French Minister Pulls Carpet from Under Areva

by Hilary Barnes

With friends in the government like this one, the French nuclear energy group Areva, in which the state is the dominant owner, doesn’t need commercial enemies.

Areva exploits uranium ore in one of the world’s poorest countries, the land-locked Niger, a former French colony, where it is currently negotiating for the renewal of its agreements for producing ore from two mines that have been in operation for some 35 years.

Niger accounts for about 40% of the world’s uranium supply and its resources are crucial to France’s large civil nuclear energy progamme, with 58 reactor accounting for about 75% of electicity production, as well as its military nuclear capacity.

Uranium prices are currently depressed, at about $35 per ton in the spot market, which puts pressure on the returns from the Niger operations, but the government of Niger is demanding that Areva’s Nigerian company should become liable to be taxed under a 2006 law, which would boost the take to the state from about 6% of government revenues to about 12%.

M. Pascal Canfin, France’s deputy minister at the Ministry for Development, couldn’t agree more, as he told the National Assembly in Paris on January 5. It so happens that he is one of the members of the present French government to represent the Ecologists. He is an ardent opponent of nuclear energy.

“The two parties have agreed to reach an agreement by the end of February on the conditions for exploiting uranium, but, and I tell you this plainly, on conditions that allow Niger to increase the revenues to which it has a right. The demands of Niger are considered by this government – which was not the case with the previous government – as legitimate.”

Niger, however, does not appear to have been speaking with one voice. Foreign Minister Bazoum Mohamed said at the beginning of January that he did not think a new agreements would put Areva under the 2006 tax provisions, but this was disputed from the staff of President Mahamadou Issoufou in this report, which said the 2006 conditions are non-negotiable.

Pascal Canfin generously conceded that the negotiations were not between the French state and Niger but between Areva and Niger. Areva holds 80% of the equity capital in its Niger company, with the state of Niger owning 13% and other shareholders the remaining 7%.  So why does Canfin have anything to say about this at all?

Until now, the payments which Areva makes to Niger have been governed by the terms of earlier agreements between the two parties.

Niger, with strong support from Oxfam France, claims that 80% of the returns from the uranium mines go to France and only 20% to Niger, which is disputed by Areava, but it is, as Anne-Sophie Simpere (Oxfam France) says, impossible to confirm on the basis of published figures.

For example, a 2009 press release by Areva, in connection with a deal wherein the state of Niger and Areva concluded an agreement by which Areva will develop the major new Imoumaren ore deposit, second only to Australia’s Olympic Bay mine, stated that as of that date the direct returns to Niger had amounted €871m and the direct returns to Areva €129m, which is the inverse of the proportions advanced by Oxfam.

A study by Oxfam and a Niger association, ROTAB, which promotes greater transparency in financial and budgetary matters, pointed out last year that Areva’s mines benefit from numerous tax concessions, including exemption from customs duties, value added tax, taxes on carbon fuels, and have a right to make a provision of 20% against profits for the restoration of the area mined.

Dr. Ibrahima AIDARA, a Senegal economist and administrator of the governance programme of the Open Society Initiative for West Africa (OSIWA), adances a similar case at Afrik.com. He said:

In the course of the past 50 years, the two Areva mines in question, Somair and Cominak, have extracted about 114,346 tonnes of uranium for about $460m. Niger’s part is about one eighth of this sum.