Tom Zoellner

by Uranium - Rock That Shaped the World

  The small circle of buyers and sellers dealt with one another directly and, at times, through a consultancy in Menlo Park, California, called the Nuclear Exchange Corp., or Nuexco. It had been formed to be a bank for uranium, but evolved into a brokerage that published a list of recent prices. By 1971, that price was on the verge of dropping below $5 per pound, and the mining companies sensed a disaster in the making.

  They decided to have a secret conference of their own. Mining executives from UCAN, Nufcor, and Rio Tinto, as well as government representatives from Canada and Australia, gathered inside the Paris offices of the agency Commissariat à l’Énergie Atomique on February 1, 1972, to have an unusual conversation. Buyers were not invited nor was the U.S. Atomic Energy Commission. These discussions were illegal under American antitrust law. They were also for the purpose of screwing the buyers, and everybody there knew it.

  After coffee and pleasantries, there were admonitions to mind the “extreme secrecy of the business discussed.” Then a system of collusion was proposed. When a producer learned of a request to buy uranium, it would inform the French agency, which would pick a supplier to offer at 8 cents under. The deals would be rotated evenly among members. Each would be guaranteed contracts at a fixed price, eliminating the need for harmful competition.

  “The system was based on the French metaphor of the filling of wineglasses,” said one observer. “Each country had a glass to be filled; when it was full, it was somebody else’s turn. If one glass was not completely filled, it would have access to the next round until it was.”

  The point man at the French agency was the discreet secretary André Petit, who agreed to serve as head of the “research organization,” which soon took on a more flippant, if more accurate, nickname: the “Uranium Club.”

  In the initial meetings, the club set a floor price of $5.40 a pound, calculated to keep every member solvent. The Australians, in particular, said (accurately) they were sitting on much bigger reserves than the others and deserved an equitable slice of the pie—especially after 1977, when demand was expected to pick up from new nuclear power plants. “Australia hoped to play the role in the Club that Saudi Arabia plays in OPEC,” noted one analyst later.

  The divvying was not to everyone’s liking, at first. At a conference in Johannesburg later that year, it was finally agreed that the Canadians could have 33.5 percent; the South Africans, 23.75 percent; the French, 21.75 percent; the Australians, a flat 17 percent; and Rio Tinto Zinc, 4 percent.

  The presence of the Rio Tinto company among this breadline of sovereign nations was a reminder of just how incestuous the uranium trade had become. It also demonstrated the matchless reach of Rio Tinto, which tended to behave as though it was a wholly owned subsidiary of the British throne. Many believed it was exactly that. One of the major shareholders was supposed to have been Queen Elizabeth II herself, via a secret account at the Bank of England. The Times of London once remarked, apparently without irony, that it was “almost patriotic” for an ordinary Briton to own shares in the company.

  Rio Tinto had been founded in 1873 as a venture backed by the Rothschild family to restart some abandoned shafts in southern Spain that had once supplied the Roman Empire with copper. But it did not become a global superpower until the 1950s, when it came under the chairmanship of the urbane Sir Val Duncan, a Royal Engineer during the war and a director of the Bank of England. He built up a network of railways, ports, and mills to extract minerals from Britain’s former colonial possessions. Its web of affiliate companies was a closely guarded secret, its ownership records kept inside a four-inch-thick book known within the company as the Bible.

  Most important, Sir Val hired a series of executives and recruited board members with close ties to Parliament and the Foreign Ministry.11 Sir Val’s sense of Rio Tinto (and perhaps himself) as a shadow version of Parliament is best illustrated by a remark he made at a dinner party in 1974, when confidence in Prime Minister Harold Wilson was at an all-time low. Some feared Wilson might actually be overthrown in a coup, but the possibility did not worry the lion of Rio.

  “When anarchy comes, we are going to provide a lot of essential generators to keep electricity going,” said Sir Val Duncan. “Then the army will play its proper role.”

