How the problems of the French company in Niger will affect the global uranium market

Prices for uranium and its processing continued to rise in 2023, again reaching historical records. The main driver of quotes growth was the desire of Western buyers to refuse supplies from Russia. An additional incentive to increase prices, according to Kommersant’s interlocutors, could now be a military coup in Niger. The rebels who seized power there no longer allow uranium to be exported from the French Orano deposits in the north of the country. Niger covers a quarter of uranium demand in the EU and about 5% in the world, however, according to analysts, interruptions can only have a temporary impact on the market.

In the first half of 2023, the price of raw materials for nuclear fuel continues to break records, follows from a report by the French Orano based on data from the UxC agency. The price of uranium oxide (U3O8) at the end of June this year amounted to $56 per pound, having increased by almost 8% in half a year. The spot price for uranium conversion (processing natural uranium into UF6 hexafluoride) reached $41, while the long-term price for uranium enrichment reached $146 per unit of separation work (SWU). The growth of quotations began in 2022, after the outbreak of hostilities in Ukraine. Western buyers are afraid of stopping supplies from the Russian Federation and are trying to switch to other suppliers in the face of a shortage of uranium processing capacities (see “Kommersant” dated October 27, 2022).

An additional factor for the rise in uranium prices could be a military coup in Niger, Kommersant’s interlocutors believe. The rebels who seized power in the country have already closed the borders and banned the export of gold and uranium. At the same time, Niger is the leader in terms of supplies of natural uranium to the EU, follows from the data of the Euratom Supply Agency (the regulator of the nuclear industry in the EU).

• In 2021, European consumers bought 2.91 thousand tons of uranium from Niger, which accounted for 24.26% of total demand.
• In second place in terms of uranium supplies was Kazakhstan (2.75 thousand tons), and in third place was the Russian Federation (2.36 thousand tons).
• Niger also supplies a small amount of uranium to the US, with about 686 tons exported in 2022.

There are 56 nuclear power units in France, which generate about 63% of the electricity in the country. As noted by the publication Politicodue to tensions in Niger and possible interruptions in the supply of uranium, it will become even more problematic for the EU to impose any restrictions on Russia in the nuclear field.

Now mining in Niger is carried out only at the field of the SOMAIR company (63.4% – from the French Orano, 36.66% – from the Niger state company SOPAMIN) near the city of Arlit in the north of the country. Uranium is transported from the quarry, first by road, then by rail to the neighboring Republic of Benin, and then from the port of Cotonou by sea, mainly to France for processing.

There are also promising projects in Niger. In May 2023, Orano signed a global cooperation agreement with the Niger authorities, including the development of uranium mining at the Imouraren deposit, which implies the company’s investment of €30 million. Canadian GoviEx Uranium began financing the Madaouela project this year, and the Canadian Global Atomic Corporation is developing a uranium deposit and Dasa gold. The Canadian Global Atomic Corporation assured that their Dasa project remains in force, but due to closed borders, deliveries will be temporarily interrupted. GoviEx Uranium also said that their work was not affected by the current situation in Niger.

Orano’s semi-annual report notes that the unstable situation in Niger has not yet had any impact on the company’s activities in the country and on the value of the group’s assets. The company also explained that French nuclear power plants receive less than 10% of uranium from Niger. The EDF group, which includes Orano, said “RIA News”that France does not depend on any country or deposit for the supply of nuclear fuel. French Orano also mines uranium in Kazakhstan through a joint venture with Kazatomprom and in Canada through a joint venture with Cameco and other companies.

The total revenue of the French Orano in the uranium mining segment in 2022 amounted to €1.36 billion, and the EBITDA indicator was €491 million. Mining revenue in the first half of 2023 amounted to €739 million.

Orano also conducts exploration in Gabon, Mongolia, Namibia and Uzbekistan.

Uranium production in Niger is declining due to the depletion of deposits, but in 2023 the country’s annual production is still 4% of global production and 3% of global demand, says Boris Sinitsyn, head of resource sectors analytics at Renaissance Capital. According to the World Nuclear Association, in 2022, Niger reduced production to 2.02 thousand tons of uranium. “However, taking into account the expected growth in uranium production in Canada, Namibia and Kazakhstan in 2023-2024, only long interruptions in production in the country can lead to a shortage of uranium in the world market, and then a temporary one,” Mr. Sinitsyn continues. 2 thousand tons of uranium, then the total growth in world production in 2024 against 2022 could be more than 13 thousand tons.”

Polina Smertina, Marianna Belenkaya