Danakali closer to getting Eritrea potash project off the ground

Artist’s impression of the plant at the Colluli project. (Image courtesy of Danakali.)

Australia’s Danakali (ASX, LON:DNK) said on Thursday it was in the final stages of completing the second phase of development of its world-class Colluli potash project in Eritrea, Africa.

The front-end engineering design (FEED), expected to be finished in June, will take the company a step closer to the construction phase and then onto production in 2022, Danakali said.

The three key objectives set for the second phase of development included updating the capital estimate, project schedule and identifying key test work required to move into Phase 3.

The Colluli project is located in the Danakil Depression region of Eritrea, East Africa, about 75 km from the Red Sea coast 

The Perth-based miner noted that despite covid-19 restrictions, engineering, procurement and construction management (EPCM) activities have continued as scheduled. It also said that all vendor and contractor packages have now been received.

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 is 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 last year.

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 2018.

Welcome boost

A United Nations report published last year suggested that Colluli could significantly boost Eritrea’s economy.

Eritrea was, until 2018, 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. 

The report 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.

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

In the initial phase of operation, Wage said, Colluli would produce more than 472,000 tonnes a year of Sulphate of Potash. 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.

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