Niger uranium price revision astounds France

Niger Junta played the Uranium card at the most opportune moment. As soon as they consolidated power there was a blanket ban over exports of uranium to France. Before the blow softens up, another punch was delivered revising royalty pay for mining uranium within Niger. Undoubtedly, the double whammy startles France.

Out of the European Colonial powers, France has the most dubious reputation of exploiting natural resources to the hilt and then do nothing to develop their colonies. Even after granting independence in paper, France continues to stage manage West African Francophone countries. Niger got the severe beating in Sahel Region.

French company Orano (previous name Areva) is in the uranium mining business in Niger for several decades. It owns majority stake in three mines. Aermine in the heart of Arlit region was the first to be opened for exploitation. Almost depleted, this mine can continue to be productive for one more decade. The second mine Akokan close to the Arlit region is almost fully depleted leaving undesirable disasters to ecology as post-closure procedure was not followed up. The third one Imouraren slated to be one of the largest uranium minds in the globe remains unexplored so far.

Consequently only Aermine is still open for production albeit in lesser output level. The Junta was well advised by a hidden brain whose identity is yet to be revealed, pounced upon uranium exports to France as geoeconomics power tool. Their initial ban was quickly followed with a demand for staggering hike in price. What stupefied France more is that the revision amounts to several multiples of the current payment of less than one Euro per kilo? Asking price of 200 Euro per kilo is something let alone France, even the global market cannot agree with. For reference, the prevailing price is around US$ 50 per pound working out Dollar 124 per kilo.

France was caught in a clap trap. At present France imports 17.6 MT of uranium from Niger accounting for 20% of her imports at damn cheap price. Moreover, Niger stands only second to Kazakhstan which provides about 23.8 MT hovering around 27% of total imports. For France sourcing the shortfall is not difficult yet she has to pay hefty spot prices to do that.

Up goes in flame the sunk cost in developing the Imouraren mind. Both Russia & China are willing to replace as operators of these uranium mines and even buy the entire production. Plainly put, China is already in the scene as JV partner of one of the uranium mines in Niger and can extend her scope and scale seamlessly.

Not doing anything is a bitter bill to swallow for the colonial master. After delivering series of threats wisdom dawns in Elysee Palace that any arbitration by France in the French Courts as provided by the business contract is a no go one, mainly because it can open the cane of worms as regards to the degree of exploitation that France was carrying on without any impunity for decades going against the grain of French motto of “liberty, equality and fraternity”.

Facing a dim future in securing cheap uranium supply, France has to find a novel business strategy to continue with business relationship with Niger. Even then she cannot run away from the geoeconomics landscape where possessing minerals is the newest power spectrum as Niger demonstrated and so would be by rest of uranium exporting nations who are eagerly waiting in the wings to get additional windfall.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

Sanctions regime, good business strategy

Who would have thought that imposing sanctions is an easy way to make big buck? The irony is, it is not the party that imposes sanctions gets a lot of the loot, but the third parties swallowing up lion’s share leaving both the aggressor and victim getting substantially less. More follows:

America is credited with the largest number of sanctions originating from her so far.  The West as a whole and EU as a significant group within is not far behind USA. The difference between America and the West differs only in terms of the width and depth to which sanctions burrow in. Expectedly, there are several permutations and combinations that are in play.

America envisages sanctions as the key policy framework where the regime has a labyrinthine architecture, pointedly one item crossing the other bringing more complexities in its wake. But more often than not victim nations find creative ways of bypassing these, resulting in a situation where the intended purpose either has not been met fully or the opposite of that happens.

There are two significant outcomes. One is that America and others who join her are not getting the benefit in terms of any cash revenue expected to accrue during the pendency of the regime. Although the victims are affected initially, overtime they bypass the burden of sanctions to a great extent making the tool of sanctions regime a toothless instrument in the dynamics of geoeconomics.

