Eritreas north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. A United Nations report published in 2019suggested that Colluli could significantly boost the economy of Eritrea. Danakali (ASX: DNK) is the 50% owner of the Colluli Potash Project located in Eritrea. Eritrea one of the worlds most repressive and secretive states, known as the North Korea of Africa is poised to disrupt the global supply chain of fertiliser. A number of unique characteristics make Colluli one of the world's largest and lowest-cost deposits of SOP. The Danakil Depression, which extends over 300km into eastern Ethiopia, hosts over 6,000 Mt of potassium-bearing salts suitable for the production of potash fertilizers. RA, listed . The removal of Eritrea from the sanction list opened up the country for foreign investments, thus significantly reducing geopolitical risk. In July 2013, major producer Belaruskali broke up with former Belarusian Potash Company cartel partner Uralkali, and in a move to grab market share, signed a potash sales contract for the Chinese market at US$315/t MOP. second phase of development, as the project has a possible 200-year plus Danakali is developing the tier-1 Colluli potash project, Eritrea, which boasts the world's lowest costs and >200 years of mine life. Wall Street Bulls Look Optimistic About Nutrien (NTR): Should You Buy? Its constitution has not been implemented, the parliament has been prorogued for many years, the ruling party has not held a congress for a number of years and independent media is banned. The front-end engineering and design (FEED) study for the project was completed in January 2018. #goog-gt-tt {display:none !important;} 6. The FEED results and the recent completion of test work and additional verification provide a higher level of financial certainty to project financiers, further de-risking the investment proposition. EuroChem will purchase the entire SOP output of the Colluli phase one potash project under a 10-year binding off-take agreement signed in June 2018. Surface mining allows controlled extraction, predictable production rates and efficient stockpiling of additional economic salts know to us. Fig. The plant administration and services facilities will incorporate administration offices, medical clinic, warehouses, and workshops (see graphic above, credit: RA International). Development Goals (SDGs). On December 3, 2019, Africa Finance Corporation also agreed to make a US$50 million equity investment in two tranches at A$0.60 per Danakali share. Danakali (DNK) - Technical Analysis - Crux Investor Danakali Limited is a resource company focused on the Colluli SOP (Sulphate of Potash) Project in Eritrea, East Africa. I recommend a book by Martin Plaut, a senior researcher at Londons Institute of Commonwealth Studies and former Africa Editor of the BBCs World Service called Understanding Eritrea: Inside Africas Most Repressive State (https://www.hurstpublishers.com/book/understanding-eritrea-2/). On September 11, 2018, the Eritrea-Ethiopia border re-opened for the first time since 1998. <> It is strategically important as it has access to the Red Sea, the Suez Canal and to Europe, as well as to the waters of the Persian Gulf and beyond to the Indian Ocean. On the financial front, a key step was taken last month when Danakali, which has a 50-50 joint venture covering Colluli with the government of Eritrea, signed a $200 million funding mandate. 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At mine-gate production costs of US$149-165/t or total cash costs of US$242-258/t, Colluli can be profitable even at the current low SOP price of US$500-650/t. Disclosure: I am/we are long SBMSF, CMP. A United Nations report published in 2019suggested that Colluli could significantly boost the economy of Eritrea. The government monitors telephone and internet traffic and runs an extensive domestic surveillance system. Whilst SOP demand is population growth story it is more of an economic growth story and the African continent is seen to be where the majority of the worlds economic growth will occur in the coming decades. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice, led by Afwerki. View the original article here. Danakali to sell stake in flagship Colluli potash project in Eritrea 03 October 2022. function GTranslateFireEvent(element,event){try{if(document.createEventObject){var evt=document.createEventObject();element.fireEvent('on'+event,evt)}else{var evt=document.createEvent('HTMLEvents');evt.initEvent(event,true,true);element.dispatchEvent(evt)}}catch(e){}} The JORC-2012 compliant mineral resource estimate, from this source. A United Nations report says that Eritrea's Danakali Colluli potash project has the potential to boost the economy of the country that was removed from the UN's sanctions list only two months ago. A pre-feasibility study was completed in February 2015, followed by the completion of a definitive feasibility study in November 2015, while the mining licence was granted in February 2017. Reverso Context-: The Colluli potash project is located in the Danakil Depression region of Eritrea, in East Africa, approximately 75km away from the Red Sea coast and approximately 177km southeast of capital Asmara. It hosts the youngest evaporite deposit and the largest unexploited potash basin in the world. Geothermal an energy option for Colluli mining project in Eritrea Colluli - Danakali Limited Agnico Eagle's EPS beat expectations; guidance maintained. It also has access to solar, wind and geothermal energy systems the East African rift. The miner said it would use the remaining cash