Ethiopia’s prime minister Meles Zenawi, in his latest interview with the self proclaimed Eritrea Opposition website, disclosed that in the immediate future, the Eritrean port of Tio is strategic and more economically important to Ethiopia than the traditional Assab and Massawa ports.
He said that under the current prospects in Ethiopia, even if we had Eritrean ports as key ports, we will still be needing Djibouti. We are investing heavily in Djibouti. We are going to build a new railway from Addis Ababa to Djibouti. We are going to build a new railway system from the north to Tajura—a new port will be built in Tajura (old Djibouti port).
Recently huge Potash deposits has been discovered in Eritrea by South Boulder Mines at Colluli and in Ethiopia by Allana Potash at Dallol with a combined worth of around 120 Billion Dollars.
Analyst estimates that Colluli deposit and its surrounding constitutes nearly half of the total deposit discovered in both countries and is one of the shallowest and a world class deposit with mineralisation begins at a depth of 23 – 180 meter that is 100 Km from the port of Mersa Fatma or 200 Km from Massawa port.
However, the Dallol deposit is at 100 Km from Eritrea border alone and mineralization starts at a depth of 100-200 meters.
The prime minister continued by saying that the demand of the Ethiopian economy is going to go beyond the capacity of Tajura and Djibouti combined. For example for the recent potash discoveries in Ethiopia’s Afar region —that is millions of tons per year – that needs to be transported only to the nearest sea port first by a rail way. And technically speaking, the closest port to this deposit is not Assab or even Massawa, but Tio. Eritrea could develop Tio into a bigger port. So under normal situation, Eritrea could regain most of these businesses, that currently lost, from the services of Tio port to Ethiopia for potash and beyond.
But the realities on the ground suggest, the only way Ethiopia to benefit from this multi billion dollar, world-class deposit is if it gets access to Eritrean ports specially the Tio or Massawa ports.
However, under the current political differences between the two countries, it is unlikely for Ethiopia to reap any benefit from its potash projects as the cost of transporting it to a further sea port only translated into the cost and that makes Ethiopia’s potash less attractive in the already fluid commodity market. Investor normally abandon such projects as they can not simply compete to similar potash projects that are closer to the sea.