Fig. The agreement encourages the maximisation of netback pricing of SOP produced in the Colluli, which will become the first Africa-based fertiliser provider in the supply chain of EuroChem. World potash demand has grown at an average rate of 2.5-3.0% per year since 2000 (Fig. The stock chart of Danakali, modified from this source. In addition to SOP, MOP, and SOP-M producible at Colluli, Danakali can also produce rock salt, kieserite, gypsum, and magnesium chloride, upon the completion of the Anfile Bay port. Fig. Gensource Potash : Strategic Business Relationship and Project Update, Analysts Are Bullish on Top Materials Stocks: Albemarle (ALB), Nutrien (NTR), DraftKings To Rally Around 38%? The JORC-2012 compliant ore reserve estimate at Colluli is estimated at 1,100 Mt at 10.5% K2O for 203 Mt of contained SOP equivalent (Fig. The cost curve of SOP production as of 2018, from the same source as Fig. Installation of an export terminal at Anfile Bay would decrease the length of the land transport route from 230 to only 87 km, thus further lowering the logistics costs required to satisfy the multi-commodity trade in and out of Eritrea. On September 11, 2018, the Eritrea-Ethiopia border re-opened for the first time since 1998. (as referred to in ASX announcements of 3 October 2022, 1 December 2022, and 12 January 2023), it . Phase one involving an estimated capital investment of $298m is expected to produce 472,000 tonnes (t) a year of high-quality SOP, while in phase two, the mine is expected to produce up to 944,000t of SOP from year six of the project with an additional capital investment of $202m. .goog-te-banner-frame {display:none !important;} 4 0 obj MiningOther CommoditiesIndustrial Minerals, Danakali (50%) and Eritrean National Mining Corporation (ENAMCO, 50%). Potash products including SOP, MOP, and SOP-M all have the potential to be produced at Colluli. According to the UNDP report entitled "Analysis of the potential contribution of Colluli potash project to sustainable development goals in Eritrea," Colluli is estimated to attract US$614 million of direct capital investment, generate 3% of Eritrean GDP once module I is up running, and account for 50% of Eritrean Exports by when module II is on stream. The best energy and mining stock ideas with multibagger potential. Eritrea is bordered by Sudan in the west, Ethiopia in the south and Djibouti in the south-east, and it has a 1,150km coastline along the Red Sea. Morgan Leighton. It also has access to solar, wind and geothermal energy systems the East African rift. Danakali has a 50% interest in a JV with the Eritrean National Mining Corporation (or ENAMCO), which operates the Colluli project. Looking for a helping hand in the market? A pre-feasibility study for the project was completed in February 2015 followed by the completion of a definitive feasibility study (DFS) in November 2015, while the mining license was granted in February 2017. The Colluli project is located in the Danakil Depression region of Eritrea, East Africa, about 75 km from the Red Sea coast. 2 0 obj The shortfall of projected and actual global potash capacity, from this source. Colluli is located in the Danakil Depression region of Eritrea and is approximately 230km by road southeast of the port of Massawa, which is Eritreas key import/export facility. Only 12% of the total land area is suitable for farming in part due to the countrys rocky and mountainous terrain but also due to a persistent drought that afflicts much of the remaining countryside. Danakali has 100% of its sales locked in for the first ten years and with the option to extend for a further three through a take-or-pay offtake agreement with EuroChem, the Swiss mineral fertiliser producer. A binding offtake agreement for up to 100% of Module I SOP production, and a US$200M debt financing term sheet have been executed, and all material permits are in place. Under the current FEED study for Module 1 and 2, Danakali will be one of the lowest cost SOP producers and with the development of the loading facility at Anfile Bay costs will decrease further as transportation costs are reduced. The Colluli Potash Project (Project, Colluli ) is 100%. Image courtesy of Danakali. The front-end engineering design (FEED), expected to be The project also involves the construction of a heavy fuel oil-based power plant on-site to meet the electricity requirement. I focus on identifying high-quality deep values in the natural resources sector and undervalued wide-moat businesses, an investment approach that has proven to be extremely rewarding over the years. (3) various tools to aid your investment decision making, (4) trade alerts and multiple thematic weekly newsletters and. The Colluli process is expected to generate a product with a purity of 94.5%. Profit was boosted by higher metal grades and prices. Annual output #google_translate_element2 {display:none!important;} Open-cut mining is a proven mining method for salts, and its safer and more cost-effective than underground mining which allows for better overall resource recovery. