Uranium Giant Niger Is One of the Poorest Countries on Earth. It Wants More from France’S Areva
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NIGER Uranium giant Niger is one of the poorest countries on earth. It wants more from France’s Areva. Atomic split BY DANIEL FLYNN AND GEERT DE CLERCQ HEAP LEACHING: Uranium ore is extracted with sulphuric acid at Areva’s Somair mine in Arlit. REUTERS/JOE PENNEY SPECIAL REPORT 1 AREVA IN NIGER ARLIT, NIGER/PARIS, FEBRUARY 5 , 2014 hen France began mining ura- nium ore in the desert of north- Wern Niger in the early 1970s, Arlit was a cluster of miners’ huts stranded between the sun-blasted rocks of the Air mountains and the sands of the Sahara. The 1973 OPEC oil embargo changed that. France embraced nuclear power to free itself from reliance on foreign oil and overnight this remote corner of Africa be- came crucial to its national interests. Arlit has grown into a sprawling settle- ment of 117,000 people, while France now depends on nuclear power for three-quar- ters of its electricity, making it more reliant on uranium than any country on earth. WAY FORWARD: A sign points the way to Imouraren, where Areva is developing a mine due to Niger has become the world’s fourth- open in 2015. REUTERS/JOE PENNEY largest producer of the ore after Kazakhstan, Canada and Australia. But uranium has not enriched Niger. to cut the tax breaks and raise the royalty The former French colony remains one of rate – its largest source of income from the the poorest countries on earth. More than mines – to as much as 12 percent. 60 percent of its 17 million people survive €9.3billion That would be more than the 5 percent on less than $1 a day. Areva’s revenues in 2013, almost charged by most Australian states, but Arlit is a dusty and neglected place, twice as big as Niger’s GDP bring Niger into line with the 13 percent scoured by desert sandstorms and barely charged by Canada’s uranium-producing touched by the mineral wealth it ships off Source: Areva, IMF province of Saskatchewan over the past de- to Europe each year. “There are neigh- cade. In Kazakhstan, the official rate is 18.5 bourhoods which go without water for mining workers, called it a negotiating tactic. percent. Areva produces uranium in both three weeks at a time,” said Deputy Mayor Production resumed at the start of February. Canada and Kazakhstan but would not de- Hassan Hamani. “There are schools where Areva and Niger’s just-expired agree- tail the royalties it pays in those countries. the pupils have to sit on the floor or study ments have never been made public. But (It explores for uranium in Australia but in straw huts.” Reuters has reviewed documents which does not mine it there). Now Niger’s government is demanding reveal that Areva’s mines pay no export du- Mining Minister Omar Hamidou a better deal from Paris, and specifically ties on uranium, no taxes on materials and Tchiana, leading the negotiations for Niger, from state-owned nuclear company Areva. equipment used in mining operations, and told Reuters the government wants to in- The two sides began talking more than a a royalty of just 5.5 percent on the uranium crease uranium revenues to at least 20 per- year ago but failed to clinch an agreement they produce. A spokesman for Areva de- cent of the budget, from just 5 percent at before Areva’s 10-year mining contracts ex- clined to confirm the authenticity of the present. pired on December 31. documents and did not comment on their “For 40 years, Niger has been one of the Areva suspended production at its contents. world’s largest uranium producers, but it’s two sites in Niger in mid-December: the Niger’s President Mahamadou Issoufou still one of the poorest countries on the open-cut Somair mine at Arlit and gi- says the deals are a throwback to the post- planet,” he said. “At the same time, Areva ant underground Cominak pit nearby. The colonial era, when France played a domi- has grown to be one of the world’s largest company says the closure was for mainte- nant role in the economies of its former companies. You see the contrast?” nance but Synamin, a union that represents African territories. His government wants Areva, which produced nearly one fifth SPECIAL REPORT 2 AREVA IN NIGER TOUGH: Mud-brick houses near Areva’s Cominak uranium mine. More than 60 percent of Niger’s population survives on less than $1 a day. REUTERS/JOE PENNEY of the world’s uranium in 2012, says a high- in 2013, the French firm is almost twice as However, the Extractive Industries er royalty rate would make its business in big as Niger’s entire economy according to Transparency Initiative (EITI), a global co- Niger unprofitable. the IMF. Loss-making and with net debts of alition of governments, including Niger’s, With uranium prices down about 70 nearly 4 billion euros, it is still Niger’s biggest and of companies seeking to improve the percent from their peak in 2007, a diplo- private employer and its largest exporter. accountability of natural resource revenues, matic source in Paris said Areva would not Areva does not provide a profit break- estimates Areva’s mines paid a total of 66.3 agree to a big increase in what it pays Niger. down for its operations in Niger but says million euros to Niger in 2011. 