The mining industry within France has been dormant for decades and its global portfolio is modest, but the French government is determined to change that. In late February, French Industry Minister Arnaud Montebourg announced the republic would create the Compagnie Nationale des Mines de France (CMF) as part of a plan to grow the country’s mining sector. CMF will act as a de facto junior mining company, exploring for non-energetic minerals largely outside of France in francophone Africa, South America, and Central Asia. It is the first new state-owned company created by the French government since 1993.
A source close to the minister, who spoke on the condition of anonymity, said the decision to create CMF was spurred by demand from foreign countries, mainly in Africa and Asia, for French aid in exploring and developing their natural resources. Rather than deal with private junior and major companies, these countries indicated a preference to work government-to-government on such exploration projects, the source said.
There is also currently a heightened sensitivity to the geopolitics of metals, said Jean-Claude Guillaneau, director of georesources at France’s Bureau of Geological and Mining Research (BRGM). “China is producing 95 per cent of the rare earths and they use [them] to attract industrial development,” he said. “To secure our industry, we need to have some long-term control of the metal availability at least on some strategic and critical metals,” he explained, adding other countries like Japan have similar publicly owned mining companies.
At the same time, the French government hopes that creating CMF will diversify its mining industry. Right now, there are two major French mining companies: Areva, a uranium specialist, and Eramet, which deals mainly with nickel and magnesium. The French government owns stakes in both companies. “CMF in fact is an idea of a diversified operator in France that we don’t have,” said Guillaneau. “Our ministry of industry thinks that it would be useful to have a more diversified organization [to develop] at the international scale.” BRGM, a shareholder in CMF, has extensive global metallurgic knowledge, especially in Africa, noted Guillaneau. For example, between 2005 and 2010, BRGM headed an international consortium to explore and inventory minerals in Gabon, a former French colony in West Africa. With their guidance, CMF will target specific countries with valuable resources to negotiate parameters for exploration and mining rights if minerals are found.
Once resources are discovered, the plan is to have private companies bid on the projects. CMF would aim to own a minority stake in each exploiting society. Because of its role as a sleeping partner in the exploitation stage, CMF would not try to bring smelting or refining operations to France, said the ministry of industry source.
France hopes that – 15 years down the road – CMF will have 15 to 20 minority shareholdings in different countries around the world mining a variety of mineral resources. The country expects to invest between $380 to $600 million in CMF, a majority of which will come from the Government Shareholding Agency which invests and manages the state’s holdings in firms.
For now, shareholders and the ministry of industry are working on a business plan for CMF with the hopes of creating the company by the summer. CMF will most likely launch a project in French Guiana soon after. According to Guillaneau, CMF is aiming to start at least four exploration projects in its first year.
France also has plans to revive its domestic mining industry, as many of the country’s mining operations have been abandoned for close to 20 years. To attract investors to explore and mine France’s natural resources, Montebourg has amended the French mining code to make it easier for firms to apply for and receive permits within France. So far, the initiative is working; three companies have received exploration permits in the past six months. However, CMF will not focus any of its energy on exploration in France for the moment.
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