| Good times in the mining sector, eh? The Gold and | | | | veteran uranium geologists, to sign contracts for drill |
| Silver Index (XAU) is holding steady above 120, | | | | rigs, and to operate those rigs. Nucor's Calvert |
| having reached a high above 156 in January, a level it | | | | laughed, "Finding and keeping employees is definitely a |
| had not seen since September 18, 1987. The spot | | | | problem." Michaud explained, "Finding a metallurgist is |
| uranium price is higher than it's been since January | | | | hard enough. Finding one with uranium experience is |
| 1980. Crude oil? Filling up your gas tank should remind | | | | almost impossible." David Miller, president of |
| you that oil prices are still painfully high. So all of this | | | | Strathmore Minerals, lamented, "Expertise in the |
| must mean mining companies are thrilled with their | | | | uranium industry started with geologists who made |
| good fortune? WRONG! There's a snowballing crisis in | | | | discoveries in the late 1940s through the late 1970s. |
| the mining sector, which has been kept off the | | | | They trained the next generation, which coincided |
| typical investor's radar screen. This new emergency | | | | with the 1970s uranium boom. That boom was short |
| could drive commodity prices to even higher levels | | | | lived and fizzled out by 1981. A very small number of |
| over the coming months, and possibly until the end | | | | professionals continued in the uranium industry, during |
| of the decade. | | | | the twenty-year bear market. Now that the number |
| The two-decade long bear market drove many | | | | of uranium companies has skyrocketed to more than |
| geologists, and other qualified technicians, out of the | | | | 420, there is a potentially catastrophic shortage of |
| mining sector. Drilling companies went bankrupt. Even | | | | uranium expertise." The generation gap has come to |
| with the recent explosion of activity in the mining | | | | haunt the industry. |
| sector, exploration in the sector is less than one-third | | | | What's the solution? Many, such as Michaud, believe, |
| of its peak in 1981, when more than 5,500 drill rigs | | | | "Retired baby boomers are coming out of retirement |
| were running. | | | | to fill the generational gap and ride their last metal |
| The mining sector's labor and drill rig shortage has | | | | rush into the sunset." |
| gone past the "we're in a crisis" stage. Without | | | | Bloomberg News ran a story on December 8th |
| qualified geological staff and drill rigs for exploration | | | | discussing developments in the oil sector, "U.S. |
| and development programs, companies may fail to | | | | producers and contractors such as Ryder Scott, |
| get their projects online fast enough to satisfy the | | | | which assesses drilling projects and oil and natural-gas |
| worldwide demand for their metals, whether it is | | | | reserves, are working harder to keep their oldest |
| gold, silver, copper, or uranium. The Baker Hughes | | | | employees and recruit college graduates because |
| North American rotary rig count is a good barometer | | | | there aren't enough new engineers to go around. |
| of how strongly the commodities boom has impacted | | | | Engineers who help find petroleum deposits are in |
| the sector. In 1999, the U.S. and Canadian drill rig | | | | demand..." |
| count reached its nadir of 488. On March 17th, the | | | | UR-Energy Chief Executive William Boberg showed |
| number stood at 1546 and climbing. Over the past | | | | off the company's recent hire, Dawn Schippe, during |
| seven years, the count jumped 316 percent. | | | | our tour of his offices, "She's an engineering graduate |
| Compared to a year ago, the North American Rotary | | | | of the Colorado School of Mines," he said. "Her |
| Rig Count is up by nearly 20 percent. Internationally, | | | | experience in uranium is now two weeks." Others in |
| the same rig count rose almost 60 percent. | | | | his company have decades of uranium experience, |
| During the course of our three-month investigation, | | | | but are three times Dawn's age. |
| we found the labor and equipment shortage applied | | | | Aging talent has found its way back into the uranium |
| not only to uranium but also to coal, oil and gas, coal | | | | sector. Aging geologists such as Dr. Boen Tan, who |
| bed methane and precious metals exploration. Ed | | | | helped discover two of the Key Lake uranium |
| Calvert, who runs Nucor Drilling Inc in Wyoming, | | | | deposits in Canada's uranium-rich Athabasca Basin in |
| exclaimed, "There just aren't any rigs available in the | | | | the early 1970s, is now helping Forum Development |
| U.S. You may find one, but it's a problem finding the | | | | explore for new uranium deposits at its Costigan |
| right rig at the right time." His company began | | | | Lake, Key Lake Road and Maurice Point projects in |
| searching for a drill rig in September for drilling | | | | Athabasca. Uranerz Energy's entire advisory board |
| scheduled to commence June 1st. Calvert explained | | | | consists of former Uranerz professionals, including top |
| that the big oil companies had signed up rig contracts | | | | geologists, Dr. Franz Dahlkamp and Dr. Gerhard |
