UNCLAS SECTION 01 OF 02 NIAMEY 000452

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL ECPS EMIN EPET EAID EFIN MARR SENV TRGY
NG
SUBJECT: CHINA'S ENGAGEMENT IN NIGER

REF: A. SECSTATE 41697

B. 07 NIAMEY 1359

C. 08 NIAMEY 278

D. 06 NIAMEY 866


1. (SBU) Summary. On April 14, the Chinese Ambassador to
Niger gave an interview to the Nigerien weekly newspaper "La
Griffe" (The Claw). In the article he summarized China's aid
projects in Niger. He stated that Chinese aid to Niger was
given "without selfishness and without conditions." The
Chinese Ambassador was not entirely forthcoming, however,
because in the article he failed to discuss the mineral
concessions and other business contracts that have been
awarded to Chinese companies in recent years - except to deny
rumors of a link between the two. End summary.


2. (U) The most talked about Chinese development project in
Niger is the construction of a second bridge spanning the
Niger River in Niamey. The first bridge, known as the
Kennedy Bridge, was built in 1969. To date, it is the only
bridge over the Niger River in the country. The bridge is
congested and dangerous, and a second bridge is greatly
needed. The cornerstone of the bridge was placed with great
fanfare on November 5, 2007 (Ref B). There has been no
additional work on the bridge since that time.


3. (U) The Chinese have sponsored, or are in the process of
sponsoring, other highly visible construction projects: a
water treatment plant, a sports stadium, a housing complex, a
center to combat malaria, a commercial center, and two rural
schools. One symbol of China's increasing presence in Niger
is the construction of the new PRC Embassy. In addition to
these projects, China has increased the number of Nigerien
products which can be exported to China duty free, sent 30
physicians to provide health sevices in local hospitals,
given medicine, farm equipment, hospital equipment, and

office equipment to various entities, and has forgiven
approximately $12 million in debt (Ref B).


4. (U) China's presence in Niger is not confined to aid.
Chinese national companies operate in many of Niger's
important economic areas: uranium, oil, telecommunications,
and textiles.


5. (U) URANIUM: In November 2007, the GON and the government
of China created a mining company known as SOMINA.
Thirty-three percent of the company is owned by the GON, 5
percent is owned by a private Nigerien citizen, and 62
percent is owned by the Chinese Nuclear International Uranium
Corporation (CNIUC) in partnership with the Chinese
investment company Zxjoy Technology and Trade. On April 8, a
wholly-owned subsidiary of CNIUC, SinoUranium, along with the
Chinese Hydraulic and Hydroelectric Construction Group
Corporation (Sinohydro Corp), signed a deal with the GON to
establish a mining operation at the Azelik mining site near
the town of Arlit. The mine will operate under the auspices
of SOMINA. When the mine becomes operational in 2011, it is
expected to produce 700 tons of uranium per year. According
to the GON Director of Mines, China will receive 62 percent
of the uranium produced at the mine. The GON and the private
Nigerien citizen will have the option to sell their
respective 33 and 5 percent of the uranium to China or to
third parties on the open market.


6. (SBU) OIL: In March 2008, the Chinese National Petroleum
Corporation (CNPC) was awarded one-third of an oil
exploration and production permit for an area known as the
Agadem Block. Previously held by a joint ExxonMobil-Petronas
venture, the Agadem block is known to contain at least 320
million barrels and may, in fact, contain much more (Ref C).
The award of the Agadem block partially to the CNPC has not
been announced officially. China is apparently unhappy
sharing the permit, and the Ministry of Mines and Energy is
reportedly having difficulty negotiating an agreement between
China and the other two partners. It has been rumored that
construction on the second bridge over the Niger River will
not move forward until China is satisfied with its level of
participation in the Agadem Block.


7. (U) TELECOMMUNICATIONS: Two Chinese firms are intricately
involved in Niger's telecommunications industry. In 2001,
the Nigerien state-owned telephone company SONITEL was
privatized and purchased by Chinese and Libyan interests.
China's stake in SONITEL is held through its state-owned
telecommunications company ZTE. Additionally, the
privately-held Chinese telecommunications giant Huawei
Technologies is responsible for the creation and maintenance
of the GON's intranet service.


8. (U) TEXTILES: In 1997, the GON privatized its textile

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production company, ENITEX, which was bought by Shanghai
WorldBest Hometex, a subsidiary of the Chinese state-owned
company China WorldBest Group (CWBG). ENITEX controls 80
percent of Niger's domestic textile market. In 2007, ENITEX
shut down all of its milling and weaving operations,
effectively wiping out commercial textile production in
Niger. ENITEX retained only its printing and dying
operations, which rely solely on imported fabric from China.
In 2006, the Chinese Ambassador reported that ENITEX's owners
were interested in eventually phasing out the company
entirely (Ref D). When China took control of ENITEX it
employed over 700 people. Today it employs 190.

9.(U) Comment. There is a good reason why the Chinese
Ambassador prefered to highlight China's aid programs rather
than its business dealings in Niger: China's commercial
transactions are perceived locally as not benefiting Nigerien
citizens. First, Chinese construction projects in Niger are
completed with mostly Chinese labor. Second, Chinese control
of various entities has not been shown to greatly improve
services or add jobs to the economy. For example, in 2006
the GON threatened to revoke ZTE's telecommunications license
because it failed to make promised upgrades. Although some
improvements have been made since then, the changes have not
occurred fast enough and ZTE's contract is currently being
reviewed by the National Assembly. Third, despite what the
Chinese Ambassador said, many people in Niger believe that
Chinese aid is contingent upon the rewarding of lucrative
government contracts to state-owned Chinese entities. End
Comment.


10. (U) Embassy Niamey maintains good relations with the PRC
Embassy in Niamey. Currently, post is not cooperating with
the GOC on any specific projects, but interactions at local
meetings are relaxed and cordial.
ALLEN