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The project has been largely derisked with regard to geopolitics, infrastructure, off-take, and financing. Eritrea has one of the world's most brutal dictatorships, but could a huge potash mine be an economic game changer? The accommodation camp, meanwhile, has been designed to accommodate 600 personnel during the production phase with the flexibility to accommodate 1,115 during the construction phase. PowerMiningOil & Gas >, MiningIndustrial MineralsMajor Commodities, Lithium Americas starts construction at Thacker Pass lithium project, Advance Lithium, LitioMx in talks to establish joint venture, Jindalee unveils updated mineral resource estimate at Mcdermitt Lithium Project, Advertise with us Advertising enquiries: Roy Morris, roy.morris@progressivemediainternational.com, +44 (0) 20 7406 6613. Colluli is positioned very close to vital potash markets. 1 0 obj During the long struggle, the people of Eritrea managed to forge a common national consciousness but, with peace established, they faced the task of overcoming their ethnic and religious differences in order to raise the country from poverty made worse by years of drought, neglect and war. Below, let's look at Danakali Ltd. (DNK.ASX) (OTCPK:SBMSF) (OTCPK:DNKLY), which operates in Eritrea. GDP dropped by -0.6% in 2020 in the wake of the Covid-19 pandemic and a locust invasion. Danakali Limited selling stake in Colluli SOP project in east Africa to To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. Niels Wage, CEO of Danakali, said: "We are very pleased to announce the appointment of Aggreko as our single power provider. The Report was undertaken during 2018 by senior economists on behalf of the UNDP. Mining in Eritrea: could a new potash project spur sustainable growth? and then onto production in 2022, Danakali said. What are my chances of getting my money back? The Colluli process is expected to generate a product with a purity of 94.5%. Fig. Danakali, currently undervalued and standing for a massive re-rating upon the first production, should be considered by risk-tolerant investors with a long time horizon. There are 70 Subscribers monitoring this project. Bloomberg News | December 23, 2022 | 7:38 am Premium Nickel aims to re-open Selebi mine in Botswana The Selebi south deposit has a resource of 11.28 million tonnes grading 0.98% nickel and 1.9% . 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. Proudly Researched by: Melanie Miles. The above mineral reserves support 215 years of SOP production at 944 Ktpa as envisaged in modules I and II development plan. Colluli will be a simple open-cut mining operation utilising truck and shovel methods complemented by continuous surface miners. 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 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. Australia's Danakali (ASX, LON:DNK) is closer than ever to beginning the development of its world-class Colluli potash project in Eritrea, which is expected to become one of the world's. I am not receiving compensation for it (other than from Seeking Alpha). Colluli is obviously a tier-1 asset, boasting the lowest-costs in the world and >200 years of mine life. Copyright 2023, All Rights Reserved | Alphastox | Proudly Hosted by, Danakali to sell stake in flagship Colluli potash project in Eritrea, Canada Nickel develops new method for accelerated carbon capture, Patriot Battery Metals drills nine holes at Corvette, Metso Outotec expands digital grinding inspections with acquisition of Global Physical, Fatal accident at Ivanhoes Kamoa-Kakula mine in Congo. Fig. The removal of Eritrea from the sanction list opened up the country for foreign investments, thus significantly reducing geopolitical risk. The benefits of this means we generate cash flow much earlier and more predictably relative to solution mining or brine operations. Colluli is the premier greenfield development project globally. Construction nears at Colluli potash project following Eritrea ministry Colluli Potash Project is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Company (ENAMCO). It has a Human Development Index of 0.42, which puts it among the ten least-developed countries on the planet. Phase one involving an estimated capital investment of $298m is expected to produce 472,000 tonnes (t) a year of high-quality SOP, while in phase two, the mine is expected to produce up to 944,000t of SOP from year six of the project with an additional capital investment of $202m. The proposed mine is located within the Danakil Depression, part of the Great Rift Valley on the Eritrea - Ethiopia border, with export facilities on the Eritrean Red Sea coastline. 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. 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. 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. Economic resources for Sulphate of Potash (SOP) production are scarce, and Colluli is favourably positioned to supply the worlds fastest-growing SOP markets. On July 9, 2018, a joint declaration of peace and friendship was signed between Eritrea and Ethiopia. .goog-text-highlight {background-color:transparent !important;box-shadow:none !important;} Colluli, owned 50:50 by Danakali and the Eritrean National Mining Corporation, has a JORC-2012 compliant measured, indicated and inferred resource of 1,289 Mt at 11% K20 equivalent and 7% kieserite. It nosedived again in 2017, this time by -10%, before jumping by 13% in 2018. The deposit stretches across the border into Ethiopia. Two articles indicate the rapid progress towards the development of a vast potash mine in the Danakil desert. 3). World potash demand has grown at an average rate of 2.5-3.0% per year since 2000 (Fig. According to Reporters Without Borders, only North Korea has less press freedom. MoEM has shown support for the financing of the project by granting time to begin commercial production (up to mid-December 2022) as well as . The company has completed a front-end engineering design for the production of potassium sulphate, otherwise known as sulphate of potash or SOP. Image courtesy of Danakali. Fig. The country also has 486,200 refugees, including 123,413 living in Sudan, 172,750 in Ethiopia and 18,976 in Egypt. 