2012 figures “Niger needs to take into account that its current deal with the country is fair. It are not yet available. Areva is not in great financial health and says that over the past 40 years Niger has The latest contracts show Areva received that the uranium price is low and not about received around 80 percent of ‘direct ben- a range of tax breaks and benefits in Niger, to increase anytime soon,” said the source. efits’ – taxes and dividends - from its two some of which were standard under Niger’s uranium mines, with Areva taking the rest. 1999 mining law. Signed on Nov. 9, 2001 TAX BREAKS It estimates that its mines paid a total and effective for 10 years from Jan. 1 2004, A new deal is important for Areva, but vital of 82 million euros to Niger in dividends the contracts state that Areva was: for Niger. and taxes in 2011, and 123 million euros · Exempt from any export duties on its ura- With global revenues of 9.3 billion euros in 2012. nium production. SPECIAL REPORT 3 AREVA IN NIGER TARGET: Security in Niger is a concern. Seven employees at the Somair mine, above, were kidnapped in 2010 by al Qaeda’s local wing; in May 2013, the mine was attacked by al Qaeda-linked suicide bombers. REUTERS/JOE PENNEY · Exempt from all entry taxes, customs kilogram in 2011. At Cominak, costs per duties and value-added tax, on materials, kilogram rose from 27,277 CFA francs per equipment, machines, parts and petroleum kilo to 45,603 in 2010, the undated docu- products used in mining operations, in- $150/KG ment showed. cluding everything from sulphur and other The uranium price Areva and “Our objective is to lower these produc- chemicals used to process ore, vehicles, and Niger agreed for the last two tion costs so that Niger can profit more,” even protective clothing. said Minister Tchiana, adding that the gov- · Protected by a stability clause so that an years - nearly double the ernment had commissioned an indepen- increase in royalties tax under a new 2006 current spot price. dent audit of Areva’s Niger operations. The mining law did not affect them. report, by Netherlands-based consultancy · Protected so that if another uranium miner Source: meeting minutes BearingPoint, has not been made public. negotiated better terms, Areva would auto- Areva strongly denies artificially hiking matically benefit from the same conditions. adhere to the 2006 law. costs. It says higher charges are due to the · Guaranteed that any audit of the mines The Areva spokesman said the tax breaks complex technical characteristics of new ordered by Niger will remain strictly were important to encourage research and ore deposits that have helped increase pro- confidential. development in the mining sector and to duction by one-third in the last five years, · Granted an exoneration of up to 20 per- allow its mines to continue production de- as well as to a rise in the cost of fuel for ve- cent of corporate income tax to help fund spite depressed uranium prices and rising hicles and machinery and of sulphuric acid future prospecting. production costs. He said the mining com- used to process uranium. Areva held a monopoly over uranium panies pay the standard corporate tax rate “THE EXPECTATIONS OF THE mining in Niger until 2007. Its sole com- of 30 percent. PEOPLE” petitor, Somina, a joint venture between Unions in Niger and transparency cam- the government and the overseas arm of paigners say Areva has also become more At the Somair mine outside Arlit, lumber- the China National Nuclear Corporation, aggressive about minimising its profit – and ing yellow trucks work round the clock was launched a year after the introduction thus its tax bill – in the country in the past hauling grey-green ore from the bottom of of a 2006 mining law that sharply reduces few years. vast 100-metre-deep pits. The ore ends up tax breaks. A confidential Niger Mining Ministry in a processing plant where it is turned into Mining Minister Tchiana said Areva’s document seen by Reuters shows produc- yellowcake.