Danakali earmarks $1.8m to get Eritrean potash project off the ground

Cecilia Jamasmie | October 30, 2019 | 7:00 am Battery Metals Exploration Intelligence Africa Australia Potash

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The Colluli project is located in a semi-desert agro-ecological zone, of which most of the land is barren and of little use to communities and wildlife. (Image courtesy of Danakali.)

Australia’s Danakali (ASX, LON:DNK) is moving its world-class Colluli potash project in Eritrea, Africa, closer towards development after raising $502,000 from investors in the quarter ended in September, which added to two other major credits received in the period.

Delivering quarterly results, the Perth-based company said it has $4.9 million in working capital, adding that it plans to spend $1.8 million from now until the end of December, directing $1.4 million to construction of the mine.

Colluli has the potential to produce 944,000 tonnes of SOP, a premium grade fertilizer, over its 200-year plus mine-life.

Colluli, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO), has been called “a game changer” for Eritrea’s economy, as it’s expected to become one of the world’s most significant and lowest cost sources of sulphate of potash (SOP), a premium grade fertilizer.

“The government will benefit from the longer-term development of the project, and the expected significant boost to royalties, taxation and exports, and from jobs and skills and economic development of the region,” chief executive, Niels Wage told MINING.COM in July.

The development of the Colluli potash projects coincides with the move towards diplomatic relations between the once feuding countries of Eritrea and Ethiopia, which officially declared peace in July last year.

A United Nations report published in January suggested that Colluli could significantly boost the economy of Eritrea, a country that, until last year, was on the UN’s sanctions list.

The document estimated that Colluli would contribute 3% of the country’s GDP by 2021 and 50% of the nation’s exports by 2030, while providing 10,000 direct and indirect local jobs.

Danakali’s potash project could be a game changer for Eritrea — UN — Colluli’s location. (*Courtesy of Danakali.*)

It also identified how the mine could help Eritrea advance its sustainable development agenda, which are 13 priority Sustainable Development Goals (SDGs). These include: no poverty, zero hunger, quality education, gender equality, clean water and sanitation, sustainable economic growth and decent work, industry, innovation and infrastructure, reduced inequalities, climate action, peace, justice and strong institutions and partnerships for the SDGs.

In the initial phase of operation, Wage said, Colluli would produce more than 472,000 tonnes a year of SOP. Annual output could rise to almost 944,000 tonnes if Danakali decides to go ahead with a second phase of development, as the project has a possible 200-year plus mine-life.

The asset has the potential to produce other fertilizer products, such as Sulphate of Potash Magnesium (SOP-M), 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.