11). Colluli Potash Mine, Danakali Depression, Eritrea, Eastern Africa Gensource Potash : Strategic Business Relationship and Project Update, Analysts Are Bullish on Top Materials Stocks: Albemarle (ALB), Nutrien (NTR), DraftKings To Rally Around 38%? Eritrea has historically struggled to attract large investments because of its unfavourable business climate. Danakali looks into solar, wind to power Eritrea potash project As inflation falls, what can be expected from the Bank of England in the months to come? The project's potential profitability is helped by soaring potash prices they jumped by 300% during 2021, sitting at above $700 per tonne (CFR Brazil Spot) at the end of October 2021. The Colluli project lies in an area that saw detailed geological and geochemical work by USAID and US Geological Survey with the Eritrean Ministry of Mines and Energy. Test work on the Colluli salts has been concluded and the process flow design frozen which indicates the Colluli process using filtered sea water will produce SOP at volumes we expect and at the high-grade spec the world requires. The Colluli potash project is considered one of the worlds most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer. Table 1. Anyone can write a book, as long as is a white person, you would buy it even a white homeless from NYC. Fig. mine-life. In addition to SOP, MOP, and SOP-M producible at Colluli, Danakali can also produce rock salt, kieserite, gypsum, and magnesium chloride, upon the completion of the Anfile Bay port. Over 100kg of Colluli product was tested at Ludman Industries in the USA for product compaction behaviour. Eritrea had been under UN sanction per Security Council Resolution 1907 since December 23, 2009, for the government's role in aiding Al-Shabaab in Somalia and refusing to withdraw troops from its disputed border with Djibouti following a conflict in 2008. Image courtesy of Danakali. All land is considered state-owned and property rights are non-existent. A big economic change will come to eritrea, proud to be an nseritrea. I based my assertion of Eritrea being ONE of the most oppressive regimes on a series of reports by human rights advocates such as Human Rights Watch (https://www.hrw.org/world-report/2021/country-chapters/eritrea) as well as sites such as D+C (https://www.dandc.eu/en/article/how-government-eritrea-became-one-worlds-most-repressive-regimes). 10. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Click to follow this blog and receive notifications of new posts by email. Potash products including SOP, MOP, and SOP-M all have the potential to be produced at Colluli. Notify me of follow-up comments by email. A United Nations report published in 2019suggested that Colluli could significantly boost the economy of Eritrea. Colluli is owned by the Colluli Mining Share Company, a 50:50 joint venture with the Eritrean National Mining Company. Materials handling trials have also been completed to determine the anti-caking requirements for the final SOP product. Project: Colluli Potash Project, Eritrea | L2B - Leads 2 Business We have recently upgraded our technology platform. Looking for a helping hand in the market? The stock chart of Danakali, modified from this source. A United Nations reportpublished last yearsuggested that Colluli could significantly boost Eritreas economy. Sylvinite and carnallitite both produce potassium chloride, which is then combined with decomposed kainitite to form high purity potassium sulphate. The Danakil Depression is located in the Southern region of Eritrea and extends over 300km into Eastern Ethiopia. What Are the Best Fertilizer Stocks? The location of the Colluli potash deposit, from this source. My References:Danakali Ltd:https://www.danakali.com.au/ Interested in supporting this channel: Paypal: PayPal . % Australia's Danakali (ASX: DNK) is selling its 50% stake in the Colluli potash project in Eritrea, Africa, almost 13 years after partnering with the Eritrean National Mining Corporation. Information about Eritrea and the Horn of Africa. 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. It also has access to solar, wind and geothermal energy systems the East African rift. 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. The FEED economic estimates, from the same source as Fig. Plus500. Posted by Daniel Gleeson on 21st August 2020. Danakali (DNK) - Technical Analysis - Crux Investor Phase one, involving an estimated capital investment of 220m ($298m), is expected to produce 472,000 tonnes per annum (tpa) of high-quality SOP, while in phase two, the mine is expected to produce up to 944,000tpa of SOP from year six of the project with an additional capital investment of 148m ($202m). Under the current FEED study for Module 1 and 2, Danakali will be one of the lowest cost SOP producers and with the development of the loading facility at Anfile Bay costs will decrease further as transportation costs are reduced. Image courtesy of Danakali. It also provides off-takers with additional confidence on Project certainty and fundability, supporting the finalisation of binding bankable offtake agreements. Danakali closer to getting Eritrea potash project off the ground The Colluli project is located in the Danakil Depression region of Eritrea, East Africa, about 75 km from the Red Sea coast. The project is on the Eritrean side of the border, giving Colluli a significant advantage relative to the other potash development projects in the Danakil Depression, which need to ship from the Tadjoura Port in Djibouti over 790km by road from the closest project on the Ethiopian side of the border. 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. Following the agreement, Collulis position as an economically attractive SOP greenfield development project has been reinforced. (. The deposit contains mainly three types of potassium bearing salts including sylvinite, carnallitite, and kainitite. 