On Indo-African Nuclear Trade Facilitation – Analysis

By Siddharth Ramana

Prime Minister Manmohan Singh’s visit to Africa in May 2011 was heralded as an impetus to Indo-Africa trade, which has touched US$30 billion a year. As future Indian investments in Africa will also be focused on energy resources, it is important to explore the role of nuclear fuel reserves in furthering Indo-Africa relations. This paper elucidates on nuclear opportunities and challenges which concern Indo-African trade relations.

It is expected that by 2020, a quarter of India’s energy requirements will come from nuclear energy, with an annual supply of 8,000 tons of uranium. To fulfill its nuclear fuel requirements, which have been hindered by its non-acceptance of the NPT, India has signed individual agreements with France and Russia, among other countries. To diversify sources of nuclear fuel, India is also actively engaging with Africa, which is known to have 18 per cent of the world’s known recoverable uranium resources. Most of the operational mines are located in Niger, the Congo, Namibia, and South Africa.

Africa’s importance as a nuclear fuel source is further highlighted owing to reservations of key members of the NSG in engaging in nuclear trade with India. South Africa is the only African member of the NSG, which makes it easier for India to access nuclear fuel from the country. Since 2008, when the Indo-US civil nuclear agreement was formalized, India has signed a nuclear fuel supply agreement with Namibia, while other African countries including South Africa, Gabon, Malawi and Tanzania have expressed their interest in inviting Indian investments in their nuclear mines.

The absence of formal Indian governmental investment in these mines has not hindered private players from furthering their economic interests. Presently, two Indian firms -Taurian Resources and Earthstone FZE (owned by Non-Resident Indians) are operating in Niger. Taurian’s mining tracts alone hold at least 30,000 tonnes of uranium. Presently, the only Indian governmental undertaking to be involved in scouting for uranium assets is the National Aluminum Company Ltd, which is trying to obtain allotment of some leases for uranium in Namibia.

India’s investments in South-Africa’s nuclear mining sector hold a number of benefits, including also a possible collaboration with South African nuclear reactor producers, in developing the innovative pebble-bed reactors for India. China’s Institute of Nuclear and New Energy Technology of Tsinghua University is already working in collaboration with Pebble Bed Modular Reactor Ltd of South Africa to further develop the system. Additionally, nuclear investments in South Africa have an added benefit for the gold industry in India since uranium mineralization in South Africa occurs along with gold deposits. With India’s demand for gold growing at over 25 per cent, it offers a win-win situation for the country.

For India, investment in the nuclear field will also adhere to its principle of capacity-building of African economies as it will help these countries develop their own mining capabilities, in addition to encouraging the growth of the local economy. This was seconded by Tanzania’s Prime Minister, Mizengo Kayanza Peter Pinda, who spoke of the need for “Good friends like India to invest in this area.” For Africa to invest in their own nuclear renaissance would require US$2 billion to US$3.5 billion per reactor, in addition to the mining costs and related expenses, which are beyond the reach of many African countries. Therefore, investments made by countries such as India help these countries economically. For example, recovery in mining helped Namibia’s economy grow an estimated 4.2 per cent in 2010.

What are the major challenges for India to achieve its energy related objectives in Africa? First, Africa is a signatory to the 1996 African Nuclear Weapon Free Zone Treaty. While it awaits complete ratification, its rules hinder transferring fuel to India without it bringing comprehensive or full-scope safeguards on all its nuclear source materials and associated facilities.

Second, while there is political support for Indian companies to invest in Africa’s nuclear sector, there are pockets of opposition towards exporting nuclear fuel. For example, South African officials have argued that uranium should be exploited for the benefit of their country rather than for the benefit of foreign nations. Opposition can also come from Western countries opposing some regimes in Africa. For instance, Zimbabwe, which is believed to have rich uranium deposits, is ostracized by the international community owing to the land policies of its leader, Robert Mugabe.

Third, the security climate in many African countries with nuclear mines makes investment a highly risky affair, which escalates costs and deters investments. Examples of gunmen targeting French nuclear company AREVA in Niger, and WikiLeaks cables describing security in Congo’s nuclear sites as ‘non-existent’, discourage nuclear trade.

Fourth, Indian interests in Africa will be hampered by its rival, China. China’s deep pockets and undemocratic functioning trump India’s slow bureaucratic handling of such issues. China’s opposition to India’s NSG membership can also be tied to efforts to hamper India’s access to nuclear fuel.

Some of the immediate measures that may be implemented are – augmenting Indian diplomatic presence in the continent, encouraging further Africa-India joint ventures, and building a strategic environment with friendly African states, especially through cooperation with the Indian diaspora in these countries.

Siddharth Ramana
Research Officer, IPCS
email: [email protected]