ATOMIC ENERGY: Freeze on Uranium

At the annual meeting of the Atomic Industrial Forum in Manhattan’s Plaza hotel last week, the Atomic Energy Commission hit the uranium business with a hydrogen bomb. Said AEC’s Raw Materials Chief Jesse Johnson: “We have arrived at the point where it is no longer in the interest of the Government to expand production of uranium concentrate.”

The decision meant that while the U.S. will honor its existing contracts to buy uranium concentrate from mills, it does not intend to sign any new contracts that would appreciably increase production. Thus, after ten years of an all-out program to expand uranium mining. AEC put on the squeeze: any big new uranium discoveries will probably not be able to find a market. But Johnson did leave the door open a bit for the building of mills in hitherto undeveloped regions: “If new contracts are considered, preference will be given to providing a limited market for areas having no present milling facilities.”

Who Will Search? The freeze, AEC said, was ordered because the U.S. by 1959 will be able to produce 15,000 tons of uranium concentrate a year, easily enough for the nation’s military and power needs. But the hold-down seemed aimed more at squeezing the budget than at controlling an oversupply. Johnson himself admitted that the U.S. has only a ten-year supply of uranium-ore reserves at the projected 1959 production rate. Later he conceded that he does not know how much ore the U.S. will need for its military and economic security ten years from now. Yet uranium men contended that by putting the lid on concentrate output, the AEC will automatically stifle the hunt for ore. Johnson agreed that prospectors will need a fresh incentive to press the search. Said he: “Much of this incentive will have to come from confidence in the future market for atomic power.”

This made little sense to uranium men, who saw as their only incentive a present-day market for their ores. Many of the small-time uranium miners who do not have contracts to sell to existing mills will fold up altogether. Such a fallout could peril future U.S. uranium supply, since some of the richest U.S. uranium lodes have been discovered by the small timers who were willing to search in the most improbable places. Said Albuquerque’s E. P. Chapman Jr., one of the Southwest’s top mining engineers: “The new policy kills all further exploration and development by people who do not have milling contracts. If you have no mill, you have no market. If you have no market, you have no reason to hunt for uranium.”

With their production of concentrate limited, even the big integrated producers were planning to cut back the costly ore search. Anaconda Copper Mining Co., which operates the richest U.S. mine near New Mexico’s Ambrosia Lake region (TIME, Sept. 30), set a course that probably will be followed by other industry leaders. Said President Clyde Weed: “We will keep on exploring, but at a slower rate. We will spend less money on development. If we find good deposits, we will sit on them until the demand picks up.”

Shake-Out. Uranium miners were not the only ones in trouble last week. The problems of developing atomic power are so great that the manufacturers of reactors now face the same kind of industry-wide shake-out that uranium miners are going through. Many small manufacturers are cutting back their plans for breaking into the reactor business. Bell Aircraft Corp. recently laid off 29 of its 30 atomic engineers. Like several other companies, it has decided to make reactor components instead of whole reactors. Even some of the giants are beginning to take a critical second look.

A major problem is that the construction of complex nuclear plants is proving far more expensive than originally thought. On a big nuclear power plant that Consolidated Edison is building north of New York, cost estimates have jumped from $55 million to $90 million. At the nation’s first major nuclear power plant, which is scheduled to start operating at Shippingport, Pa. before year’s end, Westinghouse has spent 80¢ on research and development for every $1 spent on construction of the reactor portion.

A more basic problem is that the commercial market is far too small to support the many companies that have bounded into it. While six big companies supply almost all the equipment for the $1.5 billion-a-year conventional power market, 50 to 60 firms plan to make reactor equipment. AEC expects few of them to survive. Said the commission’s Reactor Development Director W. Kenneth Davis: “During the next few years the business will not support 50 companies or even a fraction of them. We could have a few good companies or a lot of mediocre or bad ones. I favor a few good ones.”