Will Virginia Allow the First Uranium Mine East of the Mississippi?

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Jan. 10 2013 2:40 PM

The Ugly Battle Over Virginia’s Uranium

Secret tapes, murky finances, and free trips to Paris.

George Washington and Jefferson National Forest near Chatham, Va.
George Washington and Jefferson National Forest near Chatham, Va.

Photograph courtesy USDA.

For all the turmoil it is stirring, the mining company Virginia Uranium operates from a headquarters that is remarkably plain: a beige, corrugated-steel building next to a cattle farm at the edge of the small town of Chatham, Va. You wouldn’t guess the firm is heading a highly controversial effort to build the first uranium mining and milling operation east of the Mississippi River.

The parking lot, holding several cars and pickup trucks, is near the “End of State Maintenance” road sign. Inside, a woman greets me (I’m not expected) and leads me past walls covered with detailed geological maps to the office of Patrick Wales, the youthful-looking project manager. He is scowling at three computers screens on his desk.

“I can’t talk to you today,” Wales says anxiously. “The lieutenant governor has just announced his opposition to the project.”

Wales, who never did respond to requests for an interview, has good reason to be apprehensive. Virginia Uranium’s plan to develop a 119-million-pound site of underground uranium ore—one of the largest deposits in the United States—is finally coming down to the wire.

The Virginia General Assembly will decide during this winter’s session, which was called to order this week, whether or not to lift a 30-year-old moratorium on uranium mining. The denouement is coming after several years of intense lobbying by proponents and opponents, hundreds of thousands of dollars in studies, and trips paid for by the mining firm to send legislators to Paris. It is pitting neighbor against neighbor, splitting the state Republican Party, and sparking late-night political intrigues in an area that seems better suited for Andy Griffith and Aunt Bea.

If Virginia dumps the mining ban, it will be taking a big step into uncharted territory. The state has no experience regulating uranium mining or milling, although a recent government panel did make up a list of what must be done to regulate the industry. The chore would take several years and involve hiring 30 new professionals to monitor drinking water, groundwater, labor conditions, and air pollution.

The mining project could make money—some claim up to $7 billion, depending on the fickle global prices for uranium. Investors include a number of mysterious Canadians and a local family headed by a retired U.S. Foreign Service officer named Walter Coles. The family owns the heirloom Coles Hill Farm that dates back to the War of 1812. Areas underneath the farm’s rolling pastures, as well as more than 2,000 acres of leased land, could be ripped up to reach the radioactive ore. Economic studies say that 1,000 jobs may be created in a region wracked by the loss of thousands of textile, furniture, and tobacco jobs. The unemployment rate in Danville, the largest nearby city, is 9.3 percent, among the worst in the state.

The risks of pushing on with uranium mining are immense. The National Academy of Sciences warned in a 2011 study that “there are many unknowns” and that “steep hurdles” needed to be surmounted if mining goes forward. Much of the concern lies with Virginia’s dearth of experience regulating ore production, but dangers also arise because of the mining area’s climate, watershed, and nearby cities.

The United States is actually a small player in uranium production, representing only about 4 percent of the world total. Most mining has been done in remote, minimally populated, desert areas in Western states such as Arizona or Utah in the 1940s and ’50s—often with disastrous results.

As late as 2007, the Environmental Protection Agency was still dealing with the 1979 breach of a dam on the Puerco River near Gallup, N.M. that held back radioactive waste from a uranium mine closed years before. The breach, of a dam operated by United Nuclear Corporation near Navajo land, released more radioactive material than did the accident at Three Mile Island. The EPA ordered acres of tainted land and vegetation dug up.

The Virginia tract poses much different problems. Chatham has a rainy climate, so any radioactive leaks would travel farther and faster. It is also within 130 miles of three major urban areas—Richmond, Raleigh-Durham, and Hampton Roads, a thirsty metropolis surrounded by salt water that gets up to 40 percent of its drinking water from Lake Gaston, a mere 20 miles downstream of Coles Hill Farm.

Adding to concerns, Virginia Uranium plans on storing radioactive tailings from its milling operations at the farm. The underground storage areas would not be far from groundwater, and the creeks and streams in the area flow into a lake complex on the Virginia-North Carolina border that is used for drinking water. Some local residents fear what uranium-tainted dust or smoke might do to their homes. Others have placed green signs on their land stating: “I dig uranium. It’s about jobs.”

The uranium in the ground near Chatham was discovered in the 1950s, when government prospectors scoured the countryside for nuclear weapons material. Local residents weren’t surprised. One was Claudia Emerson, a Pulitzer Prize-winning poet and former state poet laureate who grew up in Chatham. “On our street,” she says, “every other house seemed to have a case of cancer in it. It could have been that people smoked a lot more, but there seems to have been something else.”

Uranium mining remained dormant locally until the late 1970s, when a Canadian firm named Marline Uranium Corp. began surveying for uranium. In 1982, it announced it had found 30 million pounds of uranium oxide near the Coles Hill site as well as some farther north in the horse-country counties of Fauquier, Madison, Orange, and Madison. It began leasing thousands of acres, joined with its partner Union Carbide, the chemical giant.