| so they wouldn't get caught short, adding, "Whether | | | | Ruhrmann. Respectively, they have 45 and nearly 30 |
| the rigs are being used daily or not, they are paying | | | | years experience in the sector. Strathmore Minerals |
| the fees to hold them." | | | | geological team includes former Pathfinder Mines |
| Vancouver-based Max Resources announced in early | | | | employees, a subsidiary of Cogema, including board |
| January of this year they had received permits to drill | | | | member Dieter Krewedl, President David Miller, and |
| on their Thomas Mountain uranium prospect in Utah. | | | | vice president of technical services, John DeJoia. |
| They hoped to drill in late January, depending upon | | | | Some of these companies bring more than 200 years |
| drill rig availability. We interviewed the company's | | | | of experience, collectively, to their new ventures. But |
| uranium geologist Clancy Wendt, who complained in | | | | without sufficient new mining school graduates to |
| early February, "I thought I had a rig lined up. Now | | | | mentor under them, future exploration and |
| we have no idea when we will get a rig." Max | | | | development may become stalled. Michaud announced |
| Resources recently announced it planned to start | | | | a chilling observation, "Annually, Canadian universities |
| drilling on or about the middle of March. Norman | | | | produce less than 10 new metallurgical engineers." |
| Burmeister planned more wisely, announcing in mid | | | | What the Future Holds |
| January Kilgore Minerals would drill the company's | | | | What is troubling about the uranium market, in |
| Idaho gold property in July. But Burmeister got | | | | particular, is that the soaring spot uranium price |
| stumped in moving his uranium property's permitting | | | | shows no signs of abating. The crisis comes at a time |
| process forward, "I am still trying to find an | | | | when President Bush announced his nuclear initiative, |
| archaeologist for my Nevada property. They just | | | | as more U.S. utilities plan to add to the country's |
| aren't available." Until he finishes that step of the | | | | nuclear fleet, and as China and India clamor for a |
| permitting process, Burmeister can't lock up a drill | | | | reliable source of uranium to fuel their aggressive |
| contractor to help delineate his uranium prospect. | | | | nuclear energy programs. Without uranium for those |
| The drill rig shortage pales when compared to the | | | | reactors, the power plants won't produce the |
| frighteningly tight labor market in the mining sector. | | | | electricity required to meet their demand. As an |
| According to the February 2006 Employment | | | | aside, uranium mining is the stage in the nuclear fuel |
| Situation Summary, published by the U.S. Department | | | | cycle where the environmentalist fanatics are baring |
| of Labor, "Mining continued its upward trend in | | | | their teeth. This past November, an office manager |
| February, adding 5,000 jobs." Cynthia Pomeroy, | | | | at Albuquerque's Southwest Research and |
| Director of Wyoming's Department of Employment | | | | Information Center, an anti-nuclear activist group |
| confirmed the crisis, "There is definitely a labor | | | | reportedly funded by Mott's Applesauce and Ben |
| shortage." | | | | & Jerry's ice cream, told us when we went |
| Matt Grant, assistant director of the Wyoming Mining | | | | undercover, "We want to stop the front end of the |
| Association adamantly announced, "There are 800 | | | | nuclear fuel cycle, which is uranium mining." |
| direct job openings in the mining business that could | | | | Don't say the warnings weren't made well in advance. |
| be filled today." He quickly noted another 2400 | | | | At the World Nuclear Association (WNA) Symposium |
| indirect jobs to service the mining industry remain | | | | in 2004, Dr Moukhtar Dzhakishev, a Russian physicist |
| empty, begging for bodies to satisfy those positions. | | | | and a former deputy minister of energy and mineral |
| Starting geologists make between $35,000 and | | | | resources, presented his conclusions, "Firstly, natural |
| $50,000 annually. Top geologists command $200,000 | | | | uranium mining capacities cannot satisfy reactor |
| and higher. Mining consultants get $800-1000/day. | | | | requirements. Secondly, accumulated uranium |
| Even day helpers on drill rigs can charge $22/hour or | | | | inventories will be exhausted sooner or later. Thirdly, |
| more. Wyoming state and county development | | | | the spot price does not reflect the actual problems |
| associations have attended job fairs in Michigan | | | | and, on the contrary, is capable of misleading all of us |
| earnestly trying to fill the growing job vacancy by | | | | about the urgency of investments to be made in the |
| recruiting laid-off auto workers. | | | | development of new mining facilities." |
| David Michaud, president of TheJobPit.com, finds jobs | | | | In his speech, Dr. Dzhakishev emphasized to the |
| for geologists, metallurgists and others in the mining | | | | WNA, "Judging by these facts, the conclusion is |
