Experience has taught Donald Spencer to be skeptical about a proposal to mine more uranium in the Edgemont area.

The straight-talking 79-year-old rancher has signed a financial agreement to allow mining on his land, but he hesitated when asked if he’s supportive of the project.

“I don’t know whether I am or not,” he said. “The more I hear about it, maybe the less I am.”

Spencer lived through the first uranium boom during the 1950s and ’60s. He said exploratory drilling during that era diminished the production of his family’s water well and left behind uncapped 4-inch-diameter holes that have tripped and injured horses on his ranch along the southwestern edge of the Black Hills.

Mining companies also left behind unreclaimed mines — including one on land that Spencer now owns — and a 4 million ton pile of radioactive waste that was later buried in a pit south of Edgemont. The waste, a sand-like substance known as “tailings,” was used as fill material at dozens of sites around town, where it emitted cancer-causing radon gas and had to be dug up. Some Edgemont residents, along with former millworkers and miners, suffered lung diseases and various cancers that may have been caused by inhaling metallic, radioactive dust and radioactive gas.

The question begged by that sad history is whether Azarga Uranium Corporation will repeat the sins of the past — mostly committed by the now defunct Susquehanna Corporation — if Azarga’s project wins regulatory approval. Here’s a look at some of those past sins, with analysis by experts on both sides of the debate about renewed mining.

Method is different

Unlike the old days, when mining companies tunneled, dug and blasted their way to underground ore deposits and then crushed and leached out the uranium in above-ground mills, the new proposal involves injecting a solution of water, oxygen and carbon dioxide to leach the uranium from the ore while it’s still deep underground, and then pumping it to the surface. It’s a method of mining called “in situ,” which is a Latin phrase meaning “in its original place.”

Mark Hollenbeck is a local rancher, engineer, former legislator and former Edgemont mayor who can recall some of the first mining era from his childhood. He now works for Azarga (previously for Powertech) as its manager for the Dewey-Burdock project, named for two Edgemont-area map dots in the proposed mining area. Hollenbeck said the in situ method is one of many ways the new mining effort will be different from the old one.

He’s infuriated by what he called the “regulatory purgatory” that has so far taken eight years and has not yet resulted in permission to mine. The Azarga proposal, he said, is being punished for the long-ago sins of others.

“It’s like saying we shouldn’t allow anybody to sell new cars because in the ’50s they didn’t have seat belts,” Hollenbeck said. “Well, we learned and we evolved and we changed and got better regulations with better technologies. To compare us to the mining operations of the ’50s is ludicrous.”

Lilias Jarding, a member of the Black Hills Clean Water Alliance, which opposes the proposed mining project, disagrees. She has a doctorate in political science with an emphasis on environmental policy and frequently writes and speaks about in-situ mining.

“From history, there is nothing that leads me to believe the uranium industry has changed,” Jarding said, “and nothing that leads me to believe we would end up with a different outcome this time.”

An existing in-situ uranium mine is now operating near Crawford, Neb., not far from Edgemont, and its owners are seeking a new permit to continue the mining. Government data on the mine, which has 5,400 wells in operation, show more than 50 violations of the mine's operating permit from 1997 to 2012, though no major disasters or contamination of ground water have been reported.

Where the wealth goes

Most of the wealth produced during the first mining era did not stay in Edgemont or South Dakota. Men like J. Patrick Lannan, whose Chicago-based Susquehanna Corp. and its subsidiaries owned the Edgemont mill and some of the mines, made millions and invested little to none of it in Edgemont, which has shriveled to half of its mining-era population.

Hollenbeck acknowledged that the major wealth from a new uranium boom will probably follow a similar path out of the city and state. Azarga has its international headquarters in Hong Kong.

“The real wealth tends to follow risk,” Hollenbeck said, “so whoever takes the risk tends to get the wealth.”

In this case, as Hollenbeck sees it, the risk is a regulatory process that he said has taken eight years so far and cost the company $100 million.

At least some of the profits would stay to be reinvested in local communities through severance taxes. The tax rate is 4.5 percent of the gross value of the uranium produced by the mines, and the revenue is split between the state and counties.

