuge enrichment works by passing the gas through spinning cylinders, with the centrifugal force moving the heavier U-238 to the outside of the cylinder and leaving a higher concentration of U-235 on the inside. Uranium dioxide pellets are produced from the enriched UF6 gas. The pellets are then encased in long metal tubes, usually made of zirconium alloy (zircalloy) or stainless steel, to form fuel rods. The rods are then sealed and assembled in clusters to form fuel assemblies for use in the core of a nuclear reactor. The rods are then shipped to nuclear power plants or other end users.

Electricity Generation and Other Uses
Nuclear reactors produce electricity by heating water to make steam. The steam is then used to drive turbines that generate electricity. In this sense nuclear reactors are similar to other thermal power stations, where the heat from burning coal or natural gas is used to produce stream. A key difference of nuclear reactors is that they do not emit carbon dioxide. A nuclear chain reaction is so-called because when a U-235 atom splits (or fissions) in the reactor’s core, the neutrons released cause other uranium atoms to also undergo fission. A moderator slows down the neutrons to achieve this. The nuclear reactor uses control rods to ensure that this chain reaction occurs at a controlled rate.
Uranium is also employed in other nuclear applications. Nuclear submarines, a critical part of America’s defense, are able to travel long distances without refueling. Nuclear technology is also used in an ever-increasing variety of medical and diagnostic equipment and medical treatment.
 

The USS Nautilus, a Nuclear-powered Submarine [Source: STPNOC web site]

Used Fuel Management
Used fuel from a nuclear reactor is first stored to allow most of the radioactivity to decay. Then it is either reprocessed to recover the reusable portion, or disposed of directly as waste. In reprocessing, the used fuel is dissolved and the uranium and plutonium in the used fuel are separated from the waste fission products. Plutonium can then be combined with uranium to make Mixed Oxide Fuel (MOX), which can be used in many modern reactors. Reprocessed uranium can be used in new uranium oxide fuel. No underground facilities have yet been built for used fuel, although several are planned. Low-level nuclear waste has been successfully and permanently stored at the U.S. Department of Energy’s Waste Isolation Pilot Plant (WIPP) in southeastern New Mexico since 1996.

Uranium as a Fuel

Fuel Efficiency
Fuels are discussed in terms of the amount of energy they produce, traditionally expressed in British thermal units (BTU or Btu). One Btu is roughly the amount of energy needed to heat one pound of water by one degree Fahrenheit. It is perhaps easier to understand uranium’s high level of efficiency by comparing it to other fuels. One pound of yellowcake (U3O8) is equivalent to 35.6 barrels (bbl) of crude oil (a barrel of oil is approximately 42 gallons).
During the 1980s, seven mines in the NAUD produced 19 million pounds of uranium, the energy equivalent of approximately 676 million barrels of oil, with a temporary surface disturbance of less than 20 acres per mine—an area smaller than a Wal-Mart parking lot. The mine reclamation left the disturbance nearly undetectable and provided a positive example of environmentally effective mining under the nation’s current mining and environmental laws.
America’s 104 nuclear power reactors provide 20 percent of U.S. electric power—clean-air electricity for one in five homes and businesses. Nuclear reactors use uranium measured in pellets. One fuel pellet is about twice the size of a pencil eraser (see illustration below). This fuel is so efficient that just one pellet provides as much energy as:
149 gallons of oil,
One ton of coal, or
17,000 cubic feet of natural gas.
Five fuel pellets meet a household’s electricity needs for an entire year.

During the 1980s and 1990s, six mines in the NAUD produced approximately 20 million pounds of uranium, the energy equivalent of one billion barrels of oil, with a temporary surface disturbance of less than 20 acres per mine—an area smaller than a Wal-Mart parking lot. The NAUD ore averages roughly 0.65% uranium—generally about five times higher than any other uranium deposits in the country. The average producing life of an underground breccia pipe uranium mine is two years, with an average production rate of 1.5 million pounds U3O8 per year, compared to, for example, a surface copper mine with a life span of 40-50 years and beyond.
The Wetlands Waterfowl Sanctuary located at the South Texas Project (STP) Nuclear Generating Station, in Matagorda County, Texas (STP website).

Estimated World Reserves in BTUs
The Energy Information Administration (EIA), which is an agency of the U.S. Department of Energy, and other reliable agencies, have estimated the extent of major worldwide energy sources. These sources are considered as commercially and technically extractable, and are measured in quintillions of Btus, which reflects the amount of heat the energy can generate. A quintillion is a billion billions, or 1018 — that’s 18 zeros: 1,000,000,000,000,000,000.

Table 1. World BTU Capacity by Energy Source
Fossil fuels (oil, gas, and coal) were formed millions of years ago from the remains of organic life forms (plants and animals) composed of hydrogen and carbon, and are thus often referred to as hydrocarbon fuels. In terms of Btu capacity, hydrocarbon fuels provide only 15.2 percent of the total, while the world’s uranium can produce 84.8 percent of the total—more than five times all hydrocarbon-based fuels together.

In 2005, the world used 0.468 quintillion Btus, and the United States used 0.101 quintillion Btus. At these usage rates, uranium could supply the world’s energy for 900 years, carbon-based fuels for 12 years to 45 years.


The World’s BTU Capacity by Energy Source
 

Project Introduction

The U.S. Department of Interior is considering the withdrawal from mineral entry and location approximately 1,069,000 acres of lands that comprise nearly all of the Northern Arizona Uranium District (NAUD) (see Figure 1). The NAUD extends through northern Arizona from the northern Coconino Plateau to the southern Utah border. Uranium mineralization in the district occurs in and around vertical columns of broken and re-cemented rock commonly 200 to 500 feet in diameter, known as collapse breccia pipes. The mineralization is restricted to depths ranging from 1100 to 1,700 feet below the surface and constitutes some of the highest grade U3O8 ore in the United States.

The USGS Open File Report (OFR-89-550) shows the mapped locations of 1,296 pipes in and around the NAUD. The study only identifies the location of pipe structures that outcrop at the surface, but subsequent work in the area has demonstrated that breccia pipes can stop upward growth at any stratigraphic level above the Mississippian-aged Redwall Limestone, and many pipes do not reach the surface. If these structures penetrate the Coconino Sandstone in a favorable area within the NAUD they often contain uranium mineralization, but breccia pipes outside of the NAUD are seldom mineralized.
 
