Areva and Niger in new uranium mining deal

By Abdoulaye Massalaki

Posted on Monday, 26 May 2014 13:58

Under the terms of a long-awaited deal to renew its production agreements in Niger, the state-owned French company also agreed to pay 90 million euros ($122.7 million) to rebuild the road to its mines in the northern town of Arlit and to invest 17 million euros in a local development project.

The two parties will take the necessary steps to ensure the economic and financial profitability of these companies and to safeguard employment

Areva pledged to build a new headquarters for its mining operations in the capital Niamey at a cost of 10 million euros, and to name Niger nationals to the head of its two mines in the country – Somair and Cominak – by 2014 and 2016 respectively.

Areva and Niger have been locked in talks for two years but failed to reach a deal before the previous 10-year production agreement expired on Dec. 31, requiring its temporary extension.

Niger, the world’s fourth largest uranium producer and one of the world’s poorest countries, has pushed to extract higher tax payments from the French group under the terms of a 2006 mining law that reduces exemptions and raises royalties rates.

Areva, however, argued said this would make its mines in the West African country unprofitable. Somair and Cominak together produce more than 4,000 tonnes of uranium a year.

“The agreement brings the mining deals for Somair and Cominak into line with Niger’s 2006 mining law,” read a joint press statement after the signing of the deal in Niamey.

“The two parties will take the necessary steps to ensure the economic and financial profitability of these companies and to safeguard employment.”

Under the new deal and in line with the mining law, Areva’s rate of mining royalties – a tax based on the market value of the minerals produced – will rise from a current level of 5.5 percent to as high as 12 percent, depending on profitability.

Areva’s Imouraren mine, which would more than double Niger’s output of uranium to around 9,000 tonnes a year, had been scheduled to start production at the end of next year after a series of delays linked to security concerns in northern Niger.

President Mahamadou Issoufou had been keen for the mine to start production before he seeks reelection in 2016.

“Since current uranium prices do not allow the profitable development of Imouraren, Niger and Areva will create a strategic committee which will decide on a timetable for its start-up according to the conditions of the market,” the statement said.

France depends on nuclear power for three-quarters of its electricity supply – the highest ratio in the world.

According to an industry source, Niger accounted for around one fifth of the uranium supply to France’s nuclear reactors last year, though this figure should decline to around 10 percent this year as Areva and EDF diversify supplies.

($1 = 0.7336 Euros)


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