Niger’s Hedges Bets on French Uranium Assets

Bottom Line: Under constant threat of terrorist attacks in the security nightmare of Niger, French nuclear group Areva will now face an audit of its uranium mines as the Nigerien government seeks a better deal.

Analysis: Areva has two mines in Niger: Somair and Cominak. Together these two facilities produce about one-third of France's nuclear power. But the 10-year contract for these mines ends this year, and the government of Niger is planning to take advantage of that by auditing the company and determining how it can get a better deal. The plan will be to increase tax revenues from Areva and to force it into more significant investments in infrastructure. Areva was operating at a loss last year, but is eyeing over 1.1 billion euros in operating profits for this year-and Niger is hoping to get a bigger chunk of this through taxes and infrastructure deals. The government of Niger already owns a 36.4% stake in Somair and a 31% stake in Cominak. Areva will now be audited first based on claims from some groups that it is not transparently reporting its revenues and operating costs. A third mine that is under construction-Areva's Imouraren uranium mine-is also under scrutiny. The government of Niger has warned that the company will face fines if there are any further delays to the opening of this mine, now slated for 2015.

Recommendation: This could all play into the security question due to the level of government corruption in Niger, where funding from drug and weapons trafficking feeds terrorist groups and makes its way to local officials and security forces as enablers. The most recent attack on Areva was in May this year-an incident that was easily predictable as a follow-on to the terrorist attack on the BP/Statoil Amenas gas facility in Algeria, both in retaliation for the intervention in Mali. In the meantime, Niger is lobbying the US for armed drones to shoot down groups trafficking in drugs and weapons to fund terrorist operations in the Sahel. For now, Washington has deployed only unarmed spy drones in Niger and about 100 military personnel, while the French Special Forces there have a single objective: to protect their uranium facilities.  

While there may not be an increase in attacks in the immediate to near-term, there will be a clear rise in trafficking activities. Because of Niger's interest in allowing the US to establish a clear presence in the Sahel, militant formations will view the window of opportunity for these activities as potentially limited. Niger is incapable of dealing on any level with the militant-trafficking groups operating freely across its borders, into Mali, Algeria, Libya and Chad. The additional 3,000 troops it has deployed along these borders will be largely ineffective.

Trafficking will continue to pick up momentum as militant groups struggle to stockpile weapons and funds from drug trafficking while this window remains open. This same funding is spread around Niger's centers of power to buy assistance from security forces and local leaders, further weakening Niger's ability to fight the threat of terror from within through corruption. By next year, when the US begins holding its yearly war games (Operation Flintlock) with Niger, security could begin to improve, but the immediate effect will be another shift in militant groups as we saw with the conflict in Mali.