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Niger: Niger Energy Profile


Exploitation of mining resources

The priority in Niger’s mining policy is production diversification so that the country’s dependence on uranium is minimised, because at present this counts for 2/3 of export income.
Niger does not lack in mining and energy resources. Uranium, coal, iron, gold, copper, oil, phosphates, cassiterite and gypsum are present in the ground, but exploiting them depends greatly on the world market rates, here more so than in any other countries, if one takes the geographical location of the country and its insufficient infrastructure into consideration. There are still not many alternative methods for extracting uranium. The more advanced projects are in the gold mining area. To be able to exploit the country’s oil resources, Niger may have to wait for a few more years yet.

Niger has a large and diversified mining potential, but at this stage it has not been widely explored because of its high costs of exploitation and extraction. The fall in uranium prices has not totally turned Niger from its mining tradition. It is the only country in the region that has two specialised training centres, the Mining School in Aïr and Geology and Mines School.
The government will no longer be in charge of the exploitation, because it does not have the necessary financial means with which to run mining projects or install electricity on the sites. Instead the government is leaving this in the hands of the private sector, where the exploitation of coal and uranium will continue.

Taking the physical features of the country and its infrastructure into account, the most valuable substances will be favoured.
Some 16 search permits were granted to private companies to look for gold and other metals. For the moment, gold is the most advanced project with the creation of the mining company Liptako in 1999, a project that was relaunched after an increase in the world rate.
Conformation of the gold bearing potential in the Liptako zone
The Liptako region, situated to the North West of Niamey, has a proven gold bearing potential. Gold washing is practised by about 20 000 people, for an estimated production of about 1 000 kilos per year. However there is no industrial exploitation in existence at this point in time. The Canadian company Etruscan has several mining permits in this area, notably in the Samira Hill and Libirri sites and they should begin their activities at the end of the year 2004. To this end, the African GeoMin Mining Development Corporation (AGMDC) was created, which is partly owned by Etruscan and another Canadian company, Semafo (both companies own 40%2525), while the remaining 20%2525 is owned by the state. The operator is the Managem company, which belongs to the mining division of the Moroccan conglomerate, ONA.

Industrial Exploitation in 2004

The gold exploitation project that is currently in its development phase is run by the Mining Company Liptako (SML), which has a joint venture between AGMDC (80%2525) and the Nigerien Government (20%2525). This initiative was relaunched after the international market rates took off again, where the price for an ounce of gold reached 300 dollars. The infrastructures required for the exploitation, for example the water dams, the pumping stations, the landing strip, but also the life base, the access routes as well as the social infrastructure have been completed.

The treating plant still has to be constructed. The bidding process has begun and the project will take about 18 months.
Overall, the SML will invest about 30 million dollars with a profitability rate at a minimum of 27 to 30 %2525. This project should take at least 7 years to complete, based on a production of 7 000 ounces per year. Its financing has been assured by the African Bank of Development (ABD), the private investment subsidiary of the French Agency for Development (FAD), Proparco, Incontra as well as partners of the Managern and Semafo project.
Some 17research areas of gold deposits have been identified in the Liptako area. Ten research permits have been granted. These searches have led to the identification of important deposits such as the Koma Bangou site, whose reserves have been estimated at 2 188 tons of gold, but also at Séfa Nangué, Mbanga, Libiri, Tialkam and Koulou Danjou sites….

Uranium: Restructuring of the subsidiary and stabilising the activity

Niger has become a victim of the famous Dutch syndrome (Dutch Disease): the uranium boom has created distortions, marginalising the rest of the economy and the majority of its inhabitants. If the fall in the price of uranium does not happen today, the effects will be especially felt through the country’s external debt ratio.
Uranium exploitation started in 1971. Nine main deposits were found, but only two were ever exploited, these being Arlit and Akouta. Niger is the world’s third largest producer behind Canada and Australia. These proven mines are estimated to have 38 000 tons, i.e. 12 years of production if extraction remains at a similar rate. Faced with the fall in prices and less than generous partners who have aligned themselves with world prices since their contracts fix the prices for the year, Niger has had to restructure its aluminium branch in order to make it more competitive. Its workforce has been halved over the last ten years (1 500 people today), whilst the majority of expatriate positions have been made redundant.

