Economics ETDs

Publication Date

5-5-1977

Abstract

Chapter I of this report briefly examines the history of the uranium industry in New Mexico. Chapter II considers uranium supply parameters in New Mexico. This section examines techniques used in estimating potential uranium resources. In particular, the methodology of petroleum resource estimates as applied by M. A. Lieberman as well as ERDA's Subjective Probability Analysis for New Mexico uranium resources are considered. In Chapter III, the demand side of the uranium market situation is considered. Several factors which affect demand for U3O8 such as recycling and the level of U-235 remaining in enrichment tails is discussed. Estimates from numerous sources for the demand for U3O8 to the year 2000 are surveyed and high and low estimate series are selected. Additionally, price trends, costs and cost trends and projected employment levels are considered for purposes of anticipating future market conditions in the uranium industry.

The final chapter develops the historical treat­ment of uranium with respect to state mineral extraction taxes. This development notes the various changes in these taxes since their inception. A critique of the tax structure existing as of 1 January 1977 is made and is followed by a suggestion for altering the tax structure. The primary focus on existing problems is the statutory allowance of numerous deductions and the resulting erosion of the tax base as well as the preferential statutory allowance of deductions to under­ground miners, but not allowed to open pit miners. The suggestions for change include the establishment of a viable well-defined tax base and also an increase in the tax burden. The proposal for increasing the tax burden is based on the fact that New Mexico is presently possessed of more and lower cost reserves than any other state which has uranium reserves. Measuring this advantage against its closest domestic competitor, Wyoming yields a well-defined portion of the economic rent accruing to uranium mining and milling companies in New Mexico. This measurable advantage, translated into a percentage of gross value is the suggested amount of the tax burden to be imposed on the uranium industry. The rationale and impact of such a tax is then considered. The conclusion is that the uranium industry can sustain a 36 percent tax burden on the gross value of production if the price of U3O8 continues to increase or if the suppliers of U3O8 can pass this increase in costs on to the buyers of U3O8.

Degree Name

Economics

Level of Degree

Masters

Department Name

Department of Economics

First Committee Member (Chair)

Gerald Joseph Boyle

Second Committee Member

Franklin Lee Brown

Third Committee Member

Alfred Leroy Parker

Language

English

Document Type

Thesis

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