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Development Goals (SDGs). It describes Eritrea as "a dictatorship in which the media has no rights". <>/Metadata 306 0 R/ViewerPreferences 307 0 R>> However, China has set its sights on the country and perhaps it will receive large amounts of Chinese FDI in the future. I based my assertion of Eritrea being ONE of the most oppressive regimes on a series of reports by human rights advocates such as Human Rights Watch (https://www.hrw.org/world-report/2021/country-chapters/eritrea) as well as sites such as D+C (https://www.dandc.eu/en/article/how-government-eritrea-became-one-worlds-most-repressive-regimes). A Front-End Engineering Design (FEED) study confirmed an advanced stage and economically attractive Project. The construction works for the Colluli potash mine are expected to be started in 2021 with the start of production expected in 2022. Please. with the move towards diplomatic relations between the once feuding countries region, chief executive Niels Wagetold MINING.COM last year. The project is on the Eritrean side of the border, giving Colluli a significant advantage relative to the other potash development projects in the Danakil Depression, which need to ship from the Tadjoura Port in Djibouti over 790km by road from the closest project on the Ethiopian side of the border. One of the essential benefits of having the salts in solid form is that it takes between 2-3 weeks to mine, process and transport our SOP to Massawa Port. In turn the well-defined geological features support our ability to maximise the potential from this the multi salt deposit. Development is already underway with expected production in 2022. Asmara is a beautiful city and awash in colonial Italian architectural gems. Additionally, it will provide comprehensive camp services incorporating catering, cleaning, laundry, pest and vector control, grounds keeping and waste management. The company expects to start full commercial production in mid-December 2022. The saleable SOP product will be trucked via road for sipping to the Massawa port which is located approximately 230km north-west of the project site. Shareholders are slated to . US Level 1 ADR . Open-cut solid salt mining beats underground solid salt mining, lacustrine brine, and playa brine in operating costs. AustraliasDanakali(ASX: DNK) is selling its 50% stake in the Colluli potash project in Eritrea, Africa, almost 13 years after partnering with the Eritrean National Mining Corporation (ENAMCO) to build the mine.Subject to conditions, the deal with Chinese company Sichuan Road and Bridge Group is expected to be finalized between March and May next year, leaving Danakali with $121 million cash, of which 90% will be distributed back to shareholders.The miner said it would use the remaining cash about $12 million to identify new projects and potential new alternative growth opportunities.The Colluli potash project is considered one of the worlds most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer.The project has the worlds largest JORC compliant reserve at 1.1 billion tonnes. Potash historical demand trends by region, from this source. Although the total productive life is estimated to be approximately 200 years, the current plan calls for the development of the mine in two stages to support an initial operational life of 60 years. .goog-text-highlight {background-color:transparent !important;box-shadow:none !important;} Australia's Danakali (ASX, LON:DNK) is closer than ever to beginning the development of its world-class Colluli potash project in Eritrea, which is expected to become one of the world's. In 1993, after a brutal war of independence from Ethiopia lasting almost three decades and led by Isaias Afwerki Eritrea became a sovereign country. Eritrea has historically struggled to attract large investments because of its unfavourable business climate. It has had a border war with Ethiopia and a clash along the border with Djibouti. The above advantageous features combine to make Colluli the lowest-cost SOP producer outside of China (Fig. It nosedived again in 2017, this time by -10%, before jumping by 13% in 2018. Eritrea has huge tourism potential, but it is hard for foreign visitors to obtain a visa. All land is considered state-owned and property rights are non-existent. Colluli has been largely de-risked in terms of. "We have found Eritrea to be very transparent and consistent across the board," Seamus Cornelius, Danakali's executive chairman, said in an interview. Simplified process flow for the production of SOP from the Colluli resource, from this source. Here Are 10 Other Analyst Forecasts For Tuesday, Berenberg Bank Sticks to Their Buy Rating for Nutrien (NTR), Registration on or use of this site constitutes