it’s not acceptable” that Niger’s most
valuable export only contributes about 5 percent to the nation’s
annual budget.
Increased revenue for Niger may come in the form of more mining
taxes, royalties or even a stake in AREVA; any of those options would
lower returns for investors and discourage future investment
Investment analysts are advising those with resource investments in
Mali to get out while they can
Mali, Niger Unrest Highlights Need for Uranium Asset Diversification
February 14, 2013, By Melissa Pistilli Uranium Investing News
France’s military intervention in Mali, its former West African
colony, highlights industrialized nations’ supreme need to secure
access to economically strategic assets — in France’s case, uranium.
That theme will increasingly be seen playing out on the world stage
over the coming years.
Mali’s Kidal region, which is controlled by Islamist militants,
borders the northwestern desert region of Niger, where France’s
nuclear power giant AREVA (EPA:AREVA) has been mining uranium for more
than half a century.In light of current hostilities at its Arlit mine,
which in 2010 was the site of a kidnapping that may have been backed
by al-Qaeda, AREVA has said it’s strengthening its security measures
at both its Arlit and Imouraren mining operations. The BBC recently
reported that the security detail includes French special forces.
France’s deployment of special forces to protect AREVA’s uranium
assets reveals that the nation’s priorities include ensuring access to
a steady and reliable supply of uranium. France relies on nuclear
power to generate about 75 percent of its electricity, and according
to a parliamentary report, the western nation acquires about 18
percent of its nuclear fuel from Niger, the world’s fifth-largest
uranium producer.
Mali isn’t the only problem neighbor bordering Niger. Islamist
militants recently launched a bloody attack on a BP (NYSE:BP,LSE:BP)
gas plant in Algeria, which borders Niger on the northwest, and to the
northeast of the country is Libya, where Muammar Gaddafi’s death has
left opposing groups vying for power.
Diversifying via joint ventures in lower-risk jurisdictions
Complicating problems for AREVA is the fact that Niger’s president,
Mahamadou Issoufou, recentlysaid his government wants to renegotiate
the terms of its uranium mining agreement with the France-based
company. He stated that “it’s not acceptable” that Niger’s most
valuable export only contributes about 5 percent to the nation’s
annual budget. The country’s government is reportedly asking for at
least 20 percent of revenue from the industry…..
Increased revenue for Niger may come in the form of more mining
taxes, royalties or even a stake in AREVA; any of those options would
lower returns for investors and discourage future investment,
explained Berry.
Investment analysts are advising those with resource investments in
Mali to get out while they can,according to a Canadian Press report.
Certainly, investments in politically unstable mining jurisdictions
carry huge risks that often are not worth the profit potential…….
Major companies like AREVA and Cameco (NYSE:CCJ,TSX:CCO) understand
how important it is to mitigate such risks through geographically
diversifying their assets. These companies are looking to replace
mined pounds of uranium with deposits in stable, mining-friendly
jurisdictions…..