The evolution of contract sale prices shows that the price has been lower than the European average (Euratom). It is worth remembering that in 1990 the price was at 408 French Francs per kilo, in comparison with 211 French Francs in 2002, meaning a fall of just under 50%2525. The fall in price continued during the 1990’s and was further influenced by the availability of important quantities of military and civil uranium from the former USSR. Despite the glumness of the market, Niger was resolved to maintaining its world ranking and its production. The same is true for France also, since the closing of mines in France and Gabon has meant that Niger has become a major and essential supply source.

Uranium is extracted by two different companies. The Akouta Mining Company (Cominak), which has a capital divided between Cogema (34%2525), Onarem (31%2525), Ourd (Japan, 35%2525), and Enusan (Spain, 10%2525) has a production capacity of 2 000 tons of uranium per year and exploits underground mines. The Mining Company of AÏr (Somaïr), which is owned by Cogema (27.5%2525), Onarem (36.5%2525), the French company Mokta (19%2525), and Urangesellschaft mbH (7%2525) has a capacity of 1 450 tons and operates open cut mines. Since 1987, the production in termes of volume has stabilised to about 3 000 tons per year. The total mining production, which has not been enriched, is exported to France (64%2525), Japan (29%2525) and Spain (7%2525).

Oil hopes yet to be realised

Oil exploration in Niger began at the end of the 1950s with two licences, Djado and Talk, along with some inconclusive carried out by Petropas. In the 1970s there was a renewed interest shown by several companies like Conoco, Esso, Texaco and Sun Oil.
But this new boom was more easily seen at the beginning of the 1990s, because the industry structure had better evolved. The oil laws were modified in 1992 and 1997, and are being revised again to make its exploitation more attractive and competitive. Two major changes are to be introduced. Firstly, companies will be able to create contracts to enable shared resources, whereas before only one company could be beneficiary to the rights of exploitation. Secondly, the other change would be the introduction of a clause concerning international transport, allowing operators that are not present in Niger to cross the country.

Niger’s oil potential is situated in two major areas, which cover almost 90%2525 of the country’s territory. These are the western reservoir, or the Lullemeden Reservoir which includes the Chad and Tamesna reservoirs. Then there is the eastern Chad reservoir. From 1960 to 1999, 38 exploration wells were drilled by oil companies, 21 of these showing signs of hydrocarbons. Six of these reserves were assessed as having roughly 300 million barrels of oil and 10 million cubic metres of natural gas. So far this is a volume that has been judged insufficient to be profitable. For this to go ahead the estimated reserves must be at least doubled.

These proven reserves are located in the licensed region of the Agadem block-1, situated in the eastern reserve. Moreover, this is only one of two licences that are currently authorised, with the Ténéré permit being held by TG World Energy. Three other blocks are currently open for exploration purposes. These are the Kafra and Bilam blocks situated in the eastern reserve, and the Tamesna and Tounfalis blocks in the western reserve, and finally the Djado block situated in the Djado Reserve.

The Nigerien mining potential is important and diversified.

Amongst the different deposits, we can mention:
In the Tera region, there have been more than 1 250 billion types of phosphate identified.
Iron deposits with 23%2525 P205 in Tapoa:

  • - uranium, estimated at about 300 000 tons, of which 55 000 tons are extractable.
  • - 50 tons of gold.
  • - 2 billion tons of iron, 40 to 45%2525 of which comes from the Say, Kollo and Kirtachi regions.
  • - 200 000 tons of nickel, with an average of 0.8 g in the Sirba and Gorouol zones, and the Makalondi and Tera regions.
  • - 45 000 tons of copper with a 0.065%2525 concentration in the Kourki zone.
  • - 13.7 million tons of coal.
  • - 25 million tons of salt from the Tidekett salt pans.
  • - 50 million tons of chalky limestone.
  • - 520 000 tons of gypsum.