The northern area contains 40 breccia pipes historically mapped by the U.S. Geological Survey (USGS) in 1989 (USGS Open File Report (OFR) 89-550). Seven of these pipes were mined between 1980 and 1990, yielding 142,000 tons of ore averaging 0.65 percent U3O8, which provided about 19 million pounds of U3O8. No mines are currently active in the northern area; however, four breccia pipes are in standby mode awaiting mine permitting activities to restart. 
In addition, field studies have been completed on seven other breccia pipes and are awaiting development activities; and another four pipes have attained discovered status and are awaiting field characterization studies. Finally, numerous other pipes are in the early stage of identification and resource definition.
From 1980 to 1990, Energy Fuels Nuclear (EFN) mined 1,142,000 tons of ore that averaged 0.65% U3O8 from 7 breccia pipes in the NAUD and produced 19 million pounds of uranium. They were some of the last hard rock uranium producers in the US prior to the uranium price decline of the 1990s. No mines are currently active; however, four breccia pipe uranium deposits are in standby mode awaiting mine permitting activities to restart. 
In addition, field studies have been completed on seven other breccia pipes and are awaiting development activities; and another four pipes have attained discovered status and are awaiting field characterization studies. Finally, numerous other pipes are in the early stage of identification and resource definition.
Uranium mineralization was first discovered on the NAUD in a mineralized breccia pipe in 1947. The uranium occurred in association with copper mineralization at the Orphan mine located two miles west of the visitor’s center on the south rim of the Grand Canyon. The first uranium ore was shipped by the Golden Crown Mining Company in 1956 to a buying station in Tuba City. Before closing in 1969, the Orphan operation produced a reported total of 4.4 million pounds of uranium in material averaging 0.42% U3O8 and 6.7 million pounds of copper. 
The Orphan mine properties were located on patented claims granted and signed by President Theodore Roosevelt before the establishment of the Grand Canyon Park. The mine was not part of the park until it was purchased by the National Park Service in 1963, and integrated into the Grand Canyon National Park when the mining rights expired in 1988.
Since the discovery of uranium in the Orphan Mine, extensive field work has been conducted by governmental and private concerns to define the spatial extent of the breccia pipes in the NAUD. This work has included ground and airborne geophysical surveys, mapping of rock exposures in the deep canyons of the area, mapping on aerial photos, shallow and deep hole drilling, electric logging in drill holes, laboratory analysis of drill core, and 2- and 3-dimensional computer modeling.
In addition, subsurface data have been obtained from observations and measurements taken in the historic underground mines.

Breccia Pipe Morphology and Origin

The following is a brief description of the morphology and geologic origin of NAUD breccia pipes:
Cavern Formation — Groundwater percolating through the sedimentary rocks dissolves the Mississippian-aged Redwall Limestone forming caverns. As the size of the cavern grows, roof rock becomes unstable and collapses into the void, forming a rubble zone. This rubble material is referred to as breccia.
Pipe Formation — Natural mechanical and chemical processes continue to weaken the overlying sedimentary rocks, resulting in the collapse zone migrating upwards above the cavern to a vertical distance of 2,000 to 4,000 feet. These resulting pipes have a cylindrical shape, a diameter of 200 to 500 feet, and a funnel-shaped pipe throat if they extend to ground surface. The breccias filling the pipes commonly have calcite or sulfate cement.
Uranium Mineralization — Uranium mineralization was deposited in the NAUD breccia pipes 200-260 million years ago. Uranium minerals, mostly pitchblende, are thought to have been transported to the breccia pipes by oxidizing ground water in the Coconino Sandstone, which occurs about 1,800 feet above the Redwall Limestone. The ground water first migrated laterally through the sandstone to the breccia pipes, then downward in the more porous and permeable breccias that are surrounded by the non-porous Hermit Siltstone. As the enriched water moved downward, the chemical environment changed from an oxidizing to reducing state, resulting in the precipitation of dissolved minerals such as uranium, copper, iron and numerous other metals in trace amounts. The uranium-enriched zone in the breccia pipe may occur over a vertical distance of more than 600 feet and at depths of 1,100 to 1,700 feet below ground surface, and may contain up to 7 million pounds of U3O8.

A generalized breccia pipe geometry is illustrated in Figure 2.

Breccia Pipe Uranium Mine Characteristics

An average breccia pipe mine produces 3 million l of uranium, and has the following characteristics:
Uranium: 3 million pounds of uranium at a grade averaging approximately 0.65 percent,
which is the equivalent of 13 pounds of U3O8 per ton of ore.
Dimensions of the uranium zone: Each breccia pipe has cylindrical uranium ore zone that
ranges in size from 200 ft to 500 ft diameter by 100 ft to 600 ft high.”
Mining method: Modified shrink stoping[5] underground mine plan.
Haulage: Spiral ramp to shaft.
Footprint: Minimal mine surface footprint and disturbance.
Surface waste rock storage: Temporary and restricted to ramp and shaft material. All ore
is excavated and shipped to an offsite mill.

[5] “Stoping” is the removal of the ore from an underground mine, leaving behind an open space known as a stope.

A generalized Breccia Pipe Morphology is illustrated in Figure 2.

Breccia Pipe Resources in the Project Area

The U.S. Geological Survey Circular 1051: The 1987 Estimate of Undiscovered Uranium Endowment in the Solution-Collapse Breccia Pipes in the Grand Canyon Region of Northern Arizona and Adjacent Utah, gives the 1,069,000 acre area (1,670 square miles) subject to the proposed withdrawal a calculated mean endowment of 112.4 tons of U3O8 per square mile and a total mean endowment of 187,690 tons (375 million pounds) of uranium oxide, equivalent to about 42% of the total uranium resources in the United States. As noted above, over 19 million pounds of uranium have been produced since 1980 from the following seven mines in the Northern Arizona Uranium area:

Table 2. A Summary of Energy Fuels Nuclear Mining History on the Arizona Strip

The current status of these mines is as follows:
Hack Canyon I, II and III, Pigeon, and Hermit, owned and operated by Energy Fuels, are mined out and have been reclaimed.
Kanab North, owned by Denison Mines, is on standby and has remaining mineable uranium reserves.
Pinenut, owned by Denison Mines, is in the final phases of development, is awaiting permitting to restart production, and has remaining, mineable uranium reserves.
Canyon, owned by Denison Mines, is in the final phases of development, is awaiting permitting to commence production, and has remaining, mineable uranium reserves.
Another Denison Mines property, Arizona 1, is developed, awaiting final permitting to start production, and has mineable uranium reserves.

