New revenue opportunities lie in zirconium
The Daily Record News Group
CITY -- For a $50 million facility tooled almost exclusively to
process uranium from natural ore, a market severely limited for
nearly two decades has provided meager business opportunities.
So when the Cotter Corp. had the chance to begin generating a steady
stream of revenue by adapting its Cañon City mill to process
ore very similar to its traditional stream of material, the company
Milling zirconium was far from Dearborn, Mich.-based CMS Energy's
roots in generating electricity. But when the company discovered
that 165,000 tons of low-grade Brazilian uranium ore, which it had
acquired from the Department of Defense to provide fuel for its
nuclear power plants, had high concentrations of the mineral, CMS
decided to branch out.
CMS turned to Cotter in January 2000 and contracted with the Cañon
City mill to provide the facilities to chemically extract the zirconium,
which is used mainly in the ceramics industry.
A CMS business development and marketing manager estimated at the
time that the venture could produce between 7,000 and 9,000 tons
of high-purity zirconium during the first year, and that production
could eventually ramp up to between 15,000 and 18,000 tons annually.
The price for zirconium is roughly $400 per ton.
According to Cotter officials, they saw a bright future in zirconium
and planned to make the mineral their bread and butter. But refining
the process and upscaling the mill's pilot plant to full-scale production
required a hefty infusion of capital that Cotter did not have readily
Enter the Army Corps of Engineers and 470,000 tons of contaminated
dirt from Maywood, N.J., which, according to Cotter President Richard
Cherry, would provide a steady income.
was presented in the business strategy as an adjunct to our processing
business," Cotter President Richard Cherry told a state House
subcommittee in late March. "The income from the Maywood project
is helping fund the processing and development we're doing in zirconium."
He estimated the Maywood soil itself would create only about 12
to 15 jobs at the mill, but more importantly it would allow Cotter
to move full-scale in zirconium processing. Zirconium processing
would employ about 200 people, he said.
According to quarterly documents filed with the federal Securities
and Exchange Commission, CMS abandoned the zirconium recovery project
in June "after evaluating it's future costs and risk."
The company recorded a $31 million after-tax loss from discontinuing
are primarily a power plant, electric utility, natural gas utility
and pipeline company," said CMS spokesman Kelly Farr. "The
investment in zirconium was not core to our future."
Zirconium was only one of numerous peripheral businesses worth hundreds
of millions of dollars, including oil and gas exploration in Africa
and South America, that CMS scrapped after the SEC began investigating
it for Enron-esque business dealings.
As a result of so-called "round-trip" trading, in which
no power was ever actually bought or sold, CMS has admitted that
it overstated its financial statements for 2000 and 2001 by a combined
Farr said although the zirconium process was successful, "due
to CMS's capital constraints, it no longer made sense for us to
continue the zirconium operation."
According to Cherry, Cotter is negotiating with CMS to acquire the
rights to the zirconium technology and equipment. Those negotiations
are at a delicate stage, he said in an interview.
But that puts even more pressure on the mill to get final approval
for receiving and disposing of the Maywood soil.
one is really willing to put venture capital funding into mineral
processing right now," he said. "So we have to be self-funding."