French nuclear fuel specialist Orano ended the first half of the year with a €133 million loss, heavily affected by the challenges faced in its mining operations in Niger due to a “severely deteriorated” political situation since the military regime took power a year ago.
Impact of Political Turmoil
“These results are marked by a significant one-time event, which is the severely deteriorated political context in Niger,” summarized David Claverie, the group’s CFO.
Despite the positive momentum driven by the favorable nuclear environment, which has boosted natural uranium prices and the uranium conversion/enrichment sector, Orano reported a €133 million loss, compared to a net profit of €117 million in Q1 2023.
Financial Loss Breakdown
The loss is primarily attributed to “€197 million” in “provisions and write-downs” recorded during the semester, as explained by Mr. Claverie.
These write-downs include the removal of the Imouraren mining license by Nigerien authorities in June (amounting to €69 million), as well as impairments related to its Somaïr subsidiary, which is facing severe difficulties.
Somaïr, the only mine operated by Orano in northern Niger since 1971, accounted for €105 million of the write-downs. Additionally, the group has set aside €23 million in provisions for various risks, including tax-related issues in the country.
Operational Challenges
One year to the day after the junta came to power, Orano’s sole operational mine in Niger, Somaïr in the Arlit region, is currently unable to export its uranium concentrate production due to logistical difficulties.
In this context, the Somaïr operation “finds itself in a situation of significant financial distress that could lead to insolvency in the short to medium term, within the coming months,” warned the CFO.
Efforts to Sustain Operations
Orano has indicated that it is “taking measures to try to sustain the Somaïr operation” and to “pay our employees (in Niger) for as long as possible,” but “this will not last forever.”
“There are a few indications suggesting that local authorities are not at all inclined to facilitate operations. The withdrawal of our permit is also a sign,” highlighted the CFO.
Local Authority Challenges
The military regime in Niamey, which has made sovereignty one of its main objectives, has repeatedly stated its intention to thoroughly review the system for exploiting raw materials by foreign companies.
“To be very clear, we have no control or visibility over the decisions that local authorities may make,” Mr. Claverie stated.
2024 Objectives Maintained
Despite the issues in Niger, Orano reassured clients about the security of supply, stating that it “remains assured due to the diversity of its supply sources” from Canada and Kazakhstan. When asked about EDF, which operates 56 reactors in France, the Orano CFO explained that the company “sources not only from Orano but also from other miners with deposits, notably in Australia and Canada.”
Outlook and Business Continuity
Despite the troubles in Niger, the company confirmed its year-end forecasts, maintaining a stable revenue around €4.8 billion and an EBITDA margin between 22% and 24%. As of June 30, its order book stands at €31 billion, representing six years of revenue.
“We remain fully committed to building the nuclear sector of tomorrow and will continue to develop our activities in nuclear medicine and battery recycling,” emphasized the CFO.