On top of these statistics we need to add the precious metals index (gold, silver, platinum) the basic metals index (copper, lead, tin and zinc), the special metals index (vanadium, titanium, lithium, nickel and chrome), rare lands, industrial minerals and construction materials.

Coal, Gold and Oil

In the North, Niger also has coal reserves estimated at about 13.7 million tons, 9.1 million of which is in Anou Araren. The Nigerien Coal Association, SONICHAR, will thus see the day in 1975 as the completion of a project for producing electricity, based on thermal extraction fuelled by coal. This project provided for the electricity needs of those companies that were involved in uranium extraction as well as in towns such as Arlit, Agadez, and Tchirozerine. At the same time, the creation of SONICHAR reduced the need for imports of hydrocarbon, thus contributing to the improvement of the trade balance and the lowering of the currency debits. To date, the company has helped the government to save at least 100 billion francs in currency. But this isn’t where the merits of SONICHAR end.

As for the fight against desertification, SONICHAR also participates in promoting industrial grade coal for domestic use in order to help lower the consumption of wood.
One must understand above all else that the government’s mining strategy relies on the increase and diversification of production, to eventually reduce the country’s dependence on uranium. These are substances with a strong market value that have already been favoured. The exploration licences granted to private companies have already helped find proven gold deposits near the Liptako region, to the west of Niamey. Important deposits have been identified like those on the Komabangou site, where gold washing is practised by more than 20 000 people, or at the Samira Hill, Libiri, Mbanga and Tialkam sites.

It is estimated that 1 000 kilos of gold a year is produced through gold washing. The most advanced and industrially exploited site is that of Samira Hill, run by the Liptako Mines Agency (SML), in conjunction with African Geomin Mining Development Cooperation (AGMDC). This was relaunched in 2003 because of the rise in the international gold market. The infrastructures needed for this activity, like for example, the dams, the pumping stations, the life foundations, and social infrastructures have all been carried out. There is only the construction of the factory that is left to do. Overally, the Liptako Mines Agency will invest about 30 million dollars, with a minimum profitability of about 27 to 30%2525 based upon the production of 7 000 ounces each year.
Niger also has high hopes for oil, with a high potential located in the north and extreme east of the country.
A reserve of 300 million barrels of oil have already been discovered in the Diffa region, and the associated companies of PETRONAS (Malaysian), and ESSO (EXXON MOBIL), have relaunched exploration in this region with the hope of finding additional reserves enabling them to reach the minimum level that is required for the extraction to become profitable, this being 1 billion barrels.

The government is keen to see this happen and has signed an agreement in November 2003 with the Chinese National Petroleum Corporation / International Limited (CNPC) concerning the licence for the Ténéré-Bilma area. This agreement covers research, extraction, transport by means of pipe canals and also the sale of crude oil across the country, all this whilst being precise about the legal rights and obligations of each party. To make this type of project more interesting, the government has also revised the oil regulations that define the legal and tax regimes for prospecting, research, exploitation, refining, transporting and selling hydrocarbons throughout the country. This reform allows an attractive and competitive legal framework to attract investors. More specifically, the new laws simplify the procedures for granting licences, and facilitates the arrival of international oil companies, though its adherence to the required norms of the petrol industry.

They have also addressed the problem of multiple joint venture contracts by making the laws more comprehensive, and concerning the laying of trans-national pipes and joint ventures.
Niger is also known for:

  • Its iron deposits: 2 billion tons with a concentration of 40 to 45%2525 in the Say and Kirtachi regions.
  • Its Phosphates: with more than 1 250 billion tons in Tapoa region
  • Its limestone: 50 million tons.
  • Its salt: 25 million tons in the saline flats of the Sahara.
  • Its nickel: 200 000 tons in Liptako.

This does not include the precious metals index (platinum and silver) and the basic metals index (lead, copper, zinc and tin), etc.