about $12 million to identify new projects and potential new alternative growth opportunities.. Danakali, an Australian company that has been developing the Colluli potash project in Eritrea, was recently granted permission by the Eritrean Ministry of Energy and Mines to commence commercial production at Colluli. Prime Minister Abiy Ahmed accused the Tigrayans of attacking a military camp and attempting to loot military assets. Afwerki has become close to Abiy and is a sworn enemy of the Tigray Peoples Liberation Front, which ruled Ethiopia when the two countries fought a border war. Danakali looks into solar, wind to power Eritrea potash project stream We use them to give you the best experience. I have no business relationship with any company whose stock is mentioned in this article. It also has access to solar, wind and geothermal energy systems - the East African rift. For the area a high-temperature geothermal reservoir was identified in Alid with estimates of a potential heat of 250 to 300 degrees Celsius. Therefore, the Eritrean government has a strong incentive to see the project be built, in production, and run successfully. region, chief executive Niels Wagetold MINING.COM last year. Since then, potash price has fallen from the neighborhood of US$600/t MOP to as low as USS$200/t MOP by 2017, and has since been fluctuating between US$200/t and US$270/t. In the initial phase of operations, the mine would produce more than 472,000 tonnes a year of sulphate of potash (SOP), a premium grade fertilizer. Danakali reports that the Colluli Mining Share Company (CMSC) has appointed RA International Group as its preferred contractor for the supply of accommodation, support services and other infrastructure buildings in support of the Colluli sulphate of potash project development, in Eritrea. It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt. Potash products including SOP, MOP, and SOP-M all have the potential to be produced at Colluli. What are the best countries for cryptocurrency adoption? The border with Sudan was closed until early 2019 because relations were so bad. Colluli Potash Project, Danakil - Mining Technology The above advantageous features combine to make Colluli the lowest-cost SOP producer outside of China (Fig. The project also involves the construction of a heavy fuel oil-based power plant on-site to meet the electricity requirement. Earth Moving Worldwide (EMW) was selected to provide mining services for the Colluli potash project in December 2019. A two-and-a-half-year border war between Ethiopia and Eritrea ended in June 2000 and was followed by about eight years of heightened tension and hostility between the two countries. Profit was boosted by higher metal grades and prices. It has been a Unesco World Heritage Site since 2017. It describes Eritrea as "a dictatorship in which the media has no rights". Despite funding setbacks last year, Danakali says that Colluli, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO), is on track for production in 2022. It also said that all vendor and contractor packages have now been received. Some 7 Mt of potash capacity as being forecasted back in 2015 has been removed from the supply side (Fig. Some people have been in national conscription for more than 20 years. The development of the Colluli potash projects coincides Colluli, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO), has been called a game-changer for Eritreas economy, as it is expected to become one of the worlds most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertiliser. Colluli, which Danakali shares with the Eritrean National Mining Corporation, is scoped to produce 472,000 tons a year of potash in sulphate (SOP) in its first phase before scaling up to second phase production of 944,000 tons annually. "A lot of the troops that he had under his command all of whom were volunteers, all of whom were guerrilla fighters had been fighting, some of them, for 10, 15 years without pay. Danakali is developing the tier-1 Colluli potash project, Eritrea, which boasts the world's lowest costs and >200 years of mine life. The Danakil Depression that commences in Eritrea and extends up to 300km into Ethiopia, is believed to contain more than six billion tonnes of potassium bearing salts. After all considerations and government taxes, Danakali said it expects to receive approximately $121m. It then plans to distribute 90% of the net proceeds to shareholders and will continue as a listed company to identify new projects and potential new alternative growth opportunities. All Eritreans are subject to conscription into the military and can be compelled into forced labour that the UN says effectively abuses, exploits and enslaves them for years". Colluli is positioned very close to vital potash markets. But when [Afwerki] discovers that his authority is being questioned after independence, he begins reacting in the same way. Fig. 4. providing 10,000 direct and indirect local jobs. - - | Reverso Context In 2019, the country received only $67.1m in foreign direct investment (FDI) inflows against $61m in 2018, according to the World Bank. Colluli will be a simple open-cut mining operation utilising truck and shovel methods complemented by continuous surface miners. Eritrea's potash mining takes shape but questions remain of Eritrea and Ethiopia, which officially declared peace in July 2018. Under the terms of the agreement, EuroChem will take, pay, market, and distribute up to 100% of the module I SOP production over a 10+3 year term from the project commissioning. 11). 