| In light of Toshiba?s recent proposed
| |
| | News reports suggest a number of
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| acquisition of Westinghouse Electric from
| |
| | uranium-heavy countries held an initial
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| the government-owned British Nuclear
| |
| | meeting in Paris in February 1972 to
|
| Fuels (BNFL), historians may be reminded
| |
| | establish a uranium-producer?s alliance,
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| of former Westinghouse Chairman Robert
| |
| | in essence a de facto uranium cartel.
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| Kirby?s litigious international outcry
| |
| | Others suggest it was formed in April
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| and prolonged battle over secretive and
| |
| | 1972, after the Canadian government
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| illegal price manipulation by a global
| |
| | reportedly gave its blessing. Canadian
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| uranium cartel. In the 1970s,
| |
| | author Gordon Edwards (Canada?s Nuclear
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| Westinghouse, determined to capture the
| |
| | History) bluntly wrote, ?The purpose of
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| world market of building nuclear
| |
| | the cartel was to secretly manipulate
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| reactors, offered dirt-cheap nuclear fuel
| |
| | world uranium prices using a phony
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| as part of its incentive to get sales
| |
| | bidding system. Hidden quotas were
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| from utility companies. The company?s 27
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| | established by representatives from
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| utility customers had locked in
| |
| | Canada, France, Australia, South Africa
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| agreements with Westinghouse to provide
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| | and Rio Tinto Zinc (London Stock
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| them with 65 million pounds of U3O8 over
| |
| | Exchange: RIO).? Namibia and Niger were
|
| the next twenty years, well into the
| |
| | also included in the alliance, as was
|
| 1990s. Those contracts set off one of the
| |
| | Gulf Oil, at least according to Robert
|
| most curious legal battles of the 1970?s,
| |
| | Kirby of Westinghouse.
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| ultimately reducing Westinghouse to a
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| | When the U.S. government re-affirmed its
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| shell of the powerhouse it once was.
| |
| | trade embargo in March of that year, a
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| In recent weeks, Toshiba (London Stock
| |
| | subsequent uranium cartel meeting took
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| Exchange: TOS; Tokyo Stock Exchange
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| | place in Johannesburg, South Africa in
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| Ticker Code: 6502) has been strongly
| |
| | May 1972. At an Ottawa conference on May
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| criticized for the Westinghouse
| |
| | 28, 1972, it was reported that Jack
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| acquisition, and may sell as much as 49
| |
| | Austin, then deputy minister of energy,
|
| percent of the deal to two other Japanese
| |
| | voiced his concern the cartel could be
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| firms and a smaller stake to an American
| |
| | considered illegal under Canadian law.
|
| firm. Toshiba?s CFO, Sadazumi Ryu said
| |
| | Nonetheless, the politicians gave the
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| the company would pay for some of its
| |
| | uranium cartel a green light.
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| acquisition costs within three years out
| |
| | The alleged price manipulation was paying
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| of current cash flow plus float debt to
| |
| | off. In 1973, the spot uranium price
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| about 115 percent of equity. Will Toshiba
| |
| | doubled. By 1976, it doubled again and
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| repeat the mistakes made by Westinghouse
| |
| | stayed above $40/pound for nearly four
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| in the mid 1970s during the last uranium
| |
| | years. It was around that time the
|
| bull market?
| |
| | alleged cartel disbanded to avoid
|
| Today, Toshiba aims its sights on the
| |
| | international anti-trust laws, which
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| lucrative Chinese nuclear energy market,
| |
| | Westinghouse was arguing after unleashing
|
| which on the surface appears more
| |
| | a tsunami of litigation. Westinghouse was
|
| ambitious than the U.S. civilian nuclear
| |
| | desperate to escape its liability over
|
| program of the 1970?s. Toshiba wants to
| |
| | the promise of cheap uranium to
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| be a major beneficiary of China?s
| |
| | utilities. In March 1976, the U.S.
