Hot items, hard times
The Daily Record News Group
CITY - Its mill has fallen on hard times and management is forced
to lay off most of its workforce. The uranium market is severely
depressed and Cotter Corp. is looking for something to keep the
A government agency is cleaning up an out-of-state site contaminated
with radioactive tailings containing uranium and thorium.
Cotter seizes the opportunity and wins the contract to ship the
stockpiled tailings to Colorado. Company officials later deny that
they have any interest in turning the mill into a disposal site
for radioactive waste.
That was the late 1960s.
Fast forward 30 years and Cotter now finds itself in eerily similar
circumstances, forced by economics and outside forces to rely on
radioactive waste shipments as a way to stay afloat.
Cotter was founded in 1956 by a group consisting of Manhattan Project
research chemist David Marcott and two oilmen, Robert O. Anderson
and Parker Wilson.
Like other Atomic Age entrepreneurs, their goal was to carve out
a profitable niche milling radioactive thorium and uranium for the
burgeoning nuclear industry, which had been opened to the private
sector only five years earlier.
The partners chose a site several miles south of Cañon City,
which, according to a newspaper ad, was "ideally situated in
an area midway between the thorium-rich areas in the Wet Mountains
to the south and the uranium-rich areas to the north and west."
In 1958, they opened a pilot mill with a capacity to process 72
tons of ore a day. A government contract guaranteed the company
$8 for every pound of uranium oxide concentrate, or yellow cake,
The mill struggled from its outset, burdened with an Atomic Energy
Commission license that permitted it to process 72 tons of ore a
day, only 36 percent of its 200-ton capacity. The mill later received
approval for a $1.25 million expansion, but it never reached its
Then in 1964, things got worse.
The Atomic Energy Commission turned the tables on the industry by
ending the government's exclusive right to uranium and authorizing
its sale on the open market. By mid-January 1965, Cotter had laid
off 138 workers. A month later, after Cotter lost a lawsuit against
the AEC and its government contract, the mill shut down. It would
stay closed for the next 18 months.
When the mill reopened, Marcott, who ran the facility, purchased
the Schwartzwalder Mine outside Golden to secure an in-house supply
for all its uranium ore.
But according to Deyon Boughton, whose husband Lynn was the chief
chemist at the mill from its opening until 1979, business did not
immediately turn around, which left Cotter scrounging for revenue.
Marcott found one opportunity in 1968, when the Atomic Energy Commission
auctioned off 100,000 tons of tailings waste -- containing 192 tons
of uranium -- left over from the nation's first bomb-making project,
the Manhattan Project.
mill was desperate," Boughton recalled. "They were facing
losing everything. When you're in that situation, you grasp at any
straws you can."
The mill processed the Manhattan Project waste for three years until
1971. The community didn't find out about it until eight years later.
When they did, they peppered Marcott with questions about whether
the mill's future was as a radioactive waste dump.
if Cotter intends to be a national dumping ground for radioactive
wastes, Marcott said no," a May 1979 Cañon City Daily
Record article said. "He added, however, that Cotter might
accept future out-of-state tailings shipments 'if there are large
recoverable values as a result.' "
During the late '60s and early '70s, Anderson, who had bought out
Wilson in 1966, was not concentrating on processing uranium. He
was, after all, on his way to building Atlantic-Richfield into one
of the world's largest oil companies and himself into the largest
landholder in the world, according to some reports.
main focus was to do whatever was necessary on paper to make it
salable," Boughton recalled.
In 1975, Anderson's efforts paid off.
Electricity giant Commonwealth Edison, which was looking for a direct
source of uranium to fuel its growing stable of nuclear reactors,
bought Cotter in a stock swap worth $17.9 million, according to
Illinois Commerce Commission records.
along with that security, ComEd also acquired a litany of environmental
problems. Reports of livestock and people getting sick started surfacing
in the early 1970s, and soon studies confirmed that there was uranium
and molybdenum contamination in soil and well water in the rural
subdivision of Lincoln Park about two miles northeast of the mill.
have to remember that in the '50's and '60s, it was state-of-the-art
to dump tailings directly into the ground," said Cotter executive
vice president Rich Ziegler. "In fact, they (tailings ponds)
were designed to seep into the ground."
As part of a facelift, Cotter constructed a new mill, which opened
in 1979, and also built three lined tailings ponds and transferred
all the old tailings to the new impoundments.
But the environmental damage had already been done.
Based on vocal resident complaints to the governor, the Colorado
Bureau of Investigation began investigating Cotter in 1979 and came
out with a scathing report a year later. Then, in 1983, the state
filed a federal lawsuit against Cotter seeking $50 million in damages
to clean up contaminated groundwater and wells of Lincoln Park residents
who lived downstream from the mill.