In addition to the developed mines, numerous other deposits have been identified; several are larger than those that are currently being permitted:
Four deposits have been delineated from surface drilling and require underground development and drilling for final reserve definition. These deposits include EZ-1, EZ-2, Sage and Wate.
At least 14 additional breccia pipe uranium deposits have been discovered and require additional drilling for resource delineation.
Numerous other targets have a drill defined structure at the upper Fossil Mountain horizon but require additional deep drilling to define potential mineable targets.

Perhaps most significant to the overall potential of the NAUD, an airborne geophysical survey employing the latest in time domain electromagnetic technology was conducted by Quaterra Resources in March of 2007. The survey investigated 422 square miles; an area representing approximately one quarter of the NAUD. The program identified all of the known breccia pipes in the surveyed area and 200 high and moderate priority anomalies with a similar geophysical signature. Confirmation drilling on the first two airborne anomalies discovered two new mineralized breccia pipes—the first new mineralized pipes in the NAUD in 18 years. If just 30% of these geophysical anomalies are breccia pipe uranium deposits, and a similar density of mineralized pipes can be identified in the remaining un-surveyed portion of the district, the final endowment of the NAUD may significantly exceed the 375 millions estimated by the USGS.


Figure 3. Kanab North Mine, Mohave County, Arizona
 
 

SECTION 2

Uranium Pricing & Demand

This section presents information regarding projected uranium prices and demand.

Uranium Pricing
Two key organizations, the U.S. Energy Information Administration and the World Nuclear Association (WNA) have provided an outlook for uranium demand. In its newly released Annual Energy Outlook, 2009, the EIA reports the following. The U.S. nuclear industry’s purchase demand for power generation was 51 million pounds of U3O8 in 2007, and 53 million pounds for 2008. In 2008, 14 percent of the demand was supplied by US mines, 42 percent from Australian and Canadian mines, and the remaining 44 percent was from other countries (Russia 23%, Kazakhstan 7%, Uzbekistan 4%, Namibia 7%, and South Africa 2%). For the period from 1994 to 2008, the U.S. purchase demand grew at an average rate of 2.4 percent per year. The report further states that for the 50-year period from 1980 to 2030, U.S. uranium power purchase demand, including both actual through 2008 and forecast to 2030, will grow at an average rate of 2.5 percent per year. For the past
50 years, by comparison, the U.S. gross domestic product has grown at an average annual rate of 3.2 percent (adjusted for inflation) (EIA 2009).

The World Nuclear Association, in its WNA Nuclear Century Outlook, uses a “low case” and a “high case” approach to forecast nuclear electrical power capacity from 2008 to 2030. Under the low case, capacity will grow between 99 gigawatts (GW) and 120 GW, at an average annual growth rate of 0.88 percent. Under the high case, capacity is projected at 180 GW, at an average annual growth rate of 2.75 percent (WNA 2009b).

Given these forecasts, this impact study assumes that the price of U3O8 in 2009 dollars will grow from its present price of approximately $52 per pound of U3O8 (as of July 2009) by at least 0.9 percent per year. This yields the following price predictions:

2010   $52.00
2015   $54.40
2020   $56.85
2025   $59.50
2030   $62.20

Although conservative when compared to many economic analyses of 2008 and other “high” cases, these prices represents a foundational level. In estimating the impact to the NAUD, further conservatism was applied by using a constant price of $50 per pound. These assumptions avoid overstating the expected benefits of uranium mining on northern Arizona and surrounding areas.

Uranium Demand
Studies by the USGS and private companies have determined that approximately 375 million pounds of U3O8 equivalent are contained in the uranium lands that could be removed from the NAUD mining opportunity that was made available by the Mining Act of 1872 and reaffirmed by the Arizona Wilderness Act of 1983. In 2008, the U.S. nuclear electrical power industry purchased 53 million pounds of uranium at an average price of $45.88 per pound. For the period 2009 through 2030, the median projection for uranium purchase demand is anticipated to increase by an annual average rate of 1.82 percent per year. This growth rate is the average of the low and the high electrical demand cases described above. Table 3 (below) contains a projection of future world uranium demand for power generation, assuming this growth rate. These conservative assumptions by EIA and WNA are based on the expectation that no large unforeseen changes occur in power generation technology, alternative fuel sources, nuclear policy, or geopolitical conditions.

Table 3. Projected World Uranium Demand

The total quantity through 2030 for world incremental uranium purchase demand is 599 million pounds. It is assumed that the NAUD can capture 50 to 65 percent of the 599 million pounds of incremental demand, or 300 million to 375 million pounds, thus reducing U.S. dependence on foreign sources, some of which could be unstable or even hostile to the U.S. This production assumption is based on the following:
The NAUD has demonstrated historical fundamental conditions that result in low mining cost and resource extraction; shallow access, high ore grade, and low capitalization. These factors place the NAUD toward the lower end of the supply cost curve—i.e., more efficient to produce—as compared to other U.S. uranium resource areas, which include the Gas Hills in central Wyoming, the Grants area of New Mexico, Texas, and western Colorado; and place the NAUD prominently in the world supply profile.
Non-mining sources of uranium include spent fuel reprocessing and sales of decommissioned nuclear weaponry uranium into the power industry. Because of cost and technological barriers, these sources do not represent threats of supply substitution of NAUD fuel.


