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Mali, Niger Unrest Highlights Need For Uranium Asset Diversification

Mali, Niger Unrest Highlights Need for Uranium Asset Diversification

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, recently said 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.

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