Second aspect is both Russia and Iran who are the first and second in the pecking order of targeted countries for sanctions are doing excellently well in terms of GDP growth and/or net recipients of foreign revenue, contrary to what the imposers expected to happen.

Third party nations such as India and Saudi Arabia make a big killing by importing Russian oil cheaply and re-exporting to the West. Indian refineries were the pathfinders who brought almost 30% of Russian crude exports refined it and thereafter exported to EU at very high prices. While America which sponsored these sanctions is least affected, EU has to put up with expensive imports due to unavailability of oil & gas in the open market. Additionally India had in previous years received exemptions from CAESER Act as regard to import of crude from Iran till such time the window was shut by the American Department of Commerce.

Stealth also had a part to play. While America imposed blanket ban on Russian imports she exempted uranium from Russia lest electricity generators in US would be affected terribly. The volume of uranium imports in the first half of 2023 is more than double that of corresponding period in 2022. According to industry analysts this amounts to 2.2 fold at 416 tonnes as America is heavily dependent on Russian nuclear fuel for electricity generation.

A startling fact re sanctions regime is that US can give waivers over sanctions that serve her geoeconomics interest. A special exemption is however made regarding allies in the East, Japan & South Korea. For example is the recent waiver allowing South Korea to repatriate US$ 6 Billion frozen in South Korea for the payment of oil previously imported from Iran? In a circuitous manner this transfer was first made to the Swiss Central Bank and thereafter to Qatar in order to administer release of funds periodically for Iranian imports such as food & medicine.   

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

How come fake joint US Indonesian statement?

When wire services carried a so-called news about joint press statement after the meeting Lloyd Austin had with Indonesian defence minister Subianto Probowo later agreeing with American view on China and Russia surprised the entire world casting doubts over Indonesian neutrality. What is behind this US disinformation campaign?

The Pentagon note titled ‘United States Department of Defence and Indonesia Minister of Defence Joint Press Statement’ published on August 24 stated inter-alia the following two key points of supposed fake agreement under “Shared Vision”:

One: They shared the view that the People's Republic of China's expansive maritime claims in the South China Sea are inconsistent with international law as reflected in the United Nations Convention on the Law of the Sea.

Two: Secretary Austin and Minister Prabowo jointly condemned violations of national sovereignty, as reflected in United Nations General Assembly Resolution ES-11/1 dated 2 March 2022, as adopted by majority vote, which deplores in the strongest terms the aggression by the Russian Federation against Ukraine and demands its complete and unconditional withdrawal from the territory of Ukraine. (Courtesy: Department of Defence August 24, 2023)

Probowo on his part made a rebuttal while speaking to reporters on August 31 2023 “There is no joint statement and no press conference. What is important for me to underline is that our relationship with China is very good. We respect each other, we already have mutual understanding. I conveyed that in the US,” he said, adding “We are close friends with China, we respect America, and we seek friendship with Russia”.

Here is my take on the whole murky episode through the lens of business strategy amid geoeconomics:

1. America thought that BRICS is not inclined to accept Indonesia as a member. President Joko Widowo who attended the 15th BRICS Summit held in Johannesburg during 22-24 August 2023 did not find fault with BRICS, but made it known that Indonesia needs time to consider joining BRICS and wish to have dialogue with partners

2. By alluding to the two countries Russia and China and casting in the minds of the respective countries doubts about Indonesia’s avowed policy of neutrality, America believed that Indonesia can be brought close to the G 7 consensus on “rule based international order”

3. Generate a new perception in the mind op government & people of Indonesia that America is the friend they can count on more than Russia-China combo

4. When Russia & China took up this matter with Indonesian authorities Probowo did not take umbrage against America but handled the matter with astute diplomatic nicety emphasising:

a) There is no joint statement and no press conference

b) We are close friends with China, we respect America, and we seek friendship with Russia.

The matter ended there with lot of mud sticking upon US regarding disinformation campaign that would take quite some time to be cleaned up!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist