ENERGY

Niger looking to China to break French control of uranium mining sector

The very poor African country of Niger looks to be seeking external investment, particularly from China, to break what it views as a French stranglehold on its mineral resource sector.

NIAMEY (Reuters)  - 

Niger wants to break effective French control of its mining sector and enlist Chinese aid in extracting more wealth from uranium and oil reserves in its remote northern desert.

The former French colony contains some of the world's biggest uranium reserves as well as deposits of iron ore, silver and platinum. But it is one of the poorest nations on earth and ranked bottom of the latest U.N. Human Development Index.

"Nothing is going to be as it was before in Niger," Prime Minister Seyni Oumarou told reporters late on Tuesday after a meeting with President Mamadou Tandja and civil society leaders.

French nuclear giant Areva <CEPFi.PA> is the main stakeholder in the two currently active mines in Niger's northern region of Agadez and France's nuclear industry has for decades relied on uranium from the West African country.

But the government has granted some 60 uranium exploration permits to Chinese, Canadian, British, Indian and other foreign firms in recent months and a further 120 permits -- mostly for uranium prospecting -- are still to be awarded.

The landlocked nation is hoping to cash in on strong world demand for uranium -- used as a nuclear fuel in power stations and atomic submarines as well as for construction in the aviation sector -- particularly from booming India and China.

Some in Africa fear China's investment strategy, which often involves bringing in cheap Chinese labour, will threaten African jobs. But Prime Minister Oumarou was upbeat.

"The Chinese should not be considered carcinogenic, but quite the reverse. Today the whole world is seeking to profit from partnership with the Chinese and we should not isolate ourselves from that," he said.

FOREIGN RELATIONS

Niger aims to more than double its uranium output within the next four years, from a current 3,500 tonnes per year, as two new mines -- one developed by Areva, the other by China Nuclear International Uranium Corp. (Sino-U) -- come on line.

The International Monetary Fund said in a report on Niger in July 2007 that higher investment in mining, mainly uranium, was expected to lift GDP growth to more than 5 percent in 2008-2010.

But the government is not the only party hoping to benefit.

Tuareg-led rebels have killed at least 40 soldiers and captured dozens more since launching a rebellion in February to demand greater autonomy for the region and a fairer share in revenues from its natural resources.

Government officials have accused Areva, in which the French government has a majority stake, of helping finance the revolt by the Niger Movement for Justice (MNJ) because it is angry about the prospect of having competitors in the region.

The rebels accuse China's Sino-U of helping fund government arms purchases and last month kidnapped one of its executives before later releasing him unharmed.

Niger declared Areva's country chief persona non grata last week after expelling its security adviser amid accusations that the company had links with the rebellion.

Areva, which employs 1,800 mostly locals in Niger, denies the charges as "completely unfounded" while the French foreign ministry, which has condemned the violence in northern Niger, has said it sees no reason for the Areva boss to be barred. (Additional reporting by Nick Tattersall in Dakar)