With plenty of ammo to aid its own inquiry, the U.S. Environmental
Protection Agency began investigating Cotter, and in 1984 officially
added the mill and Lincoln Park area to the National Priorities
List, or Superfund.
It took five years of litigation, but in 1988, the state and Cotter
reached a settlement over their lawsuit and agreed to a Remedial
Action Plan to clean up Lincoln Park. The company was on the hook
for $11 million in cleanup - not the $50 million originally sought
- and also faced damages from several lawsuits filed by residents.
Legal liabilities were not the company's only problem.
Partly as a result of the mill's problems and partly due to the
plummeting price of uranium, Cotter began laying off workers. By
January 1985, the mill's workforce was down to 33, far below the
234 who worked there just five years earlier. A year later, it shut
down, with the exception of skeleton crews kept to clean up the
facility and maintain equipment.
Cotter would not process any ore for another 13 years.
When it reopened in March 1999 on a probationary basis, however,
the market was still practically non-existent. With uranium prices
continuing to decline, Commonwealth Edison made the decision to
cut the Cañon City mill loose.
does not fit into the company's future business plans as mining
is not a core competency of ComEd," a press release said.
ComEd sold its investment in a facility worth tens of millions for
$1 million and wrote off a $22 million after-tax loss as a result
of the sale, according to federal Securities and Exchange Commission
On the buying end of the deal was General Atomics, a La Jolla, Calif.-based
company with subsidiaries specializing in the conversion of yellow
cake into uranium hexafluoride for fabrication into nuclear fuel
and the construction of nuclear reactors. GA also owns a uranium
mine in Australia and is involved in fusion research, radiation-related
electronics, telecommunications and has defense contracts for unmanned
military reconnaissance planes.
Privately owned by the Blue family of Denver, GA had estimated sales
revenue of $464 million and employed 1,750 people in 2000.
The company is probably best known for its research reactors. According
to its Web site, General Atomics has 66 research reactors built
or under construction "at universities, government and industrial
laboratories, and medical centers in 24 countries," including
one that went online in 1969 at the U.S. Geological Survey in Denver.
GA also constructed the Fort St. Vrain high-temperature gas-cooled
nuclear reactor north of Platteville, an unsuccessful venture that
ended in the power plant's conversion to natural gas.
Like Cotter, General Atomics was founded by a son of the Manhattan
Project, prominent physicist Frederic de Hoffmann. According to
one chronicler of the Atomic Age, it was "the first company
anywhere dedicated to building atomic reactors."
Soon after, GA was acquired by industrial giant General Dynamics,
which expanded the company's reactor construction activities.
General Dynamics sold its interest in General Atomics to Gulf Oil
in 1967 and its ownership was swapped several times between it and
Royal Dutch/Shell before the Blues acquired it in 1986. Neal Blue
remains its chairman and chief executive officer.
In 1988, General Atomics purchased Sequoyah Fuels Corp., a plant
built in 1970 in Gore, Okla., to convert yellow cake into uranium
hexafluoride, an intermediate step in the manufacture of uranium
dioxide for use in fuel rods and weapons.
nuclear and environmental officials documented numerous violations
and accidents at the plant, including a release of highly toxic
uranium hexafluoride gas in 1986 that killed one worker and hospitalized
another 42 people.
Scrutiny of the facility intensified in August and September 1990,
when inspectors discovered widespread contamination of groundwater
and that its "manager knew of the contamination before NRC
was informed and took no action to deal with it."
In 1991, the NRC shut the facility down for six months after continued
serious violations, including a health and safety manager who "intentionally
gave false information to investigators and withheld information
Following another gas release in November 1992, which resulted in
more injuries, the NRC closed the plant again, and soon after General
Atomics decided not to reopen the facility and applied for decommissioning.
A year later, the NRC ordered both Sequoyah Fuels and General Atomics
to pony up $86 million for cleanup and decommissioning. GA put up
a strong corporate defense, suing the NRC on two fronts, and the
agency settled in late 1996 for $9 million in cleanup costs.
Meanwhile, General Atomics had also entered into a joint venture
with Honeywell, forming the ConverDyn Corp. to operate the only
remaining facility in the United States capable of converting yellow
cake into uranium hexafluoride.
When General Atomics purchased Cotter in February 2000, the deal
created a family of nuclear industry businesses, from the initial
mining and milling to conversion and then reactors themselves. The
mill also provides an added asset that GA and Sequoyah Fuels have
already taken advantage of: a place put some of the radioactive
waste that its operations generate.
a subsidiary of General Atomics, but we have an independent board
of directors," said Cotter President Richard Cherry, the former
marketing director for Nuclear Fuels Corp. "We run as a stand-alone
Across the hall from Cherry are the southwest Denver offices of
GA, Nuclear Fuels Corp., and ConverDyn, whose chief executive, Jim
Graham, also serves as the chairman of Cotter's board of directors.