| sector. A mining engineer and consulting metallurgist, | | | | evident: one day nuclear power plants will face a |
| having graduated from Queens University in Kingston, | | | | natural uranium shortage and it is not necessary to |
| Ontario, and until recently the operations manager for | | | | be a prophet to foresee this. It is clear today that |
| Corriente Resources in Ecuador, he began his internet | | | | the key to the solution of the major problems of the |
| employment agency for the mining sector because | | | | uranium market lies with the development of the |
| the demand was overwhelming. "Headhunters who | | | | potential of the uranium producers." |
| have been around for twenty years say they've | | | | This past August, Angela Jameson reported in the |
| never seen a market like this," Michaud stressed. "For | | | | online version of The London Times, "A GLOBAL |
| the last ten years, the mining industry fed mining | | | | shortage of uranium could jeopardise plans to build a |
| graduates to the wolves. Now they need them. All | | | | new generation of nuclear power stations in Britain... a |
| are busy with no takers to those far away places." | | | | recent report by the Asia Pacific Foundation of |
| Michaud lambasted the mining companies for their | | | | Canada said that there was likely to be a |
| lack of foresight, "Mining companies have to expect | | | | 45,000-tonne shortage of uranium in the next |
| the demand for professionals, such as production | | | | decade, largely because of growing Chinese demand |
| geologists, will go up with the price of metals. There | | | | for the metal." |
| were no jobs for the past eight years." He added, "It | | | | The upward spiral of the commodities boom is racing |
| takes two to five years to train them." | | | | ahead at full speed. Depending upon whom you talk |
| For example, Michaud is desperately trying to fill a | | | | to, the labor and drill rig shortage is either very bad |
| South American mining company's job opening for an | | | | or worse than you can possibly imagine. If there are |
| experienced metallurgist. "Free housing, two cars, | | | | commodity inventory shortages right now, what |
| four weeks off annually, two plane tickets, basically | | | | happens by the end of this year, or later this decade, |
| no living expenses, and a salary starting at US$150, | | | | if current exploration efforts get grounded because |
| 000," Michaud sadly explained because no one has | | | | companies lack the trained personnel, the proper |
| jumped at the offer. "In the field of metallurgy, | | | | equipment and the expertise to explore and/or |
| including mill managers, metallurgical engineers, techs | | | | develop their properties? You can't run a drill rig if |
| and operators, about 150 new jobs are offered each | | | | you can't get your hands on one. You can't drill the |
| month." Only about one-half will be filled. Michaud | | | | property if you can't find drillers to run the rig. While |
| warned the copper mining companies were in | | | | commodities prices soar to levels not seen in twenty |
| especially dire straits to fill new job openings. | | | | or thirty years, the tight labor and equipment market |
| Uranium Sector Struggling to Keep with Demand | | | | could ratchet prices to much higher levels. And junior |
| The U.S. Energy Information Administration | | | | uranium development companies, with proven |
| announced in its most recently published annual | | | | pounds-in-the-ground assets, should become |
| report, "The U.S. uranium production industry initiated | | | | sought-after acquisition targets by those who have |
| a turnaround in 2004. All U.S. uranium drilling, mining, | | | | the staff and drill rigs to bring the projects online. |
| production, and employment activities increased for | | | | For investors, the labor and drill rig shortage has a |
| the first time since 1998. More companies conducted | | | | silver lining. As inventories dwindle lower, commodity |
| exploration and development drilling than in the prior 2 | | | | prices will continue rising. For junior uranium investors, |
| years. Employment in the U.S. uranium production | | | | this might someday be realized as the "hidden |
| industry totaled 420 person-years, an increase of 31 | | | | reason" why spot uranium prices continued rising past |
| percent from the 2003 total. Wyoming accounted for | | | | $40/pound. If you don't drill for the commodity, you |
| 33 percent of the total 2004 employment, while | | | | can't find it and develop it. This strengthens the case |
| Colorado and Texas employment almost tripled since | | | | for $50/pound uranium in the near future. Now we |
| 2003. Overall, $86.9 million went to drilling, production, | | | | understand why Strathmore Minerals' David Miller |
| land, exploration, reclamation and restoration activities | | | | warned us in November, "I wouldn't be surprised to |
| in 2004." And that was in 2004. Imagine what the | | | | see uranium prices double again." |
| employment snapshot looks like today? | | | | COPYRIGHT © 2007 by StockInterview, Inc. |
| While the spot uranium price continues rising, | | | | ALL RIGHTS RESERVED. |
| exploration companies may find it harder to recruit | | | | |