GLOBAL potash supply is dominated by three major producers in Saskatchewan, Canada, and three in Russia and the former Soviet Union. In the coming years, however, we are going to witness additional two more major players: Eritrea and Ethiopia.
Australian South Boulder Mines is developing the world class Colluli potash project in Eritrea while Canadian Allana Resources developes the Dallo deposit in Ethiopia. Both are located in the Danakil depression sharing a common border.
Colluli deposit is a very large, long life, at surface deposit that is highly amenable to open pit mining methods. It is in close proximity to the Red Sea shipping corridor and only 75 km from the coastline. It is close to existing in country port facilities like Massawa, which is only 180km, and the areas are mostly linked by coastal highway. The climate and topography at Colluli and between the deposit and the coast are extremely favorable for an open pit mining operation, solar evaporation and easy transportation.
The Dallo potash deposit in Ethiopia is located some 100 km from the Red Sea coast and the port of Mersa Fatma in Eritrea and 600 km via road from Djibouti’s deep water port.
Allana’s deposit has a depth below surface of 50 – 100 meters in the western portion, and dips to 700 to 800 metres in depth to the east. Colluli’s deposit has a depth of only 16 – 70 meters and that makes it the shallowest known potash deposit in the world. This opens up the potential for both open pit and solution mining in both deposits.
In comparison, the deposits in Saskatchewan, where the depths range between 1,500 and 2,000 meters, and Russia, where they range from 1,800 to 2,000 meters, entail solution and underground mining.
Both deposits have no major environmental constraints. They both located in a desert with almost no flora and fauna. Allana, however, recently forced to negotiate with the hamlets of Mororo and Alai Lai in the Afar region that needs to be relocated and re-established.
The Colluli concession covers over 400 square kilometers and contains a variety of over 1 billion tons of potassium. This is comprised of 261.81Mt at 17.94% KCl or 11.33% K2O of Measured Resources, 674.48Mt at 17.98% KCl or 11.36% K2O of Indicated Resources and 143.50Mt at 18.00% KCl or 11.37% K2O of Inferred Resources.
Allana’s Danakil Potash Project covers over 312 square kilometers and planned to produce 1 Million tones per year of Muriate of Potash (MOP) production via solution mining/solar evaporation from the Sylvinite Zone.
The Colluli project is a 50/50 joint venture with the Eritrean National Mining Company (ENAMCO) and the government of Eritrea recently nominates the Anfile Bay, which is 75km from the site, as Colluli’s Potash export terminal.
On the other hand, land locked Ethiopia needs to wait until the completion of the new Tadjoura port in Djibouti in Q1 2016. In the meantime, Allana is completing the final elements of the Allana Tadjoura Potash Terminal facilities with the Djibouti Port Free Zone Authority (DPFZA). Construction of the 120 km upgraded highway from the Djibouti side, 300 km highway road to the Dallo property along with a 216 km Asayita – Tadjoura railway projects are expected to start by the end of this year.
If all was well with Eritrea, the Dallo project in Ethiopia would have a distance of only 100 km to the coast.
President and CEO of Allana Resources, Farhad Abasov says:
“Obviously it would make commercial sense to transport the material from Ethiopia across the border to Eritrea. It would be ideal if this could overcome any political tensions between the two countries, but should that be difficult, then Djibouti would be the alternative export route, with the potash trucked there.”
“There is no entrenched animosity between the people of Ethiopia and Eritrea but rather qualitative differences in opinion between the two countries,” Abasov adds.
With recent strategic financial support it secured from Israel Chemicals Ltd (ICL), International Financial Corporation (IFC), and Liberty Metals and Mining Holdings, LLC, Allana Potash would finalize construction of a fertilizer production plant within a year and start using potash from Dallo as an input in 2015.
On the other hand, South Boulder Mine decided to completely re-write the original Colluli potash mine plan that was devised by the previous management after it was identified that they only includes Sylvinite rock (which is only 16% of the total resource) while considering a large quantity of economic Carnallitite and Kainatite rocks as waste.
The new management of South Boulder, however, commenced a new Definitive Feasibility Study (DFS) by processing the Carnallitite and Kainitite mineralization in addition to the Sylvinite. This approach significantly extends the Colluli mine life well beyond 200 years.
The Colluli DFS (the final necessary report before construction can commence) is expected to be completed in Q1 2015.