Cameco Layoffs

Drilling rigs lay the framework for a new well field in August 2012 at Cameco’s Smith Ranch-Highland uranium operation near Glenrock. The Wyoming Mining Association is asking lawmakers to cut severance taxes due to low prices for uranium.

Alan Rogers, Star-Tribune

When the market recovers, the uranium industry won’t need a tax break. But it does now, industry representatives say.

Citing low prices and employment, the Wyoming Mining Association will make the case for a state tax cut on uranium when lawmakers meet Thursday in Casper. The cuts worked once before, they say.

In the early ‘90s, when uranium prices slid, the state gave companies a break that lasted more than a decade. However, critics say Wyoming can’t afford to reduce mineral royalties during an economic downturn in which the state’s income from oil, gas and coal taxes has fallen. Others say the state shouldn’t on principle grant the tax breaks.

Six facilities mine uranium in the Cowboy State, the leading producer in the U.S. Last year those companies contributed $2.61 million in severance taxes to the state and $4.12 million in ad valorem taxes.

But prices for yellowcake, the powdery ore processed after mining, tumbled as low as $18 per pound last year due to a worldwide glut, from record highs of more than $120 in 2007. Production is down, and employment in the industry has fallen to its lowest level since 2004, according to the Wyoming Mining Association.

Uranium companies need an incentive to invest in new mines and production while the market is suffering, said Travis Deti, president of the mining association, in a letter provided to the minerals committee.

If the state loosens taxes on the industry now, it will be able to grow in the downturn and Wyoming will reap the tax benefits when prices rise, Deti said.

Otherwise, production is going to continue to decline as companies dig out the ore available at their existing mines and shy away from the cost of new operations or expansion.

The mining association is proposing a sliding scale for uranium severance taxes dictated by the spot price of uranium. If the price falls below $30, companies will not pay severance taxes. For every five- to six-dollar increase in the price above that, a 1 percent tax would be charged. So a $35 spot price would incur a 1 percent severance tax, while a $50 price would be taxed at 4 percent.

But the idea has already sparked pushback by those unimpressed with the association’s argument.

“’When the market recovers’ has been the theme song of the uranium industry since the 1980s, and they always want some kind of deal,” said Wilma Tope, a board member with the Powder River Basin Resource Council, which opposes a tax cut. “Unfortunately, the history of this industry is one of leaving behind un-reclaimed uranium mines and polluted landscapes for other taxpayers to clean up.”

In a statement released before the committee meeting, the council pointed out that current reclamation sites in Fremont County still need to be addressed, including groundwater concerns at the both the former Split Rock facility near Jeffrey City and the Umetco Minerals Corp. outside Riverton. Cleanup at the American Nuclear Corporation site in Fremont County is on hold due to lack of funds, according to the Nuclear Regulatory Commission. The company went under in 1994. Cleanup responsibilities were transferred to the state of Wyoming, according to the commission.

“In other words, the American – and Wyoming – taxpayers are on the hook for reclamation costs for mostly foreign owned companies. This is corporate socialism at its best,” Tope said in a statement.

Sarah Gorin, a lobbyist and expert on mineral taxes in Wyoming, said the uranium tax break from 1991 to 2009 could not be tied to an increase in production or a bump in jobs.

“WMA believes this sliding scale [for taxation] will help Wyoming’s producers conserve precious cash during the down times so they can ramp up production, and generate increased severance taxes when the market recovers,” she said in a statement with the Powder River Basin Resource Council. “I’m sure we’d all like to conserve precious cash, but we all have to pay taxes.”

Follow energy reporter Heather Richards on Twitter @hroxaner

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Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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