  Rio Tinto had been quick to join the nuclear revolution and now felt itself overextended. Its uranium holdings were spread throughout South Africa, Namibia, Canada, and even Australia, where it had a stake in the Mary Kathleen mine. Some investigators later suspected that Rio Tinto itself, acting through a Canadian subsidiary, was the initiator of the secret talks in Paris.

  Dividing up the world’s uranium through a gentleman’s agreement would not have been a particularly novel idea for Rio Tinto. Its leadership was intertwined not only with the ruling class in Britain—where atomic stewardship was now a four-decade-old tradition—but also the boards of many of its competitors. Sir Val, for example, had a seat with a French company called Imetal, which had a controlling stake in a Gabonese uranium producer. On that same board was Harry Oppenheimer, the chairman of Anglo-American, the largest producer of uranium in South Africa and a legendary mining omnivore. (Oppenheimer was also the chairman of the diamond wholesaler De Beers, an entity that happened to know a thing or two about price-rigging.) As it happened, an 8 percent stake in Rio Tinto was held by Charter Consolidated, which was in turn owned at 36 percent by Anglo-American. Several charter members of the Uranium Club had thereby been doing business with one another long before they met in Paris.

  If the oligarchic nature of the club bothered any of them, they did not show it. Nor did they ever break their promise and discuss their activities in public. Power companies suspected what was really happening behind the curtains, but were forced to keep buying $8 uranium if they wanted to keep their turbines running. “I infer they are setting prices because their asking prices always seem to come out the same, if you know what I mean,” an anonymous employee of Nuexco told Forbes.

  A Canadian member of the club was more direct. “It worked for the Arabs, didn’t it?” he said, referring admiringly to the Organization of Petroleum Exporting Countries (OPEC) oil cartel, then in its formative days.

  But in its own way, this rent seeking was not substantially different from Edgar Sengier’s Union Minière, which had depended on the favor of the Belgian and U.S. governments and a ring of elite mining interests to preserve its early lock on the world’s supply of uranium. It was merely a corporate version of what Leslie Groves had anticipated when he first told his geologists to assess the likelihood of a future American hegemony.

  The Uranium Club operated in this fashion for three years until a combination of factors contributed to its demise. The United States announced it would soon end its trade ban on overseas uranium. At roughly the same time, OPEC began an oil boycott, sending energy markets into a panic. Nuclear power was looking like an attractive alternative to oil, and the price of uranium began to take off. By 1974, the price for a delivery nine years in the future had climbed to $23 a pound. Geologists were sent back into the field. The need to collude had vanished, and producers began once again to bid one another down. The club disbanded the next year, later reconstituting itself in London as a research and advocacy group with the more benign name Uranium Institute.

  The Paris meetings would have faded into legend were it not for the actions of a whistle-blower. A disgruntled employee—never identified—of the Mary Kathleen mine dropped off a box of incriminating documents one night on the doorstep of a lobbying group called Friends of the Earth, whose members spent a night photocopying the materials before turning them in to the police as stolen property the next morning.

  These papers later became exhibits in a chain of lawsuits filed by the plant-building giant Westinghouse, which had guaranteed its customers twenty years of uranium at bargain-basement prices and then stood to lose $2.5 billion when the price started to climb. This blunder has been called one of the worst mistakes ever made by a major America
n corporation. Westinghouse grew so desperate to fulfill its contracts that it began experimenting with “purification plants” to wring trace amounts from slag heaps all over the American West—whether or not the neighboring mines had anything to do with uranium.

  “Oh, they were in a terrible pickle,” said Doug Duncan, who was one of the managers of the purification plant at a copper mine outside Salt Lake City. “It was desperation, you might say. They were up to their ears in obligations to provide uranium and were trying to squeeze as much of it out of the ground as possible.”

  The denouncement took place in courtrooms. Westinghouse officially blamed the club and unsuccessfully tried to subpoena top executives of Rio Tinto and other cartel members, who objected on convenient grounds of “nuclear security.” The cases eventually settled, and the purification plants closed down.