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| aggressive plans to expand the country?s
| |
| | Department of Justice began investigating
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| nuclear energy program. And why not?
| |
| | possible infringements of U.S. anti-trust
|
| Uranium prices have soared the past few
| |
| | laws by the alliance of uranium
|
| years. Spot uranium rocketed in 2005 at
| |
| | producers. By mid 1977, a federal grand
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| an even faster degree than in 1975. That
| |
| | jury had been formed to pursue the
|
| was the year when Westinghouse?s Robert
| |
| | investigations and possibly initiate
|
| Kirby was told by his doctor to not even
| |
| | criminal proceedings.
|
| bother giving up his chain-smoking habit.
| |
| | In a letter dated July 12, 1977, the U.S.
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| Things at Westinghouse had gotten that
| |
| | Attorney-General wrote to the U.S.
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| bad.
| |
| | District Attorney for the Eastern
|
| The head of the Pittsburgh-based
| |
| | District of Virginia, explaining the
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| conglomerate failed to grasp what was
| |
| | quandary this international episode had
|
| behind the escalating uranium price
| |
| | caused and discussed invoking immunity to
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| during the 1970s. His Westinghouse
| |
| | obtain witnesses who would talk about the
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| incentive plan sounded great when spot
| |
| | alleged conspiracy:
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| uranium sold for $6/pound. However, at
| |
| | ?These persons are not likely to come
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| $40/pound, Westinghouse got stuck with
| |
| | within the personal jurisdiction of the
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| potential liabilities of more than $2
| |
| | United States courts so long as the
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| billion (1970s dollars) because of his
| |
| | Department of Justice continues a sitting
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| offer to provide the utilities with cheap
| |
| | grand jury investigation of the
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| fuel. By July 1975, Kirby began blaming
| |
| | international uranium industry; (3) These
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| the world?s uranium cartel, which he
| |
| | persons are British subjects and we have
|
| believed manipulated the spot price
| |
| | determined that it is highly unlikely
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| higher to piggyback his company?s
| |
| | that their testimony could be obtained
|
| development plans. Across from Kirby?s
| |
| | through existing arrangements for law
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| offices in Pittsburgh?s Golden Triangle
| |
| | enforcement co-operation between the
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| were the offices of Gulf Oil, a uranium
| |
| | United States and the United Kingdom; (4)
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| supplier, whom he believed to be a member
| |
| | The Department of Justice has been
|
| of the uranium cartel. By September 1975,
| |
| | largely unable to obtain information from
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| Westinghouse announced a shortfall of
| |
| | these foreign persons about the subject
|
| 25,000 metric tons of uranium, and
| |
| | matter of this investigation??
|
| claimed ?commercial impracticability? in
| |
| | By mid 1978, Westinghouse Electric?s
|
| honoring its nuclear fuel commitments to
| |
| | complaint against Rio Tinto Zinc in the
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| the 27 utilities. And the lawsuits began.
| |
| | United Kingdom floundered in that
|
| According to a special report in the
| |
| | country?s court system. Obtaining
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| Pittsburgh Post-Gazette, Kirby?s
| |
| | evidence in England was markedly
|
| ?suspicions heightened when, in late
| |
| | different from the U.S. style of
|
| 1976, he received copies of documents
| |
| | depositions.
|
| suggesting Gulf and 28 other suppliers
| |
| | Conclusion
|
| had conspired to form a cartel to keep
| |
| | During this litigious period,
|
| Westinghouse out of the uranium
| |
| | Westinghouse settled with several
|
| business.? The documents were the minutes
| |
| | utilities, but continued to pursue the
|
| of a private meeting of uranium suppliers
| |
| | lawsuits. By 1979, Judge Merhige in the
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| held in Australia. In a bizarre twist of
| |
| | U.S. District Court for the Eastern
|
| fate, the whistleblower came in the form
| |
| | District of Virginia, Richmond Division,
|
| of Friends of the Earth, which offered
| |
| | ordered Westinghouse and the utilities to
|
| Westinghouse additional documents if the
| |
| | equitably resolve their differences.