acceptance of our. Some abridged samples of my writings are published here, while 4X as many unabridged articles are posted without delay at TNRH, a popular Seeking Alpha Marketplace service, where you also find: (1) a stream of high-alpha actionable investment ideas. The open-cut, high-grade potash project is being developed by Colluli Mining Share Company (CMSC), a 50:50 joint venture partnership between Australias Danakali and Eritrean National Mining Corporation (ENAMCO). Eritrea is an ancient civilisation dating back thousands of years and was inhabited by early humans. The west really needs to let go of calling every developing nation that doesnt bend at its will oppressive. Colluli is located in the Danakil Depression region of Eritrea and is approximately 230km by road southeast of the port of Massawa, which is Eritrea's key import/export facility. Eritrea has managed to fall out with and then mend fences with every one of its neighbouring countries. body {top:0 !important;} Colluli is located in the Danakil Depression on the Eritrean side of the Eritrea-Ethiopia border, a barren desert area ideal for large mine operations (Fig. 11). Potassium bearing minerals are typically found in areas where ancient inland seas have evaporated leaving behind their minerals. The 600 person camp capacity is exclusive of camp services personnel, which will have an additional camp, provided by RA, located within the overall camp boundary. The economy expanded by 2.9% in 2021 and is forecast to surge by 4.8% this year, according to the International Monetary Fund. 10). Danakali reports that the Colluli Mining Share Company (CMSC) has appointed RA International Group as its preferred contractor for the supply of accommodation, support services and other infrastructure buildings in support of the Colluli sulphate of potash project development, in Eritrea. Thank you for your comment. Select LanguageChinese (Simplified)EnglishGerman (5) a community of investors to bounce off ideas and share information with. mine-life. Some people have been in national conscription for more than 20 years. Fig. Over the next three decades, almost 95% of the population growth will occur in Africa, India, and South-East Asia. Colluli, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO), has been called a game-changer for Eritreas economy, as it is expected to become one of the worlds most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer. With mineralisation commencing at just 16m, the Colluli resource is the shallowest known evaporite deposit globally and is amenable to open-cut mining. In July 2013, major producer Belaruskali broke up with former Belarusian Potash Company cartel partner Uralkali, and in a move to grab market share, signed a potash sales contract for the Chinese market at US$315/t MOP. Colluli will be a simple open-cut mining operation utilising truck and shovel methods complemented by continuous surface miners. Niels Wage, CEO of Danakali, said: "We are very pleased to announce the appointment of Aggreko as our single power provider. Colluli is 75km from the Red Sea coast, providing unrivalled future logistics potential. There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required. What are my chances of getting my money back? Journalists say that getting any information out of the country is extremely difficult. PowerMiningOil & Gas >, MiningIndustrial MineralsMajor Commodities, Lithium Americas starts construction at Thacker Pass lithium project, Advance Lithium, LitioMx in talks to establish joint venture, Jindalee unveils updated mineral resource estimate at Mcdermitt Lithium Project, Advertise with us Advertising enquiries: Roy Morris, roy.morris@progressivemediainternational.com, +44 (0) 20 7406 6613. Plus500. BHP officials met with Argentinian authorities this week, expressing interest in increasing investments in the San Juan province. A comparison of Colluli with vertically-integrated SOP producing competitors, from the same source as Fig. The Colluli potash project is considered one of the worlds most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer. Colluli Mining Share Company secured 165m ($200m) of senior debt finance from the Africa Finance Corporation (AFC) and the African Export-Import Bank (Afreximbank) in August 2019. The Colluli project requires low upfront development costs and is highly scalable for long-life production. At a forward P/FCF multiple of 2.6X for Module I (2022-) and 1.3X once Module II comes on-stream in 2028, Danakali appears to be undervalued. The operating environment weighed heavily on Danakalis decision, as Eritrea is ruled by one of the worldsmost oppressive regimes and was until 2018 on the UNs sanctions list. Following the agreement, Collulis position as an economically attractive SOP greenfield development project has been reinforced. As inflation falls, what can be expected from the Bank of England in the months to come? Sadly, Eritrea looks set to remain a failed state as long as he is in office. Reverso Context-: Australia's Danakali (ASX: DNK) is selling its 50% stake in the Colluli potash project in Eritrea, Africa, almost 13 years after partnering with the Eritrean National Mining Corporation. The SOP quality spectrum, from the same source as Fig. