David vs Goliath in the world’s poorest country
The government of Niger seeks more revenue from the French uranium company, Areva.
Right now there’s a fascinating David vs. Goliath struggle playing out in Niger – the poorest country in the world. The battle pits the French multinational uranium conglomerate Areva vs. the government of Niger. Though it’s not getting much attention globally, the outcome could have important implications for other poor countries that are trying to get better deals for the minerals and oil dug out of their lands.
Areva has operated in the northern part of Niger for 40 years. The company, which is 80% owned by the French government, supplies 30% of the uranium consumed by the nuclear power plants supplying most of France’s energy. According to a recent briefing note by Oxfam France and Nigerien group ROTAB, Areva has exported hundreds of millions of dollars worth of uranium from its operations in Niger.
Meanwhile, Niger ranks dead last (186 out of 186) on the UN’s Human Development Index. More than 60% of its population of 17 million lives on less than $1 day. Fewer than 10% of people in Niger have access to electricity.
Between 2004 and 2012, global uranium prices tripled. Understandably, the government of Niger is seeking to increase its share of profits from its uranium reserves as it negotiates new production contracts with Areva. (The current 10-year deal expired on December 31st.) The government is said to be asking for an increase from 5% to 12% in royalties collected from Areva.
Not surprisingly, Areva has pushed back – hard. The company claims that 85% of the profits from uranium go to the Nigerien government. An Areva company spokesman told Le Monde that “Two uranium mines alone can’t finance the development of 17 million people.”
Local civil society organizations, led by Oxfam partner ROTAB, have in turn pushed back on Areva.
“It’s not down to a company to choose its own tax regime,” said Ali Idrissa, coordinator of ROTAB at a recent protest in front of Areva’s offices in Niamey. Oxfam France and ROTAB have launched a global petition drive calling on Areva to stop pressuring Niger into giving the company excessive tax breaks.
“This situation cannot continue,” said Idrissa. “France must prove that the time for secret agreements, closed negotiations and pressures is over. African countries should be able to count on fair revenues from French companies extracting their resources.”
Although this may seem like an obscure dispute in a forgotten corner of the world, the issues at stake are playing out in many other countries, whose governments negotiated bad deals with oil and mining companies and ended up getting far less than they should have from their minerals. This issue was highlighted last year in a major report, “Equity in Extractives,” produced by the Africa Progress Panel, a research and analysis group headed by Kofi Anan.
For some poor countries, particularly in Africa where Niger is perhaps the prime example, oil and minerals are one of the few viable economic sectors. These countries have to find ways to convert these resources into the kinds of investments that can help move them slowly up the development ladder: health, education and infrastructure.
Companies are entitled to make a profit. And in a risky country like Niger, they may even reasonably claim an extra level of profit given the risks they must face to operate (indeed, Areva’s mines in Niger were attacked by Al Qaeda-affiliated groups last year). But aggressive pressure tactics used by some mining companies, and accounting tricks like transfer pricing, are particularly unseemly when used in countries seeking to get a tighter grip on a depleting resource that should be used to benefit its population as a whole.
Governments are not blameless, of course. Corruption and political favoritism often play a role in the deals that get done between mining and oil companies and governments. Simply increasing a government’s profit share in no way guarantees that money will actually get used in appropriate ways. For that to happen, greater transparency and citizen action are needed. The politics around resource deals need to be addressed and the ability of government representatives to hold their own vis-à-vis the high-powered corporate lawyers at the other side of the negotiating table needs to be strengthened.
Critically, as Areva and the government of Niger negotiate the mining contracts, these should be disclosed and subject to public scrutiny. Niger’s 2012 constitution actually requires disclosure of these contracts.
In the end, analysts believe that Niger and Areva will reach a deal that allows Areva to continue operating in the country. Hopefully the deal will benefit the people of Niger as much as the profit margins of Areva. There is something immoral about a multinational corporation – particularly one that is a quasi-state owned enterprise like Areva – in resisting efforts by a government of a desperately-poor country like Niger to modestly increase its chance of getting ahead.