Modeled Impacts of Economics and Policy on Historic Uranium Mining Operations in New Mexico

Abstract

New Mexico was at the forefront of the nuclear age, producing more uranium (U) than any other state in the U.S. for more than three decades until the early 1980s. The state is also unique because these historic activities have been studied and quantified over during this time, providing a unique opportunity to identify how historic uranium mining operations were influenced by economics and policy. In order to quantify these relationships, this study used a system dynamics approach to determine how these factors affected mining industry decisions and how those impacts varied based on mine size. The results of this work found that as the industry evolved over time, the influence of these factors changed and that they did not impact all mining operations equally. Results indicate that price guarantees for U concentrate and subsidies for mining and milling in the early years (1948–1964) of U mining encouraged mines of all size, although smaller mines opened and closed more quickly in response to changes in price. The economic environment created by these policies encouraged exploration and production. However, the latter led to an excess in supplies and declining prices when these incentives lapsed in the mid-1960s, which negatively impacted small- and medium-sized mines, neither of which opened after 1964. The presence of larger mines had more impact on the closing of small mines than closing of medium mines, possibly as a result of economies of scale for the medium mines or their ability to access milling resources after 1964. Lastly, medium and large mines that produced both uranium and vanadium may have had a slight historic advantage over mines that produced only uranium, as evidenced by longer delays in closing response to a unit change in average price. Quantification of these relationships assists in an improved understanding of the factors that influenced historic mining operational decisions and illustrates the complexity of the roles played by economics and policies in the boom and bust cycle manifested in the uranium industry.