Yellowcake Towns: Uranium Mining Communities in the American West

6 Allocation, Protectionism, and Subsistence: Changing Federal Policies to Preserve Domestic Producers, 1958–1970

B Y 19 5 8 T H E A T O M I C E N E R G Y C O M M I S S I O N ’ S (AEC) uranium procurement program was a tremendous success. Thanks to the price schedules and incentives offered through the AEC Circulars, uranium companies had been extremely successful with prospecting for new ores, mining , and building processing mills. In 1948 two mills produced just over 100 tons of uranium oxide in yellowcake. By 1958, 23 mills produced over 12,000 tons. But there was a problem. Although the supply of uranium had increased greatly, demand was stagnating.1 In the 1950s, AEC demand came from military weapons and peaceful uses. Although news reports suggested that atomic-powered generating plants, airplanes, trains, ships, and even cars were soon to be commonplace , the technological development of such applications lagged. As for weapons, the increasing uranium stockpile combined with an international test ban movement drastically reduced the government’s requirements. Until private demand increased, many officials suggested limiting the number of 6 Allocation, Protectionism, and Subsistence: Changing Federal Policies to Preserve Domestic Producers, 1958–1970 Chapter Allocation, Protectionism, and Subsistence 106 uranium producers. Over the next dozen years, the government’s uranium policy changed from one of developing new resources and industries to one of providing the allocations and protectionism necessary to keep a glutted but needed industry alive. By 1970 the once booming uranium industry was barely surviving on what one reporter called “starvation rations.”2 The inception of the change in policy began with the adoption of a new AEC program in 1956 under which only processed yellowcake would be purchased from mills instead of both yellowcake and raw ore being purchased from miners. The new policy would be in effect from 1 April 1962 (the end of the price schedules in Circular 5 revised) to 31 December 1966. AEC officials believed this move would standardize purchasing and assist U.S. mining and milling companies with planning for a transition into future commercial uranium markets.3 By late 1957 the potential of the new discoveries in the Ambrosia Lake region of New Mexico and the Gas Hills of Wyoming kindled talk that perhaps the AEC should also curtail production. Indeed, uranium ore reserves continued to increase even as production levels grew. In 1947, uranium production had been practically nil, with 2,200 tons of ore in reserve. By 1956, annual production had reached 8,400 tons of uranium oxide, with 120,200 tons in reserve. In 1957 production increased to 9,800 tons while reserves grew to 166,300 tons of uranium oxide. A year later production had swelled to 14,000 tons of U3O8, but reserves also grew to 181,800 tons.4 As supplies increased, slow-moving private and leveling military demand called for a change in the procurement program. Although President Dwight D. Eisenhower had requested nonmilitary use of atomic energy in 1953 in his “Atoms for Peace” speech at the United Nations, nuclear technology was not developing as fast as many had believed it would. The potential growth of domestic reserves was becoming apparent at the same time the United States and the Soviet Union were negotiating the first test ban treaties on nuclear weapons. Because Congress was not willing to continue to stockpile uranium, some government officials began calling for a revision of the domestic uranium procurement program.5 In response to this growing divergence between uranium supply and demand, the AEC began to make moves to corral the domestic uranium procurement program. The first official word about a change in policy came when Jesse C. Johnson, director of the AEC’s Raw Materials Division, speaking at the Fourth Annual Conference of the Atomic Industrial Forum on 28 October 1957, announced that “it no longer is in the interest of the Government to expand production of uranium concentrate.”6 Allocation, Protectionism, and Subsistence 107 The following spring the AEC put teeth into Johnson’s announcement by altering its 1956 procurement program for the years 1962–1966 to prevent further expansion in the domestic uranium industry. On 24 November 1958 the AEC announced that it would purchase for that period only “appropriate quantities of concentrate derived from ore reserves developed prior to 24 November 1958.” The AEC maintained aspects of the 1956 plan by only buying concentrates, setting the price for those concentrates at eight dollars...