Niger - Uranium
Niger confronts monumental problems of development. Uranium, which was once the backbone of Niger's economy, no longer provided the ready answer. As a result of unprecedented earnings from uranium sales in the late 1970s and early 1980s, Niger invested heavily in development projects, especially infrastructure and communications. Modern buildings now dot Niamey and other major towns. other benefits from the uranium boom include a modern telecommunications system and a network of paved all weather roads.
The latter half of the 1970s, which coincided with the brief uranium boom, was a period of good rains and harvests. Herds were restocked to pre-drought levels, and Niger entered a period of optimism and economic growth. The early 1980s, however, brought in a period of disappointing harvests. The 1984 season was a disaster, with many areas of Niger producing no harvests.
The effects of the 1979 accident at Three Mile Island in the United States reverberated into the villages of Niger, when the global demand for the country's largest export commodity, uranium, plummeted. In the early 1980s, uranium provided 40 percent of government revenues; by 1986, it accounted for only 12 percent.
As purchases for military purposes ended, government procurement contracts world wide were not renewed, and in many countries the large reserves developed as a result of government purchase incentives, in combination with lack of substantial commercial market, resulted in an over-supply of uranium. Typically, an over-supply of uranium together with national stockpiling at low prices resulted in depression of prices to less than $5 per pound by 1971.
When the bottom fell out of the uranium market, Niger found itself with a debt that was well beyond its capacity to pay. By the end of 1986, Niger's external debts amounted to 324 billion CFA francs (slightly less than $1 billion). The abrupt end of the uranium boom created severe economic dislocation not only in the mining sector but in other areas such as banking, construction and transport which had expanded greatly during the uranium boom. A number of French and other European businesses closed their operations in Niger, and the expatriate community began a decline which has continued since the early 1980s.
Niger's uranium production grew dramatically in the late 1970s and very early 1980s. For example, 1981 production of 4360 metric tons was more than double the 1978 level of 2000 metric tons. During these boom years several additional mines were planned such as the SMTT consortium which had heavy Kuwaiti backing and a Nigerien-American (CONOCO) consortium to exploit the vast Imouraren reserves. With the decline of both world price and demand after 1979, however, these projects were shelved indefinitely. CONOCO gave its share of the Imouraren operation back to the Nigerien Government in late 1983, thereby ending American participation in Niger's uranium industry.
The early 1980s slump in the world uranium market had an adverse impact on SOMAIR and COMINAK production. As its partners became increasingly reluctant to make purchases each year, Niger's production declined. For the last 2 years, it has hovered around 3,000 metric tons. France and Japan purchase most of this annual production. Although uranium accounts for approximately 80 percent by value of Niger's exports, it now only accounts for a small percentage of government revenue.
The Government of Niger made clear over the years its willingness to sell its uranium to new customers and has tried to market to nonpartners, including the United States. with the exception of a 1985 sale to Algeria, Niger has not made a sale to a nonpartner since 1982. Niger's efforts in this regard are hindered by the fact that its production costs are high and its price for uranium is now more than double the spot market price. By the late 1880s, hiven the bleak prospects for the world uranium market and the likelihood that Nigerien uranium will not in the near term be in great demand, the future of Niger's uranium industry depended on the willingness of the French to continue to make purchases at above world prices.
In 2013, Niger was the world’s fourth-ranked producer of uranium by tonnage. In 2009 Niger was the sixth largest producer, and was unlikely to surpass Canada (9,000 tons in 2008), Kazakhstan (8,500 tons in 2008), or Australia (8,400 tons in 2008). Resources have proven uranium reserves of 210,000 tons, accounting for 11% of the world's total reserves, ranking fifth in the world. Phosphate reserves of 1.254 billion tons, ranking fourth in the world, has not yet developed. Coal reserves of 6 million tons. Other mineral commodities produced in the country included cement, coal, gold, gypsum, limestone, petroleum, petroleum refinery products, salt, silver, and tin. Niger enjoyed substantial export earnings and rapid economic growth during the 1960s and 1970s; however, when the uranium-led boom ended in the early 1980s the economy stagnated.
Niger’s uranium industry continued to be affected by political instability in the West Africa region. On May 23, 2013, at least 14 employees at Société des Mines de l’Aïr (SOMAIR), a subsidiary of Areva Group of France, were injured and one was killed after a suicide bomb attack was carried out at Areva Group’s concession facilities. Although uranium ore extraction resumed at SOMAIR’s facility on May 24, ore processing was not fully operational until August. The SOMAIR facilities were located near Arlit in the Agadez region in northeastern Niger.
On 04 May 2009, President Mamadou Tandja laid the foundation stone of a massive new uranium mining complex at Imouraren, Niger. The project will be developed by AREVA, the French nuclear giant, which is majority owned by the Government of France. Imouraren would be the second largest uranium mine in the world with a projected investment of 1.2 billion Euros (approximately 1.7 Billion USD; current exchange rate 1 USD = .719 EU) and production of 5,000 tons per year at completion. AREVA also operated the two existing uranium mining operations in Niger, which produced 3,000 metric tons, representing 43% of Niger's export income, in 2008. The Government of Niger (GON) issued a large number of new uranium exploration permits in order to attract investors from other countries, but the Imouraren project ensures that AREVA will continue to dominate uranium exports from Niger for the foreseeable future.
Production is first sold to the partners in proportion to their equity at an 'extraction price' determined by the government, notionally based on operation costs, but somewhat higher. From February 2012 the extraction price is CFA 73,000/kgU ($145/kgU), paid in Euros. The partners then sell or use it, in the case of the government, through a trading company. Orano claims: “In 2013, 90% of the direct revenue from the mines went to the state of Niger.” In May 2014 the government and Areva (now Orano) signed a new five-year agreement for the two mines based on the 2006 mining law and expressing what both sides said was a balanced partnership. The royalty rate will potentially increase to 12% of market value, but depending on profitability.
At the end of 2022 Niger's reasonably assured resources (RAR) were estimated by the IAEA as 256,520 tU up to $130/kgU, mostly accessible by open pit. Inferred resources were 53,600 tU at up to $130/kg, all in sandstone and almost all accessible by open pit (98%). Areva is reported to have been paying royalty on the basis of a product valuation of 27,300 CFA francs ($57) per kilogram, and in 2007 this was increased to 40,000 CFA ($83/kg),
The price of uranium has increased from around $65 per kilogram in 2021 to $110-$130 since 2022. The price of uranium is expected to rise further and could reach around $165 per pound by the third quarter of 2024. The price had doubled over the past three years, but is well down from a peak of $310 touched in 2007.
In a significant development that marks a major change in the global resource market, Niger, a key player in the uranium industry, made a remarkable move to ensure equitable remuneration for its highly valuable natural resource, uranium. According to numerous reports, Niger implemented a substantial price hike, elevating the cost of uranium from a meager €0.80 per kilogram to an impressive €200 per kilogram.
Uranium surged from just over $50 per pound in April 2023 to more than $100 per pound by January 2024. Rising output could defuse uranium’s long-term bullish outlook. That’s set to be dampened further as several new sources of supply hit the market. Around the world, several fully permitted mines with infrastructure already in place means several operations could come online simultaneously, easing any potential supply squeeze driven by demand.
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