OPINION: Uranium mine too great a risk for SD
Powertech (USA), Inc., a Canadian company with just 10 employees owned by a stock market hedge fund, is planning a massive uranium mining operation near Edgemont. Last year, according to their unaudited financial report, they lost about $1.6 million. The top four officers are paid about $818,000. Powertech borrowed $7.5 million in exchange for stock from a unit of GDF Suez, a huge global utility whose stock went down 27 percent in the last year (see Financial Times, January 2013.) This move diluted the already troubled stock.
About five years ago the Powertech stock was selling for $5.43 per share; currently it is about $0.12. Thus, stockholders who bought 100,000 shares for $543,000 now have an investment worth $12,000 -- a huge loss. Powerful people in South Dakota, including legislators, government officials and local investors may have lost thousands. Understandably they want their money back.
Powertech is in no position to promise South Dakota anything. After the various mining permits are granted they could sell the company. Our huge and valuable water permit can be sold also.
We are being asked to take a huge risk with our water and environment with a company of very dubious financial stability. Powertech has never managed any kind of uranium mine.
The uranium product "yellowcake" will be sold internationally, principally to China and India. This market has fallen to about $40 per pound and may go lower. France and Germany have decided to phase out nuclear power plants and China has recently announced it plans to greatly expand its use of solar and wind power. The Fukushima disaster has greatly affected this market.
"Yellowcake," after refining, can be used to make nuclear weapons. Sales require an export license, which could be revoked at any time by our government if we became alarmed about its potential use in weapons. This would immediately cause huge financial strain on the Powertech operation.
Of the mineral leases in the Dewey-Burdock mine area of 10,500 acres, 37 percent are owned by the Bureau of Land Management (BLM). No South Dakota sales taxes (4.5 percent, of which the state gets half) would be collected on yellowcake from these leases. The local tax revenue (2.25 percent) split between Custer and Fall River Counties might not even be enough to cover the damage to our local roads.
The North Dakota Bakken oil boom has not resulted in large-scale home purchasing by workers who do not want to be stuck with a local home once the boom is over. Uranium mining is not a long-term proposition and will likely play out the same way. I question the jobs and financial gain projections Powertech is making.
We should not take this risk.
Susan Henderson is a third-generation cattle rancher who lives south of Edgemont.