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RR RUEHMA RUEHPA
DE RUEHNM #0120/01 0431401
ZNR UUUUU ZZH
R 121400Z FEB 10 ZFF6
FM AMEMBASSY NIAMEY
TO RUEHC/SECSTATE WASHDC 0007
INFO ECOWAS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0001

UNCLAS SECTION 01 OF 02 NIAMEY 000120 
 
SENSITIVE 
SIPDIS 
STATE FOR AF/W 
STATE FOR AF/RSA- MAZEL, GRIESMER, BOWLES 
 
E.O. 12958: N/A 
TAGS: PREL EAID EMIN EPET CH NG ENRG EIND EINV
SUBJECT: RE: FOR RELEASE: Chinese engagement in Niger and Potential 
Areas for Cooperation 
 
REF: EMAIL:RE: FOR RELEASE: CHINESE ENGAGEMENT IN NIGER AND POTENTIAL 
AREAS FOR COOPERATION 
 
¶1. (SBU) China is building a major portfolio in Niger's resource 
sectors and will probably replace France as Niger's top foreign 
investor when projects under construction are fully operational. 
Chinese investments include oil and gas production, refining, 
uranium mining, and infrastructure.  There are no current examples 
of U.S.-China collaboration in Niger.  On the Nigerien side, the 
bilateral relationship is managed directly from President Tandja's 
office, and there is a striking lack of transparency in the terms 
of investment agreements, most of which have been negotiated 
without direct involvement of professional staff from the Ministry 
of Mines and Energy.  There is little scope for U.S.-China 
collaboration when the comparative advantage of the Chinese is 
their willingness to ignore international standards of transparency 
and commercial viability. 
 
 
 
¶2.  (U)China National Petroleum Corporation (CNPC) has a US$5 
billion deal to develop the oil and gas resources of Niger's Agadem 
block.  That concession was negotiated directly with the Government 
of Niger (GON) after the government rejected a competing offer by 
the Mobil-Petronas consortium that had done much of the initial 
exploration.  China sealed the deal by agreeing to construct a 
20,000 barrel per day petroleum refinery, which was considered a 
"must have" by President Tandja.  (Comment:  Economic analysts 
question the economic viability of the refinery, which will produce 
far more than Niger's current consumption, because high production 
and transportation costs will make it uncompetitive to export.)  In 
2009, China paid a "signing bonus" originally announced as US$300 
million, which helped to boost Niger's 2009 revenue by 26% over the 
previous year. 
 
 
 
¶3. (U) Although the terms of the production sharing agreement are 
not public, much of the oil production is expected to be exported 
by pipeline, with additional potential for export of gas when/if 
the proposed Trans-Sahara gas pipeline is built from Nigeria to 
Algeria through Niger.  The block includes three different fields, 
Goumeri, Sokor and Agadi, which have total recoverable reserves 
estimated at 295 million barrels.  The Chinese also have 
exploration rights to two additional blocks, Bilma and Tenere, in 
the same remote desert region.  No detailed information is 
available about the progress of construction at the Agadem site, 
but a high volume of container traffic moves along the highway 
across southern Niger and CNPC has established large staging areas 
near Diffa, the eastern-most regional capital located near 
President Tandja's home town. 
 
 
 
¶4. (U) The Nigerien company established to own and operate the 
refinery, Societe de Raffinage de Zinder (SORAZ) is 60% owned by 
CNPC and 40% by the GON, but CNPC is covering all project costs 
until the refinery is commissioned in 2011.  Estimated production 
of 20,000 barrels per day is far in excess of Niger's current 
consumption of under 3,000 bpd and the refinery is nearly 1,000 km 
distant from Niger's capital, Niamey.  Dagang Surface Construction 
Company has been awarded the contract to construct the 462 km 
pipeline to deliver oil from the production area to the refinery. 
 
 
 
¶5.  (U) China is also the second largest investor in Niger's 
uranium mining sector.  China's state-owned uranium firm, SINO-U, 
is investing US$ 300 million to develop a new mine at Azelik, which 
is due to begin production in late 2010.  The Nigerien company 
formed to build and own the mine, Societe des Mines d'Azelik 
(SOMINA) is a joint venture established in 2007 by SINO-U (37.2%), 
the GON (33%), Beijing ZXJOY Invest of China (24.8%), with 
Trendfield Holdings awarded a 5% stake as promoter of the deal. 
This 5% holding was subsequently purchased in April 2009 by Korea 
Resources Corporation (KORES).  As part of the agreement, 
Trendfield will assist KORES with the long-term off-take purchase 
agreement of 400 tons of uranium annually from the Government of 
Niger. 
 
 
 
¶6.  (U)Niger law gives the GON a 10% carried interest in every 
 
NIAMEY 00000120  002 OF 002 
 
 
mining project, but allows the GON to invest in order to retain 
greater percentage of ownership.  In 2009, the China Import-Export 
Bank loaned Niger US$ 95 million to cover Niger's share of the 
capital costs of the SOMINA mine, which will produce an estimated 
700 tons per year. 
 
 
 
¶7.  (U)Chinese-funded new infrastructure in Niamey includes a new 
four- lane bridge across the Niger river that is nearing 
completion, a large new Embassy compound with housing for all 
staff, and a separate new Economic and Trade Center.  Each of the 
new Chinese-Nigerien joint ventures is represented by a modern new 
office building in the capital.  Construction by Chinese crews 
using materials imported from China has limited the benefit to the 
local economy. 
 
 
 
¶8.  (U)The oldest Chinese investment in Niger is the textile firm 
Enitex, which was purchased by private Chinese investors when it 
was privatized around ten years ago.  The company subsequently 
closed the fabric weaving operation, but has continued printing on 
cotton fabric imported from China.  Enitex products are popular in 
both domestic and regional markets, but high costs and rigid labor 
practices constrain profitability. 
 
 
 
¶9.  (U)For over fifteen years, China has sent medical doctors for 
one-year rotations at the National Hospital in Niamey and several 
regional hospitals.  A recent initiative to place young Chinese 
volunteers in Niger has not been as successful; the first group 
arrived about three months ago, but most are still waiting for an 
appropriate placement, and the Economic and Trade Office is likely 
to terminate the program. 
 
 
 
¶10.  (SBU)On February 11, 2010, Conoff met with the First Secretary 
at China's newly constructed Economic and Trade Office, an imposing 
structure on a large compound in central Niamey.  He reported that 
the office is staffed by five Chinese expats, who also live on the 
compound, and four local staff.  Instead of inviting us to see the 
new facilities, he received us in a small anteroom attached to the 
guard house.  He speaks fluent French and responded cordially to 
questions, but did not volunteer any information, even that which 
is publically available.  According to him, the partners are only 
now discussing how the production will be exported. 
 
 
 
¶11. (SBU)President Tandja has been personally involved in building 
Niger's bilateral relationship with China, his son has managed the 
investment relationships in his capacity as the commercial 
counselor in Niger's Embassy in Beijing, and members of the 
President's family are reputed to benefit financially from the 
investments.  The personal nature of the relationships, the lack of 
transparency in the terms of investment, and the high probability 
of corruption make U.S. collaboration in the investment sector 
highly unlikely. 
 
 
 
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