Figure 4. Reclaimed Hack Canyon Mine
 
 

SECTION 3

Project Area

This report assesses the impact of potential uranium mining operations on the economies of Coconino and Mohave Counties, Arizona, which comprise the study area (region of influence, or (ROI) for this analysis (Figure 1). Three adjacent counties in Utah could also be affected by this project. It is possible that some mine workers would reside in neighboring Kane County, where the community of Kanab is one of the nearest population centers to the northern Arizona mining sites. Uranium mined in northern Arizona would be milled in San Juan County, near the town of Blanding, at an existing facility. Some mine servicing support would come from St. George and Washington, in Washington County along Interstate 15. Impacts to the Utah counties are addressed qualitatively, along with impacts to other areas, Arizona, and the United States.

Table 4 (below) presents a summary of indicators for the two ROI counties in Arizona, the adjacent Utah counties, and the two states (see Appendix for graphics illustrating socioeconomic trends). In 2008, all five counties showed growth over 2000 populations. In Arizona, whose statewide growth was 26.7 percent during that period, Coconino County grew by 10.5 percent and Mohave County by 26.6 percent. Note that the major population centers in both of these geographically large counties are in the southern portions of the county. Coconino County contains the cities of Flagstaff (county seat and largest city) and Sedona, as well as the towns along the Grand Canyon’s South Rim. Mohave County contains Kingman (county seat) and the cities along the Colorado River, Lake Havasu City (largest city) and Bullhead City.

Table 4. Project Area Overview

In Utah, population increases of 8.8 and 4.5 percent occurred in Kane and San Juan Counties, respectively, between 2000 and 2008, while Washington County experienced a population increase of 52.3 percent, and Utah’s statewide growth was 22.5 percent. Coconino and Mohave Counties have population densities well below the state average of 45.2 persons per square mile, with densities of 6.2 and 11.6, respectively. Washington County has 37.2 persons per square mile, exceeding Utah’s statewide density of 27.2, but Kane and San Juan are very sparsely populated, with densities of only 1.5 and 1.8, respectively (USCB 2000a).

The northern portions of both counties are in an area known as the “Arizona Strip,” which is separated from the southern part of the state by the Grand Canyon. The area is characterized by small communities some distance apart, with no large towns. The nearest population centers to prospective mine locations north of the Grand Canyon are the small communities of Fredonia and Page, in Coconino County, Arizona, and Kanab, in Kane County, Utah. The prospective mining locations south of the Grand Canyon are less isolated from population centers, and workers could come from more populated areas such as Williams or Flagstaff. Characteristics of these communities are discussed in more detail below.


Figure 5. Aerial View of Kanab, Kane County, Utah

The population of the project area is largely white (Caucasian) except in San Juan County, where Native Americans comprise 56.3 percent of the population. In the remaining counties, Native Americans are the predominant minority, ranging from less than 1 percent of the population in Kane County to 27.7 percent in Coconino County. A portion of the Navajo Nation lies within San Juan County, and Coconino County is home to a portion of the Navajo Nation and the Hopi Indian Tribe. Statewide, Native Americans comprise 4.5 percent of Arizona’s population and 1.2 percent of Utah’s, compared to 0.9 percent nationally (USCB 2000a).

Per capita income (PCI) is total income divided by total population and is a useful measure to compare regions, even though it does not explicitly capture regional differences in cost of living. The PCI varied substantially across the project area, with San Juan County, UT having a PCI of only 44.5 percent of national levels. The highest PCI was for Arizona statewide, closely followed by Coconino County (BEA 2009a).

As of 2007, the national percentage of individuals living below poverty (“poverty rate”) was 13 percent. Arizona and Mohave County were only slightly above the national poverty rate, while Coconino County was somewhat higher and San Juan County was substantially higher, with a rate of 31.6 percent. The poverty rate in Utah statewide and in Kane and Washington Counties was somewhat lower than the national average.

The average 2008 unemployment rates in Mohave County, AZ, and San Juan County, UT, were slightly higher than the national average rate of 5.8 percent, and somewhat lower in the other three counties. By May 2009, following several months of recession and job loss across the nation, all five counties had seen increases in unemployment, but only Mohave County equaled the national unemployment rate of 9.1 percent (BLS 2009a).

The economies of the ROI and adjacent counties in Utah area are reasonably diversified, according to 2007 data (BEA 2009b). The ROI is more typically urban due to the presence of Flagstaff, with the Services sectors accounting for 40.6 percent of jobs, followed by Retail Trade (13.3 percent), Construction (8.6 percent), and Manufacturing (5.1 percent). Diversification in the ROI is very similar to Arizona as a whole. The three Utah counties, however, reflect a somewhat more rural diversification, with Services accounting for only 30.9 percent of jobs, followed by construction (14.0 percent), Retail Trade (12.6 percent), and Local Government (7.5 percent). When Washington County is excluded, however, the Services sector accounts for only 18.8 percent of jobs in Kane and San Juan Counties, more typical of a very rural area. (Note that much of the employment data for these two counties have not been disclosed by the BEA, so it is difficult to assess the exact level of diversification.[6])

Table 5 (below) presents data on the communities within or near the project area. The larger towns or those south of the Grand Canyon—Flagstaff, Sedona, Williams, and St. George—experienced strong population growth between 2000 and 2007. These communities also host tourists for the Grand Canyon, Zion National Park, and other well-known scenic attractions that draw tourists from around the world.

Table 5. Population Trends and Housing Costs, Project Area Communities

Growth in the Arizona Strip communities and in Kane and San Juan Counties has been more modest. Fredonia grew by 5.8 percent between 2000 and 2007, while Page grew by only 1.4 percent. Kanab, the county seat and largest town in Kane County, grew by 5.8 percent between 2000 and 2007.

[6]County or other small area data may not be disclosed when data do not meet BLS or State agency disclosure standards regarding confidentiality or data quality. For example, if there are few firms in an area, data users could determine or approximate a firm’s total payroll, hours worked, and other information that a firm may not want known to its competitors.

The San Juan County seat of Monticello[7] saw its population almost unchanged, while Blanding, the county’s largest city, grew only slightly. However, St. George City, Washington County’s seat and largest city, grew by 43 percent. (USCB 2000a, 2008a; 2008b).

Median home values (owner-occupied homes, as recorded in the 2000 Census) vary across the project area, as Table 5 (above) shows. By comparison, Arizona’s median home value was $121,300, Coconino County’s was $142,500, and Mohave County’s was $95,300. In Utah, the statewide median home value was $146,100, while it was $103,900 in Kane County, $68,400 in San Juan County, and $139,800 in Washington County. The national median home value was $119,600. Although it is expected that most of the mining labor force would be drawn from local residents, Kanab, Fredonia, and Williams have median home values well under the national and state averages, suggesting that any incoming workers could readily find affordable housing.

The city of Sedona, south of the project area and divided between Coconino County and Yavapai County, is a major tourist and retirement center. As Table 6 (below) shows, Sedona’s median home value in 2000 was substantially higher than communities closer to the project area and the county and state values. These high home values suggest that much of Coconino County’s wealth may be concentrated in the southern portion of the county.


Figure 6. Fire Station in Fredonia, Arizona

[7] The town of Monticello, located north of Blanding, is considered too far from the prospective NAUD mine sites for its labor force to be employed in the possible mines. However, any increases in the amount of uranium processed at the White Mesa Mill in Blanding would lead to greater employment opportunities for residents of Monticello, Blanding, and the surrounding areas.


 

SECTION 4

Methodology & Definitions

This section presents Tetra Tech’s assumptions and methodology in preparing this report, and describes certain taxes that can be affected by mining production.

Regional Input-Output Multipliers
In performing this analysis, Tetra Tech used the Regional Input-Output Modeling System (RIMS II) developed by the Bureau of Economic Analysis (BEA), U.S. Department of Commerce (BEA 2009c). RIMS II is widely used in both the public and private sectors for economic impact analysis. In the public sector, for example, the Department of Defense uses RIMS II to estimate the regional impacts of military base closings. State agencies use RIMS II to estimate the regional impacts of various projects such as new highways and airport construction and expansion. In the private sector, analysts and consultants use RIMS II to estimate the regional impacts of a wide variety of activities and programs such as tourist expenditures, opening or closing manufacturing plants, shopping mall development, and new sports stadiums.

RIMS II measures the economic impact of a business operation by using location-specific multipliers to determine the total output, earnings, and employment generated within a geographic region. The RIMS II multipliers reflect three types of economic impact:

Direct impact represents the initial value of goods and services purchased by the subject business operation;
Indirect impact represents the value of goods and services purchased by local companies to provide goods and services demanded by the subject business operation; and
Induced impact measures the change in local household spending patterns resulting from increased earnings by employees in local industries producing goods and services for the subject business operation.

RIMS II multipliers are based on a national input-output table, which is adjusted to reflect a region’s industrial structure and trading patterns. Industries are defined according to the North American Industry Classification System (NAICS) (USCB 2009b). Economic sector Mining (NAICS 21) includes oil and gas extraction and all types of mining, quarrying, and support activities. This report focuses on Sector 21, Mining.

RIMS II multipliers are available for any region composed of one or more counties. However, if an economic sector is not currently present in a county or region, a multiplier may not be available to estimate impacts resulting from increases in that sector. For this reason, this analysis uses a multiplier based on Montrose County, Colorado, which is similar to the project ROI and where uranium mining is present.

To assess the impacts of uranium mining operations on the ROI’s economy, the multipliers for Industry 2122A0, Gold, Silver, and Other Metal Ore Mining, were applied to estimated sales, wages and benefits, and employment data provided by the American Clean Energy Resources Trust, a consortium of mining companies.

Data
All statistical data used in this analysis are the latest available that provide comparable, consistent, and reliable information for the geographic area under consideration.

Projected uranium production, wages and benefits, and employment data have been provided by ACERT members.

ACERT and Tetra Tech approximated potential total sales dollars using projected production and predicted prices for Arizona uranium. The pricing methodology is discussed above and is based on predictions by the EIA and WNA.

Tax Definitions
Several types of taxes are relevant in analyzing the impacts of potential uranium mining operations to the economies of Coconino and Mohave Counties and other areas. Some non-payroll taxes are listed below, with a brief definition.

Property Tax (ad valorem or “according to value”), a county-levied tax on property. Purpose: to compensate government for the cost of services based on the value of real and personal property. Flows into the economy by County action.
Sales and Use Tax, a State- and local-levied tax on sales of tangible personal property at rates ranging from 2.9 percent to 8.0 percent, based on local options. Purpose: to finance the operations of local and state governments. Flows into and out of the economy by state and local action.
Severance Tax, a state levied tax on extracted minerals equal to 2.5 percent of 50 percent of the difference between the gross value of production and the production costs. The tax applies to all lands from which minerals are extracted, regardless of the land’s ownership. Purpose: to compensate present and future citizens for the loss of natural resources from the land by individuals and corporations that make a profit by using up the irreplaceable natural wealth of a state. Flows back into and out of the economy by state action.
Arizona State Corporate Income Tax, a State-levied tax on income, 6.968 percent of net income; deduction allowed for depletion, but not for Federal income taxes. Purpose: to finance the operations and capital improvement for state government. Flows into and out of the economy by state action.
Federal Corporate Income Tax, a Federally-levied tax of 35 percent for taxable income over $18,333,333, with a sliding scale.

Federal, state, and local governments may also levy other taxes and fees based on production and other factors.

Mine workers who are Utah residents would pay Utah personal income tax. Any mine or worker purchases made in Utah would be subject, as applicable, to Utah sales and use taxes.
 
 

SECTION 5

Estimated Output Impact Analysis

Operating Scenario Assumptions
The economic analysis is based on the following operating scenario assumptions for the NAUD, which are premised on the USGS and private evaluations identifying the uranium resources in the area, as discussed in Section 1 of this report.

The 126 projected mines, divided into 3-mine “sets,” would be developed and mined under a “rolling” schedule that extends over 42 years. Operations would include the following activities over a 5-year cycle for each set of mines: planning and permitting (Year 1); development, and installation of machinery and infrastructure (Year 2); production (Years 3 and 4); and reclamation (Year 5). Except for the first three years and the last two years of the 42-year period, two sets of mines (six mines) would be in production during any given year.

This rolling schedule approach has several advantages. First and foremost, the 42-year schedule would ensure a long-term, stable workforce in the project area, avoiding the undesirable “boom-and-bust” impacts, typical of many large projects, in which a large, short-term influx of workers can stress communities. The project’s longevity would allow local workers to work many years in an industry that provides higher-than-average wages and benefits. Workers who moved into the area would bring their families and settle into the community, contributing to the long-term healthy growth of local communities, and strengthening the local tax base and the expansion of services.
Suppliers and other businesses could feel confident about opening or expanding in the project area, given the long-term nature of the project.

Allocating production over a long duration would also minimize any impacts related to transportation of machinery and ore, thus reducing traffic and the wear and tear on the transportation network. Finally, the long-term nature of the project and the rolling schedule means that at any one time, operations in the NAUD would be fairly small in scale, thus avoiding the commitment of a large portion of available infrastructure resources (equipment, for example) to the NAUD effort. Such a capture of resources for one project could harm other mining operations in the region, the U.S., and even internationally.

Impact Analysis
This section estimates the impacts to the local economy from operations at the breccia mines. As such, the analysis encompasses:
The mining companies’ projected sales;
Purchases of goods and services by the mining companies from local businesses (“suppliers”);
Sales of goods and services by other local businesses to the local and area suppliers; and
Sales of goods and services to employees of these companies and to mining workers;

In performing this analysis, we have used the RIMS II multipliers as described in Section 4. RIMS II measures the economic impact of a business by using location-specific multipliers to determine the total output generated within a geographic region.

To determine the total estimated output impact of the mining operations on Coconino and Mohave Counties (the ROI), Tetra Tech used the RIMS II output multiplier specific to NAICS Sector 2122A0, Gold, Silver, and Other Metal Ore Mining; this multiplier of 1.5560 indicates that each $1.00 of sales by the mine operators would generate an additional $0.5560 in sales for other local businesses (BEA 2009c). Applying this multiplier yields the results shown below.

Table 6. Estimated Output Impact Analysis

Estimated annual sales from the projected uranium mining operations could total approximately $18.9 billion over the 42 production years of the project. Application of the BEA multiplier predicts that additional sales generated by other businesses as a result of the mining operation’s impacts on the local economy could be as much as $10.5 billion, yielding a total estimated output impact for the ROI of up to $29.4 billion. The average annual impact to the area could be as much as $700 million, and would represent a substantial beneficial impact to residents of the local counties and the State of Arizona, and would benefit adjacent areas as well.

A typical uranium mine in Arizona requires a minimum of $23 million of equipment for mine site surface and underground equipment (see Figure 7 below). The equipment is powered by electro-mechanical and diesel drive trains. A mining operation employs sophisticated maintenance planning systems to realize the lowest cost.

An integral part of cost effective mining is the presence of third party maintenance support and parts inventory near the operations areas, to avoid production delays, unscheduled shutdowns for maintenance, and subsequent loss of revenues. Mines also use consumables such as tires, fuel, explosives, and lubricants; construction support; and miscellaneous parts and services.
The mining companies have projected expenditures of $21 million for mining labor, materials, and supplies; $8 million for trucking the ore to Blanding Utah; and $23 million to process the ore at Blanding. 

To the greatest possible extent, the mine operators’ policy would be to use local contractors and suppliers to obtain services and supplies needed in its operations, thus maximizing the impact to Coconino and Mohave Counties and neighboring areas. 

The company would use local providers to obtain materials from national suppliers, thus allowing a portion of those expenditures to remain within the ROI and surrounding areas, directly benefitting the local economy.


Figure 7. Typical Uranium Drilling Equipment

Economic Impact on Neighboring Counties
The uranium mining operations would be dispersed around Coconino and Mohave Counties, which would receive the primary economic benefit. However, the economic influence of these operations could also extend to other areas, including Kane, San Juan, and Washington Counties, Utah, to the north (see Figure 1). Goods and services could also be obtained from Flagstaff (in Coconino County) and other metropolitan areas, such as Grand Junction and Denver, Colorado; Farmington, New Mexico; and Salt Lake City and other Utah cities.

Mine workers residing in the neighboring counties, and the mine’s purchases of goods and services from larger towns outside of the ROI, would generate additional impacts beyond the ROI. This report does not analyze those impacts in detail. However, to partially assess these effects, Tetra Tech collected employment data from the Bureau of Labor Statistics (BLS) for the ROI, Arizona, the neighboring Utah counties, Utah, and the United States (see Table 7). All data shown are for private sector employment only (government jobs are excluded).

Within the project area, Sector 21, Mining (which includes support activities) accounts for a noticeable share (7.9 percent) of total employment only in San Juan County, which is home to a uranium mill. In the remaining project area, mining accounts for less than 1 percent of total jobs (BLS 2009b). In Arizona, mining jobs make up 0.5 percent of the total, and in Utah, 1.1 percent of jobs. Data for the mining sector were not disclosed for Kane County.

Table 7. Private Sector Employment and Wages, 2007,
Coconino and Mohave Counties and Comparison Areas

Data in these counties for the industry subsector including uranium mining were not available or were not disclosed due to confidentiality concerns (USCB 2009b). In every area but Washington County, Sector 21 wages reflect a higher percentage of the total than the employment numbers for those sectors, revealing that this industry pays higher than average wages.

The 2000 Census collected information regarding residents’ employment by industry sector (later data are not available for these counties). Tetra Tech used these data to assess the number of mining workers residing in the area. As Table 8 shows, only in San Juan County were more than 1 percent of the resident labor force employed in the mining sector.