|
| nuclear power plant manufacturer would
| |
| | Westinghouse agreed to concessions that
|
| help the environmental group release
| |
| | ultimately cost the company nearly $1
|
| jailed members in the Philippines. Kirby
| |
| | billion, but locked up the utilities as
|
| ran with what he had, ignoring their
| |
| | long-term customers by providing parts
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| request, and began a course of intense
| |
| | and engineering services for up to 25
|
| litigation. The lawsuits were eventually
| |
| | years. In quiet out-of-court settlements,
|
| consolidated and heard in a federal
| |
| | the uranium suppliers paid Westinghouse
|
| district court in Virginia. During the
| |
| | nearly $100 million and supplied the
|
| course of the litigation, Westinghouse
| |
| | company with uranium.
|
| took its grievances to London?s House of
| |
| | Besides, there was another cartel in the
|
| Lords, setting international case law
| |
| | 1970?s, which posed a far greater risk to
|
| about the discovery process in
| |
| | the developed nations. From the oil
|
| litigations.
| |
| | embargo, which began 1973 and throughout
|
| What really happened in the 1970?s?
| |
| | the decade, the OPEC oil cartel
|
| Kirby and Westinghouse were caught up in
| |
| | overshadowed the tiny uranium cartel.
|
| an international trade dispute, during a
| |
| | Saudi King Faisal?s ?oil sword? had a far
|
| world revival of the uranium market.
| |
| | greater impact on the energy climate,
|
| Uranium prices had collapsed in December
| |
| | Gross Domestic Product, inflation and
|
| 1959 when the U.S. government placed an
| |
| | quality of lifestyles, than an anxious
|
| embargo on the purchase of foreign
| |
| | alliance of uranium producers trying to
|
| uranium for domestic purposes. The
| |
| | meet production costs and peddle
|
| embargo came after the nuclear weapons
| |
| | stockpiled inventory at higher prices.
|
| build-up of the 1950s had peaked. In 1959
| |
| | Not only was the oil crisis a more
|
| alone, the U.S. bought 20,000 metric
| |
| | serious affair, but another un-related
|
| tonnes of uranium for the country?s
| |
| | episode tanked the price of uranium.
|
| weapon procurement program, about 61
| |
| | Just as the decade was coming to a close,
|
| percent from Canada. Within a week after
| |
| | on March 28, 1979, a water pump broke
|
| the embargo, global uranium prices fell
| |
| | down at the Three Mile Island nuclear
|
| by 75 percent. Twenty-four out of the 28
| |
| | plant, about ten miles southeast of the
|
| Canadian uranium producers and processors
| |
| | Pennsylvania state capital. It was an
|
| left the business.
| |
| | unexpected event, heightened
|
| Two Canadian crown corporations remained
| |
| | Hollywood-style, as the accident
|
| with viable uranium assets to mine and
| |
| | coincided with the opening of a new movie
|
| sell. Eldorado Mining and Refining Ltd
| |
| | called The China Syndrome, starring Jane
|
| had stakes in mines at Port Radium, Key
| |
| | Fonda, Michael Douglas and Jack Lemmon.
|
| Lake and Rabbit Lake. The provincially
| |
| | In short order, many Americans were
|
| owned Saskatchewan Mining Development
| |
| | persuaded that events within the movie
|
| Corporation owned had stakes in Key Lake,
| |
| | were somehow related to the Three Mile
|
| Cluff Lake and Down Lake. Before 1942,
| |
| | Island event. This was a Hollywood PR
|
| Eldorado Mining (later re-named El Dorado
| |
| | man?s dream. Fanning the media flames to
|
| Nuclear Ltd) had been a privately owned
| |
| | capture a larger box office gross, a
|
| radium company, which in that year was
| |
| | basically nothing episode (in terms of
|
| taken over by the Canadian government and
| |
| | loss of human life, since no one died
|
| made into a crown corporation. During
| |
| | from the reactor accident) was
|
| World War II and for the next decade, the
| |
| | transformed into an earth-shattering
|
| company?s raison d?etre was to produce
| |
| | campaign against the entire nuclear
|
| uranium for the U.S. and U.K. nuclear
| |
| | energy industry. Ironically, more died in
|
| weapons programs.
