Over the last few months, I’ve written in-depth about the nationalisation risks across the mining industry.
From gold mines in West Africa to Tin mines in the DRC.
As I’ve pointed out, it’s another clue that we are entering a more bullish phase in the commodity cycle.
For better or worse, resource-rich nations always seek to extract more of their mineral wealth as commodity prices rise.
That’s the phase we’ve entered and why I expect conflict over minerals to escalate even further in the years to come.
But one commodity that hasn’t gained much attention in terms of its ‘supply chain risk’ is uranium. The key commodity needed to FUEL the West’s nuclear ambitions. But where will supply growth come from?
The Uranium Supply Dilemma
To show you what I mean:
Kazakhstan, the world’s largest uranium producer, is heavily committed to Chinese contracts.
It’s unlikely to shift these, given that China is a major investor in the country and its mining firms.
That includes Kazatomprom, the world’s largest uranium-producing company, which accounts for around a quarter of global supply.
Then there’s Namibia…
Another important uranium hub.
This country has become a choice destination for ASX plays like Paladin Energy [ASX: PDN], Bannerman Energy [ASX: BMN], and Deep Yellow [ASX: DYL].
But here, too, problems fester below the surface…
The Namibian government recently flirted with the idea of resource nationalisation, which sent shivers down the spines of international mining firms.
As I keep reminding readers, resource-rich nations tend to elevate this agenda whenever the commodity cycle turns upward and resource prices rise.
This is what we’re seeing play out worldwide, from copper, gold and uranium.
But the most significant risk to the uranium supply chain could come from this former French colony:
Niger: A Geopolitical Storm
This country doesn’t get much attention in Australia, but it’s worth investigating if you want to understand the supply chain risks in the uranium market.
You see, France has maintained an active presence across its former colonies, especially mineral-rich West Africa.
Niger is perhaps the most important of all.
Over the years, France has deployed thousands of troops across uranium-rich Niger.
This landlocked West African country holds some of the world’s largest uranium reserves and has gifted France’s nuclear economy around one-third of its requirements.
And for years, the French, aided by local elites, have bled this uranium-rich country dry.
Despite feeding France with an abundance of uranium which can be turned into cheap baseload power, Niger remains one of the poorest countries on Earth.
Famine, drought, war and poverty remain the daily plight of most people here.
But times are changing for the French and the West more broadly…
The Junta ‘Shake-Up’
Across France’s former colonies, major leadership changes are taking place.
An Arab Spring of sorts.
New Junta governments are replacing former pro-Western dictators.
And these new leaders tend to despise Western governments and their international mining companies!
Gold miners across Mali are waking up to this new reality.
And in 2023, a coup d’état broke out in uranium-rich Niger, ousting the country’s President.
Mohamed Bazoum was a cozy ally for the West, a key reason France had access to cheap, reliable uranium supply.
But as I’ve outlined, that situation is looking precarious…
In 2024, the new Junta government cut military ties with the US, ordering 1,000 American troops out of the country.
And since coming to power, it has cosied up to new allies in China and Russia, nations which are also keen to grab hold of Niger’s uranium reserves.
France is losing its grip on Niger and West Africa more broadly.
The region has grown tired of feeding the West with abundant resources, receiving little in return.
And that represents a major threat to
France’s energy security.
For the moment, Niger continues to export uranium to France.
But how long that lasts is anyone’s guess!
Approximately a third of France’s uranium supply comes from the Sahel…
A dispute that creates a sudden supply disruption will devastate France’s energy security.
Yet, governments, investors, and the West aren’t paying enough attention to this threat.
That’s why uranium remains a solid long-term opportunity for investors. But as I’ve outlined, you need to tread carefully.
I’ve identified one uranium play free of these geopolitical risks.
Given the steep sell-off across the uranium market over the last few months, its ‘risk-free’ premium has faded. That makes it a great time to add this stock.
If you’d like to find out more, you can do so here.
Enjoy!
Regards,
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James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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