  But there was another reason the club fell apart. Back in Australia, the attitude toward uranium was about to take a turn. Campaigning with the slogan “It’s time,” the left-leaning Labour Party won a majority of seats in Parliament and began to reverse two decades of Conservative policy. Prime Minister Gough Whitlam began rethinking uranium. The government suspended all exports and forbade the opening of new mines, even as prices were spiking to new highs.

  Australia then became embroiled in a question that had never been asked so loudly or so insistently since the first confused days after Hiroshima: Is uranium immoral?

  The flashpoint had been Mount Brockman. A company named Energy Resources of Australia had acquired the lease to the Ranger site and was preparing to dig when the government suddenly announced the creation of a national park named Kakadu. It would encircle 7,700 square miles and incorporate a large part of the South Alligator River uranium fields, including the Ranger Mine. This would have shut down virtually all production in the Top End and turned Australia into a nonplayer in the world uranium business.

  The Labour Party didn’t campaign on this issue, but its parliamentarians had been receiving multiple visits and phone calls from organizations such as the Friends of the Earth Australia, whose members were a colorful crew of college professors, anti-Vietnam protesters, and veterans of the ragtag Greenpeace campaigns that had challenged French nuclear testing in the Pacific. A key part of their strategy was handing out agitprop pamphlets that summarized the objections to uranium—its radioactive waste, its disregard of Aboriginal land, its contributions to nuclear proliferation and the possibility of global destruction. India’s first atomic bomb had recently been test-exploded with the help of Canadian uranium. Was putting all this stuff into the world really making the planet any safer?

  Friends of the Earth called on Australians to forswear the money and leave the uranium in the ground. “We have a duty to care for the Earth, our home,” said one of their handouts. “We are responsible for our exports and their ultimate impact on the environment.” The government agreed to form a judicial panel to decide the fate of Kakadu National Park—and with it, the future of the northern uranium business.

  Critics were livid. Even if Australia were to withhold its treasure, the stuff could easily be mined elsewhere, and overseas companies would be delighted to fill the gap. There were existing mineral leases, such as Ranger, to be considered, as well as the loss of billions of dollars in revenue and thousands of steady jobs for working-class Australians. Some suspected that uranium was merely a cover for larger socioeconomic grievances. Mining executives, in particular, disliked being called warmongers and waste barons.

  “The debate in Australia was assuming some of the characteristics of a class war,” wrote Tony Gray, founder and chairman of the uranium company Pancontinental. “Uranium mining was being clothed in materialism and identified with the gaudy rich. Money loomed in conflict with morality.”

  But the traders had done themselves no favors by creating an alarming image around their product. Trucks taking yellowcake barrels to port were often accompanied by police vehicles, their lights whirling, closing down major intersections and making a spectacle of what ought to have been a banal transfer of goods. Railroad workers were persuaded to walk off the job for one day, in protest of uranium. “I wish the bloody stuff had never been discovered,” said the union leader Bob Hawke, in an unguarded moment.

  The price of uranium, meanwhile, had gone up nearly seven times from what it had been in the heyday of the club. Australian mining companies were powerless to increase their production; millions of dollars were lost. “We felt time slipping away,” recalled Gray. “The uranium market was booming and we could do nothing about it.”

  Joe Fisher was especially angry. “Never in this modern age has there been a precedent where a national park of exceptional magnitude was declared over mineral rich geological structures containing one of the largest potential energy and mineral resources known to mankind,” he complained in his memoirs.

  He also ridiculed the antinuclear demonstrators. “They were handing out literature, stating that miners should desist from blasting rocks as they were capable of feeling pain,” he wrote. “They are unreal. Even if they were silly enough to believe that rocks feel pain, why are they not picketing the quarries that abound around large cities in the States?”

  There was a more personal element for Fisher. He felt, as did Tony Gray, that uranium miners were being cast as land-raping villains. This insulted all the pluck and bravery of the first uranium pioneers. If it wasn’t for the drive to build atomic bombs, he said, the Top End would still be deserted. The lowlands of Kakadu were already crisscrossed with mine roads and pockmarked with diggings, many of which had been put there by Fisher himself.

