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Australia’s Danakali (ASX: DNK) has completed the sale of its 50% stake in the Colluli potash project in Eritrea, Africa, 13 years after partnering with the Eritrean National Mining Corporation (ENAMCO) to build the mine.
The buyers, Chinese company Sichuan Road and Bridge Group, have paid a first instalment of $105 million. A second tranche payment of $16 million is expected within the next six months, Danakali said.
The Colluli potash project is considered one of the world’s most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer.
The project has the world’s largest JORC compliant reserve at 1.1 billion tonnes. 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 2019 suggested 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. It also has access to solar, wind and geothermal energy systems – the East African rift.
The operating environment weighed heavily on Danakali’s decision, as Eritrea is ruled by one of the world’s most oppressive regimes and was until 2018 on the UN’s sanctions list.
4 Comments
Ted
The reason Denkali sold its interest to Chinese is they can’t raise the necessary capital because of the west make it hard to do business in Eritrea. Ask the executives they will tell you the reasons. Eritrea was consistent in its interest to work with mining companies from Canada and Australia but the business environment purposely made hard by the west to do business in Eritrea. The gap is filled by Chinese only because they come with the necessary cash, technology and human capital.
Debessay Gabriel
How ever you may wish to categorize and demonize the Eritrean leadership, the Eritrean people will never allow their natural resources to be looted and plundered by western imperialist countries as they are doing to the rest of Africa.
isiaias
Its a Dictatorship. China’s onboard crimes against humanity.
Yohannes Zacharias
Eritrea would be the first African nation to own 30-50% in their mining industry,as such could be a bad example to the mining community plus its policy of self reliance is detrimental to their interest.All the mining companies who came to Eritrea were harassed and forced by the west. Watch their testimony they released before blaming Eritrean Government.