Table 8. Civilian Labor Force And Mining Employment by Residence, 2000

The White Mesa Mill at Blanding, in San Juan County, is the only operating facility of its type in the United States. In 1980, the mill began processing uranium ore that contained nominally 0.3 percent or greater U3O8 ore into yellowcake uranium concentrate containing 90 percent U3O8. Since its opening, the mill has been owned by several companies, and it is currently owned by Denison Mines Corporation (DMC) of Toronto, Canada. The mill also recovers vanadium as a by-product (DMC 2009a). Figure 1 shows the mill’s location; Figure 8 (below) is an aerial view of the mill.
The capacity of the mill between 1980 and 2008 was 2,000 tons per day (tpd) of raw ore feed. In April 2008, a $31 million expansion and modernization program was completed. According to local newspapers, the mill’s employment has ranged from approximately 103 employees in 1985 to 150 employees in 2007 (Deseret News 1985; Telluride Watch 2007). Current employment is about 150 when the mill is in full operation (DMC 2009b).

Based on the projected NAUD mining operations production of up to 375 million pounds over 42 years, the existing White Mesa Mill would have adequate capacity to support the NAUD projection. This proposed production would ensure the continued operation of the White Mesa Mill, along with the substantial benefits the Mill provides to San Juan County, Utah, and its residents, and would maintain the economic opportunities for suppliers in Blanding, the surrounding areas, and the region.
 
 

Figure 8. White Mesa Mill, Blanding, Utah
Regional and National Impacts

Grand Junction, Colorado, with an estimated 2007 population of 48,425, is 425 miles northeast of NAUD and is a major regional support center for the mining and oil & gas industry. Mining support vendors located there include two general mining parts warehouses, and
parts warehouses for major mining equipment manufacturers.

Farmington, New Mexico, with an estimated 2007 population of 42,425, is 275 miles east of the NAUD. It is also a major regional support center for the mining and oil & gas industry.

Other suppliers for the uranium mining operations could be found in major metropolitan areas of the region, such as Denver and Salt Lake City.

Other major beneficiaries of NAUD production would include trucking companies. Historically, mining companies in the western United States have faced the need to haul ore and waste long distances to mills, railheads, and disposal sites. This need has been driven by the effect of diverse topography, lower population density, the absence of alternative transportation, and other factors. In the case of the NAUD, the raw ore extracted from the breccia pipes would be trucked to the White Mesa Mill at Blanding, Utah. The Blanding area is not served by railroads.

Mining companies have historically employed third-party trucking firms for efficiency and cost savings. The economic impact is local, as contract firms typically hire personnel and build service shops such that the truckers and trucks return to home base at the end of every shift. For 375 million pounds of U3O8 over a 42-year period, the total ore to be transported would equal nearly 29 million tons, generating about $1.6 billion in today’s dollars for trucking firms, long-term stable employment for their workers, and a steady stream of revenue for their suppliers. As with most of the economic impact involved in the NAUD mining, these dollars would build the local economy, contradicting the
paradox that exists in so many resource-rich areas, where the economic development impact leaves the area with the raw material.

Yellowcake, the output of the processing mill, is shipped to converters and refiners in 55-gallon drums that weigh an average of 800 pounds. Drums are shipped to conversion plants, where the yellowcake is ultimately converted to fuel for nuclear power plants. An average truck shipment contains approximately 40 drums, or 17.5 tons of yellowcake. This shipping would also generate revenues for trucking firms and their suppliers, as described above. As noted previously, yellowcake is not categorized as a hazardous material for shipping purposes.

Other beneficiaries would include mining equipment companies; equipment suppliers for items such as tires; oil companies; and a host of other firms that employ workers across the United States, in areas far removed geographically but not economically from Arizona.

Other Local Impacts
In addition to their economic contributions, uranium mine company workers residing in the area would contribute to the well-being of the area through their companies’ environmental and safety efforts, from workers and their families volunteering and participating in local activities, and from company efforts in and donations to the community.

Reclamation of the mine sites as shown here becomes a source of pride to the local communities and residents.
 
 
 
 

Figure 9. Reclaimed Pigeon Mine, Northern Arizona

Fiscal Impacts
It is estimated that in addition to the benefits described above, various levels of government would collect the following additional revenues over the 42-year life of the project:
$2 billion in federal and state corporate income taxes
$168 million in state severance taxes
$9.5 million in claims payments and fees to local governments.

Figure 10. Hermit Mine, Northern Arizona, During Operations (Above) and After Reclamation (Below)
 
 
 

SECTION 6

Estimated Earnings Impact Analysis

The estimated earnings impact analysis measures the wages and benefits that could be received by households in the local economy. As such, it encompasses:

Wages and benefits projected to be paid by uranium mining companies;
Wages and benefits that would be paid by local businesses providing goods and services to mining companies (“suppliers”);
Wages and benefits that would be paid by other local businesses selling goods and services to suppliers; and
Wages and benefits that would be paid by local businesses providing goods and services to the employees and families of all these companies.

To determine the total and annual average estimated earnings impact of the mining operations on Coconino and Mohave Counties (the ROI), Tetra Tech used the RIMS II earnings multiplier specific to NAICS Sector 2122A0, Gold, Silver, and Other Metal Ore Mining; this multiplier of 1.5751 indicates that each $1.00 of sales by the mine operators would generate an additional $0.5751 in sales for other local businesses (BEA 2009c). Applying this multiplier yields the results shown below in Table 9.

Table 9. Estimated Earnings Impact Analysis

The direct spending on local wages and benefits for potential NAUD mining operations is projected to total over $25.6 million annually during the years when all activities are underway (roughly 38 years of the 42). Additional wages would be generated by other businesses as a result of the mine operations; this impact on the local economy is estimated to total over $14.7 million annually, yielding a total earnings impact for the ROI at an estimated $40 million annually. Impacts would be somewhat lower during the initial years of the proposed project, before production begins, and at the end, when all that remains is reclamation of the final sets of mines.

Note that it is likely that some mine workers, especially in the Northern Tract, could reside in Kane County, Utah, and possibly in San Juan County as well. Much of the indirect impact would be tied to the counties where the workers actually reside, since this is generally where they shop and obtain services. For this reason, some of the indirect earnings impact would occur within Kane and San Juan Counties, and impacts to Coconino and Mohave Counties would be slightly overstated.
 
 


Uranium mining companies actively participate in their local
communities.

The photo above shows visitors the way to the ACERT booth at Western Legends Week in Kanab, UT. At right is the mining companies’ poster for the event.

