Areva signs new Niger uranium deal, plans US$1.48b investment

Areva signs new Niger uranium deal, plans US$1.48b investment (Source: Mineweb)

Areva and the government of Niger renewed a uranium mining deal Monday with a 50% price increase and also revealed plans to develop the country’s largest industrial mining project.
Author: Rodrick Mukumbira
Posted: Tuesday , 15 Jan 2008

WINDHOEK -

The West African nation of Niger was this week on anti-landmine alert following a series of blasts in its central and southern parts that have alarmed the population.

But that did not deter French mega-nuclear reactor builder Areva from renewing an agreement with the country, securing a key source of uranium needed to supply its expanding global business.

A journalist was killed in the capital Niamey by a land mine. Landmines have long been a threat in the highlands and desert in the north of the country, where the army is fighting Tuareg-led rebels of the Movement of Nigerians for Justice (MNJ). Since landmines have been found in the capital, this has prompted fears that the rebels--who have been seeking greater autonomy over the country's uranium resource since February last year--are not ready to lay down their arms.

Nevertheless, Areva is motivated by the need to secure supplies in the face of growing global demand for nuclear power that is pushing uranium prices to record highs. Tuareg rebels aside, exploration in Niger--the world's sixth-largest yellowcake exporter--is gaining momentum.

Areva, the world's largest nuclear group, says the new agreement signed Monday by Mamadou Tandja, President of the Republic of Niger, and Anne Lauvergeon, CEO of AREVA, reinforces its position as the top player in mining uranium in Niger while also meeting the country's economic aspirations.

Under the accord, Areva has also won the right to invest more than US$1 billion to develop the country's biggest industrial mining project at its Imouraren site. The company is looking at producing some 5,000 tonnes per year of uranium. The project is expected to create about 1,400 permanent and many indirect jobs.

The accord sets conditions for Areva to buy uranium produced from the Cominak and Somair uranium mines over the next two years in what the company describes as a "win-win" partnership agreement. The mine jointly produced over 3400 tons of uranium in 2006, making Niger the world's fourth highest uranium producing country, according to World Uranium News.

In return, Areva will pay about 50% more to Niger's government for the uranium mined in order to reflect the recent rise of long-term prices, the company said Monday.

The agreement is likely to normalise the two entities' relationship, which was damaged last year when Niger - a former French colony - sought to break Areva's monopoly over the country's uranium mining sector.

In April, fighters from the MNJ attacked Areva's Imouraren mine, killing a guard. In early July the group held an executive from a Chinese uranium prospecting company for several days. Later in July, an Areva executive was refused re-entry to Niger amid accusations that the company had links to the MJN. A security advisor to Areva was also expelled on similar grounds.

These incidents apparently broke the company's 30-year monopoly over the uranium mining sector, as the Nigerian government awarded dozens of uranium exploration permits to a string of Chinese, South African, Canadian and Indian companies. Areva responded by increasing the rate it paid to Niger for a pound of yellowcake from US$26 to US$38 in a deal it signed in July that was valid until 1st January this year.

With the new agreement, Tuareg-led rebels hope that benefits will begin trickling into their communities, creating jobs for the light-skinned people who have long complained of marginalisation. "The company has already worked here for 30 years but the local population hasn't even benefited from 1 per cent of this wealth," Aghaly ag Alambo, an MNJ commander, is quoted as saying in a Financial Times report.

However, the Niger government has refused to negotiate with the MNJ, dismissing the rebel group as bandits and accusing it of involvement in trans-Sahara drug trafficking.