Danakali secures financing for power plant at vast potash project in Eritrea
Australia’s Danakali (ASX, LON:DNK) scored on Thursday its second win this week after the African Export Import Bank (Afreximbank) approved a credit that allows the company to start building a power plant at its world-class Colluli potash project in Eritrea, Africa.
On Monday, the same bank and the Africa Finance Corporation (AFC) provided the Perth-based company with $200 million in senior debt finance, which is part of the overall project funding package for the development of the asset.
Credit approval is a critical project financing and execution milestone and represents the conclusion of an extensive due diligence process, the company said.
Construction of the mine, 100% owned by Colluli Mining Share Company (CMSC), a 50:50 joint venture between the Aussie miner and the Eritrean National Mining Corporation (ENAMCO), is estimated to take two and a half years.
The project has been called “a game changer” for Eritrea’s economy, as it’s 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 in July.
A United Nations report published in January suggested that Colluli could significantly boost the economy of Eritrea, a country that, until last year, was 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.
It 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.
In the initial phase of operation, Wage said, Colluli would produce more than 472,000 tonnes a year of SOP. 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.