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close this bookThe Courier N 143 - Jan - Feb 1994 Dossier: Fighting Poverty - Country Report : Niger (EC Courier, 1994, 96 p.)
close this folderCountry report
close this folderNiger: Winning the economic battle - a very long shot
View the document(introduction...)
View the documentProfile
View the documentUranium - Euphoria gives way to disenchantment... but oil and gold may soon be in prospect
View the documentAn interview with President MahamaneOusmane
View the documentPrime Minister Mahamadou Issoufou outlines the Government's five priorities
View the documentEU-Niger cooperation - Off to a fresh start

Uranium - Euphoria gives way to disenchantment... but oil and gold may soon be in prospect

Appreciating the extent of Niger's currently severe economic difficult ties means looking at the history of uranium and the part the mineral has played in the country's general policy over the past 20 years.

It was in 1966-67 that the French Atomic Energy Commission confirmed the importance of one of the world's biggest deposits of uranium, some 40 000 tonnes of it and economically exploitable. It was found in 1958 near the surface of the Sahara plain at Arlit, in the Tim Messoasin at the foot of the Air massif one of the most arid parts of Africa.

SOMAIR, the Air mining company, was set up to work the deposit and it began operations in 1971, producing about 400t of uranium. Plant capacity soon went up to more than 800t p.a. and the ore handled from 40 000 t to more than a million.

The mine was already Niger's biggest undertaking, relegating groundnut processing to second place, as we shall see below. In the euphoria of this discovery at a time when African leaders were indeed looking at the ground beneath their feet in the hopes that they would find some highly desirable oil or other mineral there, the Government of Niger trusted to uranium to provide for at least 15% of its budget resources. Its optimism was fuelled by a combination of confidence in the technical (but not economic) reports and growing demand from the principal purchaser, France, which took the whole of SOMAIR's output (about 1200t of uranium in 1973).

But the commercial viability of Niger's uranium depended on an international market which was uncertain and indeed stagnant because of oversupply. It was also soon to be faced with the consequences of the international political disorder triggered by a worsening oil crisis. Between the decision to exploit the uranium in 1969 and the first exports in 1973-74, production costs doubled and the selling price dropped by a third. And although the Atomic Energy Commission gave the mine financial support and decided to buy its uranium at cost price, the hopes of the kind of rapid wealth which is generated when oil is struck collapsed or at least they appeared to, because things in fact changed after 19731974 when President Hamani Diori's short sighted handling of the deteriorating domestic situation ended in a coup d't led by Sevni Kountchin April 1974. Today, the impression is that President Diori may have been counting on uranium revenue going up in the near future and was indeed putting his back into what was by no means a simple task, but be that as it may. The boom did not start until after 1974 and it was the new regime, under Kountchwhich reaped the benefit of it, in particular with the first oil crisis, which peaked in 1975 and gave the nuclear programmes a new air of obvious urgency. The main oil-consuming countries, whose economies were entirely oil-based, had agreed, in theory, if not in practice, that ultimately they had to master the atom and nuclear energy to replace oil - a new situation which had immediate repercussions on the uranium market OECD forecasts suggested that world demand in 1979 would exactly match the maximum world production to be derived from existing resources. Demand was to double between 1980 and 1985, the OECD said, and it was essential to take immediate steps to increase uranium prospecting. The price of the product in 1973-1974 was not such as to support adequate prospecting or the necessary further expansion of production, so a way had to be found of guaranteeing that the requisite production levels could be reached to avoid the possibility of shortage and an unstable market in the 1980s.

Uranium did indeed boom between 1975 and 1980. Althogh Niger did not do as well from it as it had hoped, the advantages gave it far more than any of its neighbours in the sub-region, except Nigeria. But the big problem was that the country had been inveigled into living well beyond its means and had run up considerable debts, installing much useful infrastructure for the future in the process, of course, but storing up serious trouble for itself in the shape of assisted State operation - a very serious thing now (see chart).

Graph 1: Niger’s exports

Graph 2: Niger’s public foreign debt

Back to square one?

So euphoria was short-lived, because the industrialised countries soon managed to adapt to the crisis, while public opinion there came out ever more clearly against nuclear power. The demand for uranium dwindled and the price plummeted as a result. In 1982, recession set in. Slight improvements notwithstanding. Niger's uranium exports and income were still well down on the 1980 figures and now they are 50% down on the already much poorer 1983 figures (CEAF 15450 per kg in 1993, as against CFAF 30000 in 1983). In Niamey, euphoria has given way to disenchantment.

Should the authorities go back to the square one of 1973-74 and go on banking on mineral resources, new and old, for the country's future ? That is the question. Contrary to what might be expected from Niger's economic history, in which farm and livestock products dominated until 1975, the Government of the Third Republic seems still to be hoping more and more that the mines will give the country back some economic growth and strike a balance in macroeconomic affairs once again. And the whole point of gold prospecting in the Liptako is to diversify State income, according to the Ministry of Mining and Energy's Mining Development Support Scheme (PADEM). The aim should be achieved through prospecting and setting up a pilot gold processing plant or, alternatively, building a metallurgical analysis laboratory to determine the grade of the ore from various sites now under investigation, particularly the apparently promising ones at Tialkam and T. The Government is still investing in uranium too and a long list of the country's mineral potential is given in the Guide to Investments in Mining in Niger.

Striking oil, on which the authorities seem to be counting heavily, would change everything in the country's macroeconomic forecasts. As Mining Minister Gado Foumakouold The Courier: 'The search for oil, by Elf Aquitaine in particular, is well under way and there are clear signs that it is there. Drilling was to start in three more places in October last year and we hope that this too will be conclusive.' The Minister's (muted) optimism is, he said, based on the fact that Chad could soon be producing and exporting oil, just as Cameroon, a little further south, did before, and Chad and Niger share the same geological features, which should mean that Niger will find commercially exploitable oil too. This could lead to proper regional cooperation between Niger, Chad and Cameroon, with a pipeline down to the port of Douala.

However, these details of Niger's possible petroleum resources, still only more or less well founded working hypotheses, have apparently already affected relations between the central Government and the regions. Some Tuareg leaders, particularly from outside, may be taking a harder line or stepping up their demands because Niger's oil, if oil there be, is in Tuareg country
and the Tuaregs are no longer willing to be bystanders when it comes to 'their' oil wells.

The question is, can the present Government follow its predecessors' line and make everything depend on mineral resources, to the detriment of farming and herding, which are more reliable despite the drought ?