  “Mineral explorers alone had the imagination and appreciation to take the first steps in bringing the area’s natural grandeur to public attention,” he wrote.

  A more reasonable compromise, he argued, would be to set off an area of no more than twelve hundred square miles—not a mammoth blanket of public protection thrown over the entire mineralized area with so much uranium there left to use and sell. He called Kakadu “the park that grew too fat” and was gratified when the famous British naturalist Kenneth Mellanby deemed it “mongrel country” and “scruffy” in an interview with a Darwin newspaper.

  “I enjoyed my visit, it was very interesting, but to the ordinary person it must be the most boring national park in the world,” said Mellanby.

  After interviewing 287 witnesses and compiling more than twelve thousand pages of evidence, the Ranger Uranium Environmental Inquiry came out with a report that was tied up in ideological knots. It approved the creation of Kakadu National Park, but upheld the Ranger lease at the same time. This meant there would be a West Berlin-style mining colony as an industrialized island in the middle of the park, surrounded on all sides by wilderness. A company village could also be built a respectful distance away from Mount Brockman. Local Aboriginals would have the right to veto any future improvements under the new Land Rights Act of 1976.

  The report came laced with a whiff of self-pity. “There can be no compromise with the position: either it is trusted as conclusive, or it is set aside. We are a tribunal of white men and any attempt on our part to state what is a reasonable accommodation of the various claims and interests can be regarded as white man’s arrogance or paternalism. Nevertheless, this is the task we have been set.”

  Here was the heart of it, the national wound of Australia—the historically wretched treatment of the dark-skinned people colloquially known as blackfellows, but more properly called Aboriginals, whose Dreamtime places were soon to be spaded up for radioactivity.

  They had lived here as nomads for more than forty thousand years, growing no crops and taking their sustenance from scavenged berries and insects, as well as game and waterfowl that they hunted with spears. Initiation rites were complex and lengthy. Land was held in common by members of an extended clan, in conjunction with a story detailing the holiness of a particular cliff or river, often the dwelling of a spirit creature. The story was like havi
ng a lease on the property. It often came bundled with apocalyptic visions, as the penalty for treading on a restricted spot was usually personal disaster or the end of the world.

  They feared the country, but loved it, too. The words for “land” and “home” are the same in most Aboriginal dialects. A song from the Oenpelli region:

  Come with me to the point and we’ll look at the country

  We’ll look at the rocks

  Look, rain is coming

  It falls on my sweetheart

  The arrival of British convict ships in the 1780s had been a catastrophe for the Aboriginals. They had no immunity to smallpox, measles, and flu; huge numbers of them died within weeks of their first contact with the whites. Those roaming in the deserts of the interior, and the tropical savannas near Mount Brockman, were insulated from the first wave of infections, but as the interior began to fill up with British cattlemen in the 1800s, life grew even more difficult. The white settlers tended to view the Aboriginals as either low-wage laborers or outright impediments to opening up the new country; their passionate connection to the land was ignored. They were called idle, lazy, and vengeful. “They are given to extreme gluttony and if possible will sleep both day and night,” complained one settler in a letter home.

  Occasional massacres erupted; as many as twenty thousand Aboriginals may have died violently at the hands of whites over the years. They were sometimes given liquor as a joke and encouraged to knife each other. Reported a Protestant minister named Reverend Yate: “I have heard again and again people say that they were nothing better than dogs, and that it was no more harm to shoot them than it would be to shoot a dog.”off

  The practice of taking Aboriginal girls as concubines—often against their will—was common at many outback cattle stations. This had even more tragic consequences. Believing the indigenous race was in decline, the federal government instituted a “child removal” policy in 1915 in which the offspring of mixed-blood unions were taken from their parents and housed in orphanages, internment camps, and foster homes with the aim of assimilating them into white society. They were often taught to believe that their real parents were stupid and shiftless. Few Aboriginals were allowed to become Australian citizens; those who were so privileged were required to carry identification papers, known colloquially as dog licenses, to prove it.