Figure 11. Western Legends Week, Kanab Utah: ACERT Poster and Booth Photo
 
 
 

SECTION 7

Estimated Employment Impact Analysis

The estimated employment impact analysis measures the number of jobs that could be generated and sustained in the local economy. As such, it encompasses:
Persons that would be employed by uranium mine operators;
Persons that would be employed by local businesses providing goods and services to mining companies;
Persons that would be employed by other local businesses selling goods and services to the local businesses providing goods and services to mining companies; and
Persons that would be employed by local businesses providing goods and services to the employees of all these companies.

To determine the total and annual average estimated earnings impact of the mining operations on Coconino and Mohave Counties (the ROI), Tetra Tech used the RIMS II earnings multiplier specific to NAICS Sector 2122A0, Gold, Silver, and Other Metal Ore Mining; this multiplier of 2.7642 indicates that each NAUD uranium mining job would generate an additional 1.7642 jobs in the ROI (BEA 2009c). Applying this multiplier yields the results shown below.

Table 10. Estimated Employment Impact Analysis

Annual employment was estimated to be 390 workers (65 workers per mine[8] and 6 mines operating per year), with an additional 688 jobs to be created by other businesses as a result of the mining operations. The employment impact on the local economy is estimated to total 1,078 jobs. However, as noted above, it is likely that some mine workers could reside in Kane County or San Juan County, Utah, and that some of the indirect employment increases could occur in those counties. As noted above, impacts would be somewhat lower during the initial years of the proposed project, before production begins, and at the end, when all that remains is reclamation of the final sets of mines.

Although this is a relatively small increase over existing employment in the ROI counties, these well-paid jobs would provide substantial employment opportunities to residents in the less populated and more remote areas of the Arizona Strip and adjacent areas of Utah.

[8]The job total includes miners, geologists, engineers, managers, and other professional and support staff.

Conclusions
The NAUD represents an important domestic supply of low-cost uranium of the highest grade in the United States, which consumes approximately 50 million pounds of uranium annually. Only 12 percent of the U3O8 used by U.S. nuclear power plants was U.S.-origin uranium, while 88 percent was of foreign origin. The NAUD uranium endowment is estimated to produce over 375 million pounds of U3O8 with an energy equivalence of 13.3 billion barrels of crude oil — equal to the total recoverable oil in Prudhoe Bay, the largest oil field in North America.

Mining the lands proposed for withdrawal in the NAUD would produce significant economic benefits to the local area, to Arizona and Utah, and nationally:
1,078 new jobs in the project area
$40 million annual impacts from payroll
$29.4 billion in output impacts over the 42-year life of the project
$2 billion in federal and state corporate income taxes
$168 million in state severance taxes
$9.5 million in claims payments and fees to local governments
$1.6 billion to trucking firms transporting ore
Continuation of 150 jobs at White Mesa Mill in Blanding, San Juan County, Utah, and the indirect jobs those workers support
Increased business for regional and national mining support vendors
Increased property taxes for local governments
Increased state and local sales taxes

The proposed project’s 42-year schedule would ensure a long-term, stable workforce in the project area, and businesses could feel confident about opening or expanding in the project area. The environmental cost of the NAUD mining would be low. The breccia pipe mines have a small footprint and a two-year life, and after reclamation, formerly mined areas are undetectable.

In short, uranium mining in northern Arizona would allow the United States to secure an important domestic source of fuel while providing significant economic benefits with minimal environmental impacts.


View of the “Arizona Strip”
 
 
 

SECTION 8

References

BEA 2009a. Bureau of Economic Analysis, U.S. Department of Commerce. Regional Economic
Accounts, Local Area Personal Income: Table CA04 – Personal income and employment
summary. Available at http://www.bea.gov/bea/regional/reis/. Viewed June 2009.

BEA 2009b. Bureau of Economic Analysis, U.S. Department of Commerce. Regional Economic
Accounts, Local Area Personal Income: Table CA25 – Total employment by industry.
Available at http://www.bea.gov/bea/regional/reis/. Viewed July 2009.

BEA 2009c. Bureau of Economic Analysis, Economic and Statistics Administration, U.S.
Department of Commerce. RIMS II Multipliers 1997/2006: Table 1.5, Total Multipliers for
Output, Earnings, Employment, and Value Added by Detailed Industry, Montrose County,
CO (Type II). U.S. Department of Commerce. Washington, D.C. Obtained July 2009.

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SECTION 9

List of Preparers

About Tetra Tech, Inc.
Tetra Tech is a leading provider of specialized consulting and technical services, offering infrastructure and environmental services to public and private sector clients. Our technical consulting services include research and development, applied science, engineering and construction management, operations and maintenance, and restoration and remediation. Founded in 1966, Tetra Tech has more than 10,000 employees located in 275 offices worldwide.

Tetra Tech’s mining group provides geological, geotechnical, environmental, and mine engineering services to the mining industry. Our technical mining expertise includes research and development, applied science, engineering design, construction management, operations support, and site reclamation—supporting sustainable mining throughout the complete mine life cycle. Tetra Tech is also experienced in supporting economic and socioeconomic analysis related to mine feasibility studies and impact analysis.

Preparers:

Andrew P. Schissler, P.E., Ph.D., Project Manager. Principal Mining Engineer, Tetra Tech, Inc.
B.Sc. and Ph.D., Mining and Earth Sciences Engineering; M.B.A.
35 years experience in mining engineering and management for private and government clients.

Stephen A. Krajewski, P.G., Ed. D., Senior Geologist Modeling & GIS, Tetra Tech, Inc.
B.S. Geography, M.S. Geology, Ed. D. Earth Science
35 years experience in computerized modeling of mineral deposits internationally for academic institutions, government agencies and public and private companies.

Kristin L. Sutherlin, Socioeconomist, Tetra Tech, Inc.
B.A., Economics; M.A. Candidate, Urban Studies / Planning.
25 years of experience in socioeconomic and economic impact analysis for government and private clients in the energy sector and other industries.

Leroy Aga, Senior Mine Planner, Tetra Tech, Inc.
Assoc. Science.
25 years experience in developing mine optimization, reserve estimation, production scheduling, and mine planning.
 

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