The plan touched off a flurry of protests, but it was doomed anyway. The partial meltdown of the Three Mile Island nuclear power station in Pennsylvania in 1979 caused uranium prices to tank. Union Carbide bolted, and Marline eventually shut down.

Uranium came up again in 2007 with some curious similarities to the efforts 30 years earlier. For one, Norman W. Reynolds, who had headed Marline, was the new president and chief executive of Virginia Uranium. He is working with the Coles family, which wanted to develop the reserves on its farm after Walter Coles, a two-tour veteran of the Vietnam War, retired a decade ago from U.S. diplomatic service in Egypt, Russia, and Jordan.

The investors behind the Virginia effort aren’t easy to track down. Documents and a company website describing the Virginia Uranium venture show links to the Canadian mining industry based in Vancouver. (Canada is the world’s second-largest uranium producer after Kazakhstan.) Virginia Uranium is shown as subordinate to an entity called Virginia Energy Resources that appears to also control a British Columbia firm called Otish. The name apparently refers to a uranium mining region in Quebec, and a search turned up a firm named Otish Energy. When I called the number listed, a recording of an operator from “Tangent Management” sent the call to voice mail.

One thing that isn’t murky, however, is how much influence Virginia Uranium has been trying to buy. It stirred up a scandal in 2011 when it took a dozen legislators on an expenses-paid trip to France to tour abandoned uranium mine sites, with a side trip to Paris.

In the past year, according to the Virginia Public Access Project, the company has spread $160,000 around to state political campaigns, about 70 percent of it going to Republicans. The firm has contributed $12,500 to the Republican Party and $10,000 to a political action committee backing Gov. Robert F. McDonnell.

Elected in 2009, the popular and telegenic McDonnell wants to turn Virginia into the “energy capital of the East Coast” by pushing offshore oil drilling, coal, nuclear power, and alternative energy.* He says he has not taken a stand on lifting the moratorium but did set up a study group to explore what the state would need to do to handle uranium mining.

While McDonnell sidesteps the issue, his lieutenants are active players. One of his biggest allies placed a late-night call to Pittsylvania County Supervisor Jerry A. Hagerman last summer just before the board was to consider a resolution on whether to support the ban.

Stanley did not know that Hagerman, a retired police investigator who opposes mining, was tape-recording the telephone call. Stanley can be heard saying: “You guys don’t need to vote now. It can save you big personally and politically and you have control of your conscience.” Stanley later said he misspoke. “I’m hoping legislators don’t lift the ban,” Hagerman says.

Just how touchy the topic is came to light in December when Lt. Gov. Bill Bolling, who had been groomed as McDonnell’s replacement, came out publicly against mining. He joins a host of other opponents, including the cities of Norfolk and Virginia Beach, the Virginia Farm Bureau, the Danville Chamber of Commerce, a group of African-American pastors from southwestern Virginia, and, possibly, the North Carolina legislature, which is considering a draft resolution opposing mining just across its northern border. In support are a small business group called Organizers of People for Economic Prosperity and influential Republicans, such as state Sen. John Watkins, who says the project is a “unique opportunity” to create jobs.

Thorough Watkins’ leadership, the Virginia Coal and Energy Commission, a study group, voted 11 to 0 on Jan. 7 to recommend ending the ban. But in a shrewd political ploy, mining would be allowed only in Pittsylvania County, where Virginia Uranium has an interest. The recommendation would not apply to areas including Culpeper, Madison, Orange, and Fauquier Counties—outer bedroom communities for Washington, D.C. that have a number of horse farms and a large population of wealthy people.

The ultimate question that may determine the fate of mining in Virginia is whether there is a strong and sustainable market for uranium. In the 1980s, a drop in prices killed the Marline project. When Virginia Uranium got started in 2007, uranium was selling for about $140 a pound. It later dropped to about $70 a pound. After the Fukushima disaster in Japan in March 2011, prices sank to $40 per pound level and remain there.

Although the Virginia Uranium website advertises “Energy for America,” it’s hardly certain its products will be used in this country. A new commercial power plant hasn’t been built in the United States since the 1970s, although four units are being built in South Carolina and Georgia. A new Energy Information Agency study says that growth in electricity demand for the use of nuclear fuel will be less than 1 percent for the next 20 years, far less than earlier predictions, raising more questions about future demand for uranium.

Most of the 60 or more reactors now under construction are in Asia, so it is not likely that Virginia uranium will be of much benefit to this country. In exchange for about 1,000 jobs and some tax money, the state would be stuck with any ill effects from the project for years.

Correction, Jan. 14, 2013: This article originally misstated the year in which Virginia Gov. Robert F. McDonnell was elected. (Return to the corrected sentence.)

Peter Galuszka is the author of Thunder on the Mountain: Death at Massey and the Dirty Secrets Behind Big Coal. A former Moscow bureau chief for Businessweek, he has been covering coal and other energy issues for nearly four decades.