The Jihadi Threat To Africa Industry

On May 23, uranium producer Areva’s Somair mine near Arlit in Niger, as well as a military base in neighbouring Agadez, were the target of twin suicide bomb attacks. The operation was a collaborative effort between two distinct Islamic militant groups, and killed at least 21, injured 39 and damaged key machinery at the mine. The attacks once again brought the risks posed by Islamic terrorism in many African countries to the forefront. This report reiterates why we believe the rising tide of Islamic militancy – specifically Jihadi Salafism – represents one of the most serious risks for investors throughout much of Africa. It also argues that the situation is unlikely to improve for the foreseeable future.Niger, Burkina Faso, Mauritania, Mali, Libya, Algeria and Nigeria appear particularly vulnerable.

1. Introduction
We wrote on the threat Islamic militancy – i.e., Jihadi Salafism – posed to mining and energy investors in Africa in January, following the attack on Algeria’s In Almenas gas plant, which killed 66. We argued that risks posed by Islamic terrorism were rising in Burkina Faso and Niger, and remained elevated in Mali, Mauritania, Libya and Algeria.1 In this report, we re-examine this argument in light of the recent suicide bombing attacks against uranium producer Areva’s Somair mine near Arlit, Niger (at least two killed, 13 injured), and military base in neighbouring Agadez (at least 19 killed, 16 injured).

Note that Somair produced roughly one-third of Areva’s 2012 uranium output, and two-thirds of its output from Niger. The mine’s grinding unit was also badly damaged after being targeted, which will likely result in production delays. The full extent of the attack’s direct and indirect impacts will likely take time to fully materialize. There is little doubt, however, that the risk and fear premium will rise in the region, including higher security, insurance and labour costs.

2. The nature and significance of the attack on Areva
The collaborative and brazen nature of the attack on Somair suggests that despite the French-led intervention in northern Mali – or perhaps more accurately, because of it – radical Islamic militant groups continue to represent a serious and growing threat to Western business interests across much of Africa. The attack was reportedly masterminded by a division of Al Qaeda in the Islamic Maghreb (the “Signatories in Blood”) led by the now infamous Mokhtar Belmokhtar (aka “One-Eyed Jack”), who also oversaw the January attack on BP’s In Almenas gas facility in Algeria.

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