3). The Colluli Potash Project is located within the Danakil region of Eritrea, approximately 177km south-east of the capital city Asmara. Your email address will not be published. Danakali (DNK) - Technical Analysis. The operating environment weighed heavily on Danakalis decision, as Eritrea is ruled by one of the worldsmost oppressive regimes and was until 2018 on the UNs sanctions list. These authors includeSilver Coast Research, , among others. Please. After the Second World War, it was annexed to Ethiopia. function GTranslateGetCurrentLang() {var keyValue = document['cookie'].match('(^|;) ?googtrans=([^;]*)(;|$)');return keyValue ? Unlike other potash producing basins of the world, the Danakil region contains a variety of potassium-bearing salts, enabling the opportunity to generate a range of potash fertilizers. Colluli is located about 75 kilometres from the Red Sea coast, making it among the most accessible premium potash deposits globally. I have no business relationship with any company whose stock is mentioned in this article. A pre-feasibility study for the project was completed in February 2015 followed by the completion of a definitive feasibility study (DFS) in November 2015, while the mining license was granted in February 2017. Has access to the Ethiopian side of the deposit been guaranteed? Materials handling trials have also been completed to determine the anti-caking requirements for the final SOP product. Subject to conditions, the deal with Chinese company Sichuan Road and Bridge Group is expected to be finalized between March and May next year, leaving Danakali with $121 million cash, of which 90% will be distributed back to shareholders. Plus500. 2. 1. Required fields are marked *. <>/Metadata 306 0 R/ViewerPreferences 307 0 R>> Table 1. Danakali has reported a 1.1 billion ore reserve with a mine life of almost 200 years. 6. The project, 50/50 owned by Australian mining company Danakali and the Eritrean Government, is rapidly progressing towards construction. Colluli contains three potassium-bearing salts in solid form, namely. In June 2018, Danakali reached a binding take-or-pay offtake agreement with EuroChem Trading GmbH. The agreement can be further extended by three years if mutually agreed upon. endobj 2023 Glacier Media Group, All Rights Reserved, selling its 50% stake in the Colluli potash project, Botswana mining growth seen flat amid dim diamond outlook, Harmony Gold CEO says gold sector consolidation inevitable, BHP seeks to tighten grip on South Americas copper sector, Quest for worlds biggest diamonds gives De Beers a headache, https://www.hrw.org/world-report/2021/country-chapters/eritrea, https://www.dandc.eu/en/article/how-government-eritrea-became-one-worlds-most-repressive-regimes, https://www.hurstpublishers.com/book/understanding-eritrea-2/, Canada injects $75 million into BHPs Jansen potash mine, Russia raises fertilizer export quota by 500,000 tonnes, World to face potash price crunchas Brazil Potash propels Autazes project toward production, Europes largest rare earths deposit found in Sweden. Abu Dhabi has established a growing reputation as a source of innovation due to forward-thinking projects across sectors including energy, infrastructure, sport, culture and tourism. This project has been viewed 588 times. 1 0 obj Danakali Limited selling stake in Colluli SOP project in east Africa to Construction nears at Colluli potash project following Eritrea ministry and mag chloride to be commercialized with minimal further processing required. By clicking the Download Free Whitepaper button, you accept the terms and conditions and acknowledge that your data will be used as described in the Masdar City Free Zone privacy policy With planned production of 1m tonnes/year of SOP, it will put Eritrea among the topten potash producers in the world. Finance > M-a. Upon accepting the notice, the ministry, Danakali said, also showed support for the financing of the Colluli project by: Danakali, an Australian company that has been developing the Colluli potash project in Eritrea, was recently granted permission by the Eritrean Ministry of Energy and Mines to commence commercial production at Colluli. I'd like to emphasize that the articles contributed by these authors are the product of their respective independent research and analysis. The country also boasts impressive marine tourist sites, a wide range of flora and fauna, and scenic terrain. Potash is the common term for fertiliser forms of the element potassium (K). The SOP quality spectrum, from the same source as Fig. Image courtesy of Danakali. Colluli is obviously a tier-1 asset, boasting the lowest-costs in the world and >200 years of mine life. The Colluli potash project is a low-cost, long-life sulphate of potash (SOP) fertiliser project under development by the Colluli Mining Share Company, a 50-50 joint venture partnership between the Australian start-up Danakali and the Eritrean National Mining Corporation. 4. "There is a supportive business environment because mining there is a very strategic industry. M&A: Mining Finance | Mining Journal One-third of the country's GDP is made up of remittances sent home by Eritreans living in Europe and other developed countries. Image courtesy of Danakali. partnerships for the SDGs. It has a geographic area of 117,600km2, making it slightly larger than Bulgaria. In spite of the projected long-term growth of potash demand, the building of new production capacity has been lagging in the past few years, thanks to low potash prices. The potassium salt composition in the resource provides the option to diversify the potash product suite as the Project grows.