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Click to follow this blog and receive notifications of new posts by email. "In the beginning, things were fine, but gradually it became clear to President Isaias [Afwerki], who led the independence struggle for 30 years, that things were not going the way he expected them to," said Martin Plaut, the former Africa Editor of the BBCs World Service, in an interview in 2019. We are confident in RA Internationals capabilities to deliver a high-quality product and service.. The project has the worlds largest JORC compliant reserve at 1.1 billion tonnes. In the initial phase of operation, Wage said, Colluli would education, gender equality, clean water and sanitation, sustainable economic 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. Click HERE for a free trial now. partnerships for the SDGs. 2). A pre-feasibility study was completed in February 2015, followed by the completion of a definitive feasibility study in November 2015, while the mining licence was granted in February 2017. I have taken a starter position and plan to build a position of meaningful size in the next couple of years. Disclosure: I am/we are long SBMSF, CMP. The FEED economic studies envisage the production of 472 Ktpa in module I for development capital of US$302 million and another 472 Ktpa in module II beginning year 6 for additional investment of US$202 million. Has access to the Ethiopian side of the deposit been guaranteed? As a natural resources industry expert with years of successful investing experience, I conduct in-depth research to generate alpha-rich, low-risk ideas for the member of The Natural Resources Hub (TNRH). Colluli is positioned very close to vital potash markets. Eritrea's north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. I am not receiving compensation for it (other than from Seeking Alpha). Colluli Potash Project is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Company (ENAMCO). Danakali is developing the tier-1 Colluli potash project, Eritrea, which boasts the world's lowest costs and >200 years of mine life. Located in the Horn of Africa, prolonged periods of conflict and severe drought have had a catastrophic impact on the Eritrean economy and the country is one of the worlds poorest, with income per head estimated at $678 in 2022 (up from $501 in 2010). I have no business relationship with any company whose stock is mentioned in this article. A United Nations reportpublished last yearsuggested that Colluli could significantly boost Eritreas economy. Eritrea has one of the world's most brutal dictatorships, but could a huge potash mine be an economic game changer? There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required. A United Nations report says that Eritrea's Danakali Colluli potash project has the potential to boost the economy of the country that was removed from the UN's sanctions list only two months ago. This project has been viewed 588 times. of Eritrea and Ethiopia, which officially declared peace in July 2018. The development of the Colluli potash projects coincides The Project has unrivalled potash product versatility. The border lands mostly arable are unusable for farming purposes, because of unexploded land mines left over from the war of independence. Net to Danakali's 50% interest, Module I is projected to generate NPV-10 of 242 million, on average delivering an undiscounted FCF of US$43 million per year, with a post-finance IRR of 29.7%; module I&II is projected to generate NPV-10 of 439 million, on average delivering an undiscounted FCF of US$85 million per year, with a post-finance IRR of 31.3% (Table 1). Colluli is located in the Danakil Depression region of Eritrea and is approximately 230km by road south-east of the port of Massawa, which is Eritreas key import/export facility. The Colluli project lies in an area that saw detailed geological and geochemical work by USAID and US Geological Survey with the Eritrean Ministry of Mines and Energy. DANAKALI Ltd., Eritrea - Colluli Potash Project | Aktienforum | Aktien Forum | Diskussionsboard | Community von finanzen.at In November 2021, Eritrea also signed a memorandum of understanding with China to join its Belt and Road Initiative. The Colluli potash project is expected to commence production in 2022. Danakali is just one of many deep-value natural resources ideas covered by Laurentian Research. Image courtesy of Danakali. The FEED economic estimates, from the same source as Fig. There are many sources of potassium, including. The miner said it would use the remaining cash about $12 million to identify new projects and potential new alternative growth opportunities.. Unlike other potash producing basins of the world, the Danakil region contains a variety of potassium-bearing salts, enabling the opportunity to generate a range of potash fertilizers. The location of the Colluli potash deposit, from this source. Shallowest known evaporite deposit globally. Colluli is without peer on capital intensity and production capacity with the ability to expand rapidly. Last Updated on: 01 December 2022. Artists impression of the plant at the Colluli project. 