World Class Potash Project In Eritrea Moves Closer To Development

Danakali Limited is set to become the world’s largest player in the potash field
The Colluli potash project in Eritrea is now not only the world’s largest and most advanced but also economically attractive and fundable Sulphate of Potash (SOP) greenfield development project, with a mine life in excess of 200 years.


It’s not easy for most investors to get excited about potash, a fertiliser — and less so about Eritrea, a north African country which spent years on a United Nations sanctions list.

But times do change and there is a small company poised to benefit from growing global fertiliser demand and the international rehabilitation of Eritrea.

Danakali, an Australian-based miner, has moved to within sight of developing the potential world-class Colluli potash project which sits close to the Red Sea which is Eritrea’s eastern border.

Difficult Neighborhood

If the location and the past record of a bitter dispute with neighboring Ethiopia wasn’t enough to ring alarm bells there’s trouble on the other side of the Red Sea where a messy civil war is being fought in Yemen.

Despite the multiple negative factors there are a growing number of indications that the Colluli project will be developed and it will become a low-cost, high-profit, producers of potash, an essential fertiliser in some countries which need to boost crop yields.

>> ALSO READ : Danakali’s Advanced Potash Project in Eritrea is a Cut Above the Rest

On the political front the U.N. lifted sanctions on Eritrea two months ago after a dramatic improvement in relations with Ethiopia, opening the way for increased international investment.

Sales Deal Underwrites The Business

On the business front, Danakali has signed a sales agreement with Russian-controlled EuroChem for up to 100% of the potash produced in the first stage of Colluli.

On the financial front a key step was taken last month when Danakali, which has a 50-50 joint venture covering Colluli with the government of Eritrea, signed a $200 million funding mandate with a syndicate of African-development financial institutions.

>> ALSO READ : Danakali Poised to Develop the World’s Largest Undeveloped Sulphate of Potash Deposit

The next step is to start construction of the potash project which appears to be far simpler than rival operations in Europe and North America where potash is extracted in very deep mines.

Near-Surface Ore For Easy Mining

Colluli’s potash is located close to the surface making for easy mining, and close to port facilities on the Red Sea which will provide easy access to fast-growing Asian markets.

Environmental conditions will not be easy for workers at Colluli with the potash located in a region known as the Danakal Depression which is regarded as one of the hottest places on earth.

But, compensating for the location and the difficult history of Eritrea is an ore body containing at least 1.1 billion tonnes of potash, enough for at least 200 years of production.

>> ALSO READ : Danakali’s Colluli Asset Recognized as World’s Superlative Potash Deposit

Interest in Danakali has been limited over the past 12-months as the different parts of the project have been stitched together and uncertainty has spread about global trade during the China v U.S. trade war.

From around 63c on the Australian stock market in August Danakali has slipped to 50c, a price which values the stock at $130 million.