| |
| | the movie (one, Jack Lemmon?s character)
|
| By 1956, both countries looked elsewhere
| |
| | than as a direct result of the Three Mile
|
| for their uranium. By 1965, Canada?s
| |
| | Island accident (0 reportedly died).
|
| production plummeted to 3,000 tonnes from
| |
| | Hysterical commentary from that era
|
| a peak of 12, 000 tonnes annum in 1959.
| |
| | bespoke of a nuclear accident, which
|
| Canada?s uranium exploration came to a
| |
| | would melt down to the earth?s core, as
|
| standstill, and only three mines remained
| |
| | one character in the movie suggested.
|
| operational. Boom town Elliot Lake became
| |
| | Unable to distinguish what was movie
|
| a ghost town. Lacking buyers, a
| |
| | fiction from scientific reality, the
|
| self-serving Canadian Prime Minister
| |
| | movie?s message left a horrifying memory
|
| Lester Pearson announced in 1965 that
| |
| | in the collective minds of the general
|
| Canada?s exported uranium would only ?be
| |
| | populace. A general panic followed, and
|
| used for peaceful purposes only.? Nearly
| |
| | nuclear energy was badly tainted by the
|
| a year earlier, the U.S. government had
| |
| | accident. As the momentum for building
|
| banned the enrichment of foreign uranium
| |
| | U.S. nuclear power plants came to a
|
| for domestic use, pre-empting any
| |
| | grinding halt, overflowing inventories
|
| newsworthy value to Pearson?s
| |
| | for the raw material to fuel those power
|
| announcement.
| |
| | plants had once again nullified the
|
| Between 1964 and 1967, more than sixty
| |
| | uranium exploration and mining sector. It
|
| nuclear reactors were ordered for the
| |
| | took more than two decades to draw down
|
| U.S. civilian nuclear energy program.
| |
| | those built-up uranium inventories, about
|
| Westinghouse?s newly designed light-water
| |
| | as long as it has taken for the public to
|
| reactor created excitement within the
| |
| | once again accept nuclear energy as a
|
| industry. During that time, Canadian
| |
| | safer, cleaner alternative to fossil-fuel
|
| uranium exploration was taken out of
| |
| | powered electricity.
|
| mothballs and production resumed.
| |
| | Why is today?s uranium bull market
|
| Hardball shenanigans in Washington kept
| |
| | different? Is the current and spectacular
|
| the uranium ban intact, and global
| |
| | rise in spot uranium prices different
|
| uranium prices reached an all-time nadir
| |
| | today than it was in the early to mid
|
| of $4/pound. Canada was shut out of the
| |
| | 1970?s, when an alleged uranium cartel
|
| U.S. nuclear fuel cycle market, and
| |
| | reportedly bid up prices to an artificial
|
| Ottawa was forced to stockpile a reported
| |
| | level? Is that same factor occurring
|
| $100 million of uranium during the Nixon
| |
| | during the current steep rise in the spot
|
| presidential administration. By late
| |
| | price of uranium? Will Toshiba sink into
|
| 1971, Prime Minister Trudeau?s cabinet
| |
| | the same quicksand, during the balance of
|
| had reached the end of their rope failing
| |
| | this decade, as Westinghouse Electric
|
| at every step to remove the ban by
| |
| | once did?
|
| diplomatic means.
| |
| |
|
