When the uranium industry suffers, small communities near uranium mining operations in places like Converse County suffer.
That’s how Sen. Brian Boner, R-Douglas, views it anyway. Boner is one of the supporters of a proposal to zero out some taxes for uranium and insulate mines, and miners, in Wyoming that are being hammered by international competition. The industry has been in a low price environment for years, due to a flooded market of cheap-to-mine uranium from other countries.
What’s being proposed in House Bill 139 is that Wyoming exempt uranium from severance taxes until 2034 in a bid similar to one proposed by the uranium industry two years ago.
The measure wouldn’t fully exempt uranium producers from paying the severance tax. It would create a scale for taxes depending on how much money uranium is going for on the open market.
The new normal of uranium prices — sub-$30 per pound — would be exempt. Between $30 and about $36 per pound, the severance tax would be 1 percent. Every additional $5 in value for a pound of uranium would add another percent to the severance tax until $50 per pound of U308 is reached. From then on the severance tax would be 4 percent.
The cost to Wyoming coffers is more modest than a similar tax cut would be in some other mineral industries. From fiscal years 2020-22, legislative staffers calculate a $500,000 loss to the general fund and a $1 million loss to the budget reserve account, if the bill is passed.
In addition to Boner, the bill is sponsored by Reps. Donald Burkhart, R-Rawlins and Aaron Clausen, R-Douglas, and Sen. Eli Bebout, R-Riverton.
“Obviously, this is near and dear to my heart in Converse County,” said Boner, a rancher from a family of ranchers in eastern Wyoming. “We are attempting to give a little bit of a break for this industry.”
Wyoming’s uranium industry has found favor with a similar tax cut in the past — about 20 years ago — but lawmakers have not been sympathetic to the industry’s plea for relief more recently. The Wyoming Mining Association, with uranium companies in support, asked for the scaled severance tax cut during the interim session in 2017.
It failed to impress. At the time, Wyoming’s key industries — oil, gas and coal — were all struggling, too. The question posed at the time was why uranium deserved to catch a break where the other minerals did not.
Producers said at the time that they were nearing the end of their contracts and would face near impossible competition on the spot market. The uranium wouldn’t be worth the costs of extracting it, they said.
Clausen, one of the sponsors of the bill and another Converse County politician, said that the trade-off of losing some money from tax revenue and retaining jobs is worth it.
“We spend more than that trying to attract jobs to Wyoming, and if we spend that to keep jobs, I think it’s a good investment,” he said.
Boner took a similar stance, saying his concerns about the tax cut were alleviated when he realized how little uranium was paying in severance taxes today.
The modest income from the industry is reflective of how much those mines are struggling, he said.
Two Wyoming operating firms have pleaded with the Trump administration for relief. The Department of Commerce is considering their request to force nuclear power producers to procure a certain percentage of their enriched uranium domestically. This would interfere with some longtime trade relationships as well as force nuclear power to purchase a more expensive fuel, experts noted.
But companies say something has to be done to give them a leg up to compete with low costs of production coming out of Kazakhstan and elsewhere.
Uranium prices did jump in 2018 based on production cuts from Kazakhstan and demand from the nuclear power sector. The price climbed to just shy of $30 per pound in December, a 20 percent increase from the start of the year.
Some producers are taking advantage of the poor market with their eye on a rebound, including Uranium Energy Corp, which acquired the North Reno Creek project outside Wright in May.
“We’re executing on contrarian acquisitions during difficult years in the uranium market,” said CEO Amir Adnani in a press release.
Acquiring the Wyoming property would position the firm to “lead a renaissance in U.S. uranium production via the ISR mining method, which is globally recognized for being low cost and environmentally friendly,” Adnani said.
But the contrarians have retreated of late. The expected recovery hasn’t come as soon as some hoped, noted Glenn Catchpole, a former executive of Uranerz before the company merged with Energy Fuels. Catchpole is now on the board of the Azarga Uranium Corp.
“People are being more conservative. Investors who support companies see that same thing,” he said of the delayed rebound.
Whether and when prices will finally rise is unclear even to those in the industry.
Catchpole says he’s an optimist, noting that he’s been through two booms and two busts in uranium in his career. Catchpole said the Wyoming tax break could certainly help some companies hold on while low prices linger.
“When is it going to take off? I don’t know,” he said. “Experts keep predicting. They set a date, and the date comes and goes.”
But the prolonged low prices and the low production is why Wyoming doesn’t have much to lose in offering the severance tax cut, he said.
“The state’s really not getting hurt at $30 (per pound of uranium) because we are not producing anyway,” he said. “We are not paying severance taxes because we aren’t producing.”