4). They have significant experience in executing projects of the scale and quality required for the Colluli project. Colluli is located about 75 kilometres from the Red Sea coast, making it among the most accessible premium potash deposits globally. In 2023, Botswana expects diamond output to decline by 1%. It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt. Based on what evidence? Business intelligence for leaders in foreign direct investment. These include: No poverty, zero hunger, quality 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. World Class Potash Project In Eritrea Moves Closer To Development - Forbes Journalists say that getting any information out of the country is extremely difficult. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address. This article lost credibility in characterizing the country of Eritrea as most oppressive regime. The project has a 200-year lifecycle and is expected to start operating in 2022. Send Me Updates. Danakali to use filtered sea water at Colluli potash mine 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". So, as a mining jurisdiction, it has got nothing but ticks in all the right boxes.". "There is a supportive business environment because mining there is a very strategic industry. 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. The project will be developed in multi-modules, with Module I serving as a platform for future growth. 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/). Net to Danakali's 50% interest, Module I is projected to generate NPV-10 of 242 million, on average delivering an undiscounted FCF of US$43 million per year, with a post-finance IRR of 29.7%; module I&II is projected to generate NPV-10 of 439 million, on average delivering an undiscounted FCF of US$85 million per year, with a post-finance IRR of 31.3% (Table 1). 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 fertilizer. Colluli Potash Project, Eritrea. the countrys GDP by 2021 and 50% of the nations exports by 2030, while Posted by Daniel Gleeson on 21st August 2020. body {top:0 !important;} The deposit is the only one in the world world where SOP can be made from an open-cut mine due to its extreme shallowness. 2 0 obj Here Are 10 Other Analyst Forecasts For Tuesday, Berenberg Bank Sticks to Their Buy Rating for Nutrien (NTR), Registration on or use of this site constitutes acceptance of our. The country also boasts impressive marine tourist sites, a wide range of flora and fauna, and scenic terrain. 9). endobj endobj Fig. The Colluli project requires low upfront development costs and is highly scalable for long-life production. Many Eritreans hoped that the peace deal with Ethiopia would create economic opportunities for the country, but there is little sign of that happening yet. The front-end engineering and design (FEED) study for the project was completed in January 2018. Flour was awarded the FEED contract for the Colluli potash project in January 2017. Please disable your ad-blocker and refresh. The cost curve of SOP production as of 2018, from the same source as Fig. 2. M&A: Mining Finance | Mining Journal The agreement encourages the maximisation of netback pricing of SOP produced in the Colluli, which will become the first Africa-based fertiliser provider in the supply chain of EuroChem. They are in deep need. A port development at Anfile Bay could assist in unlocking this potential. Colluli Potash Project Aspires to 'Meaningfully' Advance Eritrea's 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. 2). Reverso Context-: 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. Colluli is located in the Danakil Depression . 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. ColluliMining Share company (CMSC,) a 50:50 Joint Venture between Danakali Limited (DNK) and Eritrean National Mining Corporation (ENAMCO) Codes: ASX: DNK, SO3-FRA, SO3-BER. - - | Reverso Context It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt.There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required.A United Nations report published in 2019suggested that Colluli could significantly boost the economy of Eritrea.The project is the only known source of potash that allows extraction of the fertilizer in solid form. The project, 50/50 owned by Australian mining company Danakali and the Eritrean Government, is rapidly progressing towards construction. taxation and exports, and from jobs and skills and economic development of the Colluli has a JORC-2012 compliant Measured, Indicated and Inferred Mineral Resource estimate of 1,289Mt @11% K20. Eritrean troops are fighting on the Ethiopian government's side (Eritrea borders Tigray to the north). Colluli is located in the Danakil Depression region of Eritrea and is approximately 230km by road southeast of the port of Massawa, which is Eritrea's key import/export facility. Eritrea is an ancient civilisation dating back thousands of years and was inhabited by early humans. In comparison, Tessenderlo (OTCPK:TSDOF) and Compass Minerals (CMP) have a P/FCF multiple of 10.0X and 20.9X, respectively. 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. Under the terms of the agreement, EuroChem will take, pay, market, and distribute up to 100% of the Colluli sites SOP fertiliser production over a 10-year term, from the Projects date of commissioning. In November 2021, Eritrea also signed a memorandum of understanding with China to join its Belt and Road Initiative. These alternative producers require substantial lead times to generate their harvest salts for processing. Therefore, the Eritrean government has a strong incentive to see the project be built, in production, and run successfully. The Colluli potash project is expected to commence production in 2022. Fertiliser is a key component to ensure world food security in the future. Earth Moving Worldwide (EMW) was selected to provide mining services for the Colluli potash project in December 2019.