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Cablegate: Signs of Life for Niger's Best Export As New

VZCZCXRO7372
RR RUEHMA RUEHPA
DE RUEHNM #1055/01 2621231
ZNR UUUUU ZZH
R 191231Z SEP 06
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 2904
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA 0550
RUEHMT/AMCONSUL MONTREAL 0055
RUEHQU/AMCONSUL QUEBEC 0005
RUEHON/AMCONSUL TORONTO 0001

UNCLAS SECTION 01 OF 02 NIAMEY 001055

SIPDIS

SENSITIVE
SIPDIS

DEPT. FOR AF/W: BACHMAN

E.O. 12958: N/A
TAGS: ECON ETRD EINV ENRG EMIN NG
SUBJECT: SIGNS OF LIFE FOR NIGER'S BEST EXPORT AS NEW
CANADIAN VENTURE SEARCHES FOR URANIUM

NIAMEY 00001055 001.2 OF 002


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SUMMARY
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1. (SBU) In a sign of heightened interest in Niger's uranium
reserves, a small Canadian exploration company - Northwestern
Mineral Ventures Inc. - has begun operations in a 4,000
square kilometer concession centered on the northern Nigerien
town of Ingal. World market prices for uranium are rising
after two and a half decades of decline and stagnation. Niger
is the world's fourth largest producer, accounting for
approximately 10% - 15% of global production. However, since
the early 1980s, little in the way of exploration has been
attempted. Thus, the country still offers significant
unclaimed tracts for exploration and exploitation. Against
this backdrop, Northwestern's interest in Niger is
significant both in its own right and as a suggestion of what
is still possible here in Niger - substantial additional
exploration and exploitation in an uncrowded field. For the
people of the world's poorest country, that could equate to
much needed foreign investment in their most lucrative - but
long dormant - natural resource sector. END SUMMARY

2. (SBU) In a meeting with acting Econoff on September 18,
Northwestern's Chief Financial Officer (CFO) Erik Martin
described the company and its Niger venture. Northwestern is
a small publicly traded company based in Toronto.
Approximately 85% of its shareholders are Americans, though
they collectively hold only 20% of the company's stock.
Majority ownership is Canadian, though the firm is also
listed on the New York Stock Exchange. With approximately $15
million in the bank, Northwestern plans on investing $4.4
million dollars in Niger exploration over the next three
years. The company currently operates a uranium mine in
Quebec and a gold mine in Mexico. Noting that Niger produces
roughly 10% of the world's uranium, Martin argued that the
country was attractive to small companies such as his, as
large tracts remain unexplored and unclaimed by larger
operators. Given rising global demand for uranium, Martin
argued that exploration in environments such as Niger was a
better investment now than at anytime in the last 20 years.

3. (SBU) Northwestern has obtained exploration rights to two
tracts, which collectively total 4,000 square kilometers,
located west of the city of Agadez. NOTE: Niger's active
uranium mines lie in a straight line running 300km north from
the city of Agadez to the city of Arlit. END NOTE Martin
informed Econoff that Northwestern had already conducted
aerial exploration of their concession and that results were
promising enough to merit land-based exploratory efforts.
Those efforts would be undertaken by a contractor - RSG Group
of Ghana. RSG will establish base camps in the zone and begin
intensive exploration from mid-October. In the event that
exploration yields results, Northwestern would approach the
Government of Niger (GON) for a separate exploitation permit.
The company has established a Niamey office with seven
full-time employees, and is about to open an office in
Agadez. It expects to soon double the number of local
employees and to continue hiring in the near-term. It has
retained a former senior employee of the Ministry of Mines
and Energy, an Agadez regional native, as its local chief of
operations. For security purposes, the company has agreed to
pay the Nigerien Army 2,000 to 5,000 CFA (approximately $5.00
to $10.00) in per diem expenses for each of ten soldiers
deployed to the site.

4. (U) Niger derives $27.5 billion CFA (approximately $53
million) per year in revenue from existing uranium mining
activities. This constitutes five percent of the national GDP
(up from two percent in the late 1980s and 1990s, but down
from a high of twelve percent in the 1970s). Long dormant due
to market prices as low as $14.00 per unit, and exploitation
of more accessible reserves in Australia, Canada, and
elsewhere, Niger's uranium sector has been sustained by two
public companies - SOMAIR (Socit des Mines de l'Air), and
COMINAK (Compagnie Miniere de l'Akota). These two companies
collectively employ 1,632 Nigeriens in their surface and
subterranean mining activities.

5. COMMENT: (SBU) In recent years, popular anxiety over
reports of chemical runoff from the mines contaminating the
drinking water of Arlit and Tchighozerine has been balanced
by public optimism over the rising price of uranium. While
hopes for development based on gold mining or oil drilling
are present in more muted form, Nigerien nostalgia for the

NIAMEY 00001055 002.2 OF 002


"good old days" of the 1970s uranium boom revives at the
mention of any new venture related to this proven
money-maker. At the same time, the uranium sector has not
attracted the aggressive Chinese interest manifest in the oil
exploration sector. Therefore, we expect the GON to be
supportive of Northwestern's efforts, and to make reasonable
efforts to clear bureaucratic roadblocks from the company's
path. END COMMENT
ALLEN

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