UPDATE: US Proposes Halting Uranium Mining Near Grand Canyon

The U.S. Interior Department on Monday proposed suspending review of new mining claims on Arizona lands near the Grand Canyon National Park for two years while it studies the possibility of removing about 1 million acres of federal land from new uranium mining.

About 10,600 current mining claims are located in the proposed withdrawal area and several proposed uranium mining operations are waiting for approval from the state of Arizona, the agency said. The proposed removal of the area from uranium mining wouldn't affect any other activities on the land, the agency said.

Lawmakers and environmental groups who have been pressing to halt uranium mining near the Grand Canyon hailed the move.

"The Grand Canyon is too important to waste, and the Obama administration recognizes that," U.S. Rep. Raul Grijalva, D-Ariz., said in a statement.

Grijalva reintroduced legislation this year that would permanently ban uranium and other mining on 1 million acres in and around the Grand Canyon. A hearing on the proposal is scheduled for Tuesday by the U.S. House Natural Resources Committee.

The lands in and around the Grand Canyon contain uranium deposits that have gained in value as plans for new nuclear power plants have driven up uranium prices over the past few years. Spot market prices for uranium rose as high as $136 a pound in mid-2007, up from $7 a pound in 2000, although prices have dropped since to about $50 a pound amid the global recession.

As requests to mine for uranium on federal lands near the Grand Canyon rose along with prices, local officials became concerned that a uranium mining boom would cause contamination of the Colorado River, which runs through the area and supplies drinking water to several million people in southern Nevada and California. In June, the Metropolitan Water District of Southern California, which uses the Colorado River, among other sources, to supply drinking water to 19 million people, asked Interior Secretary Ken Salazar to "carefully evaluate" potential public health hazards that uranium mining could pose to the Colorado River.

"We rely on high-quality Colorado River supplies and have concerns over any activities that could potentially threaten the quality of that supply," the water agency's general manager, Jeffrey Kightlinger, wrote in the letter.

The Interior Department has received similar letters from former Arizona Gov. Janet Napolitano, who is currently U.S. Homeland Security secretary, and from the Southern Nevada Water Authority, which serves more than 42 million people in and around Las Vegas, most of them visitors from out of town.

In June 2008, the House Natural Resources Committee asked the Bush administration to temporarily suspend its review of mining claims on the lands, called the Arizona Strip, pending further study into whether the lands should be protected from mining. The Interior secretary at the time, Dirk Kempthorne, rejected that request.

The Grand Canyon itself attracts more than 4 million visitors a year, is home to rare and protected plant and animal species and is considered sacred by American Indians who live there. But it's also teeming with uranium supplies, which is becoming an increasingly important energy fuel as utilities in the U.S. and other countries plan to build new nuclear reactors to keep up with growing demand while reducing greenhouse-gas emissions. Nuclear power plants are considered zero-emission energy sources, although the radioactive waste they produce continues to draw criticism.

Companies that have filed mining claims on the Arizona Strip, include Nu Star Holdings Inc. (NSHJ), Liberty Star Uranium & Metals Corp. (LBSU), Uranium One Inc. (UUU.T) and Energy Metals Ltd. (EME.AU), according to an analysis of Bureau of Land Management data by the Environmental Working Group in Washington.

Denison Mines Corp. (DNN) of Canada, among other companies, plans to expand uranium mining on the Arizona Strip as early as this year, a move opposed by environmental groups and the local Havasupai Indian tribe.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; [e-mail]