If the projected 10 million pounds of uranium is mined and the price is $40 per pound (that was the approximate price around the time of this writing), the mines would produce $400 million in revenue for Azarga and the severance tax would peel off $9 million for the state and another $9 million to be split between Custer and Fall River counties. Those are cumulative figures over the anticipated 12-year proposed life span of the mines.

Fewer than a dozen landowners would also receive mineral-rights payments and production royalties from Azarga, the terms of which Hollenbeck declined to disclose.

Environmental concerns

The environmental impact of the first mining era is its most obvious and dubious legacy. At least two large open-pit mines remain unreclaimed north of Edgemont, and there’s a massive containment site south of Edgemont where 4 million tons of radioactive tailings — the byproduct of uranium milling — were buried.

The impact of the water-filled, open-pit mines on the surrounding environment is largely unknown but was the subject of September testing by the U.S. Environmental Protection Agency. Results are pending and could be released this year.

Hollenbeck said Azarga will be required to post millions of dollars worth of bonds, which are yet to be calculated, if it wins regulatory approval. The bonds would serve as financial protection for taxpayers and landowners if the company is unable to reclaim the mined areas.

He said the environmental risk from in-situ mining is less than traditional mining, if all goes as planned. The above-ground surface is disturbed only by pumps, and the water in the solution that is injected underground is taken from local underground sources. At the end of mining, the water is treated to meet federal standards and pumped back below ground.

Jarding fears regulators might loosen the water standards over time to favor Azarga. She also suspects that the environmental impacts that were so obvious during the first mining era will simply persist in a less obvious, underground location.

“I have a real concern about the out-of-sight, out-of-mind factor,” Jarding said.

Health risks

Compared to the old mining era, when miners labored in tunnels and open pits and were exposed to potentially lung-damaging metallic dust and radioactive waste, and millers operated huge crushers and chemical leaching tanks, the in-situ mining method includes very little above-ground work.

Modern miners will operate pumps and some chemical tanks, but little else will occur above ground as the leaching is accomplished underground by the injected, water-based solution.

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After the uranium is extracted from the solution, it will go to a processing facility to be converted into dry uranium known as yellowcake. That facility might be built on-site; otherwise, trucks would haul the unprocessed material to a plant somewhere off-site.

Jarding thinks the minimal amount of above-ground activity might bring a false sense of security to locals whose groundwater could be tainted by the injection and pumping process. If something goes wrong, she said, uranium or radium could enter the water and sicken people and livestock.

“Underground excursions when the mining fluid goes out of the mining area are typical,” she said, referring to uranium mining in general.

Impact on wells

Even supporters of mining acknowledge that ranchers in the Edgemont area suffered diminished production by their private water wells during the first mining era.

Jarding said it was partly a product of exploratory drill holes.

“You can be punching so many holes and pumping so much water that you take away artesian pressure,” she said.

Additionally, some of the old tunnel and pit mines required constant pumping to keep groundwater out, and that may also have affected pressure.

Hollenbeck, whose own family’s well was affected during his childhood, said another culprit may have been ranchers themselves. Many had wells drilled during the first mining era and some may have overused them, he said.

Hollenbeck said Azarga benefits from better data on the existing condition of wells and is better prepared to deal with the situation. He said Azarga has agreements with the local counties to replace negatively impacted wells, and he said the bonds required to be posted by state and federal regulatory agencies will include money for well impacts. Those bonds are yet to be calculated and depend on factors such as the fluctuating price of uranium, but Hollenbeck said the bonds will be “in the millions.”

Spencer, who has leased mining rights to Azarga, said his agreement with the company includes a requirement that the company drill him a new well if his is harmed.

That was the main reason Spencer consented to the agreement. Had he not leased rights to the company, he knew the minefields would be near enough to his property that any negative impacts probably would affect him anyway.

“So I decided it was better to take their lease money because, like I said, if they hurt the water, they were going to hurt it whether they leased my ground or not,” Spencer said.

Hollenbeck said drill holes will be better plugged this time as a result of stricter standards. During the first mining era, hole-plugging was haphazard and without oversight.

Spencer looks on all such promises skeptically. When asked if he thought the first mining era was good for Edgemont, he uttered a characteristically blunt assessment that could turn out to be just as applicable to the future.

“That depends,” Spencer said, “on if you was gettin’ a check out of it.”

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Enterprise Reporter

Enterprise reporter for the Rapid City Journal.