5. Danakali has reported a 1.1 billion ore reserve with a mine life of almost 200 years. There is also potential for kieserite Required fields are marked *. SOP - a premium grade fertilizer - usually grabs a higher price at US$500-650/t (see here). The mine will put Eritrea among the top ten potash producers in the world and impact the global supply chain of high-quality fertiliser. Are the rights of those working on the site ensured, or will they be slaves forced to work on the mine as National Service conscripts? In 2019, the country received only $67.1m in foreign direct investment (FDI) inflows against $61m in 2018, according to the World Bank. Extraction of the salts in solid form is a crucial positive differentiator of Colluli. The Danakil salt basin, in Eritrea, is a positively unique example as it is one of only very few known potash deposits where kainite, a sulphate bearing mineral key for potassium sulphate production, is found in solid form. Based on what evidence? 3 0 obj Only 1% of the population has access to the internet, according to the World Bank. In 2023, Botswana expects diamond output to decline by 1%. Colluli has significant multi-commodity potential presenting major additional value upside. 3). 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. Agnico Eagle's EPS beat expectations; guidance maintained. The independent study, commissioned and funded by the UN Development Program (UNDP), assesses a wide range of econometric data and includes . The UN sanction was lifted by the UN in November 2018 under Resolution 2444, by the EU in the following month, and by the U.S. in May 2019. Discover how your business could benefit from a base in Masdar Citys economic free zone, download this free whitepaper. Colluli is located in the Danakil Depression . Table 1. And how is that relevant here, the government has not changed since Dankalis involvement so it was certainly a government worth doing business with at some time. Earth Moving Worldwide (EMW) was selected to provide mining services for the Colluli potash project in December 2019. We have recently upgraded our technology platform. Whilst SOP demand is population growth story it is more of an economic growth story and the African continent is seen to be where the majority of the worlds economic growth will occur in the coming decades. SOP in developing regions where the highest rates of population growth are expected, from. It is estimated that 49% of the population is Christian and a further 49% is Sunni Muslim. The Colluli potash deposit is considered to be one of the worlds shallowest evaporite mineralisation with potash resources found just 16m below the surface. Bloomberg News | December 23, 2022 | 7:38 am Premium Nickel aims to re-open Selebi mine in Botswana The Selebi south deposit has a resource of 11.28 million tonnes grading 0.98% nickel and 1.9% . The front-end engineering and design (FEED) study for the project was completed in January 2018. A big economic change will come to eritrea, proud to be an nseritrea. The country also has 486,200 refugees, including 123,413 living in Sudan, 172,750 in Ethiopia and 18,976 in Egypt. Danakali explored the use of filtered seawater at Colluli. As a matter of fact, Zijin Mining (OTCPK:ZIJMF) acquired Nevsun Resources along with its Bisha zinc-copper mine in Eritrea on December 28, 2018. A port development at Anfile Bay could assist in unlocking this potential. MoEM has shown support for the financing of the project by granting time to begin commercial production (up to mid-December 2022) as well as . Your email address will not be published. Internal industry and services contribute the majority of the remaining GDP, while agriculture accounts for only 13% (despite employing 80% of the population). taxation and exports, and from jobs and skills and economic development of the In late 2019, the China Shanghai Corporation for Foreign Economic and Technological Cooperation began constructing part of the 500km road connecting Eritreas Massawa and Assab harbours (both have special economic zones). The United Nations Development Programme (UNDP) has indicated Colluli has the potential to significantly boost the Eritrean economy and have a substantial positive impact on the Sustainable Development Agenda of Eritrea. In spite of the projected long-term growth of potash demand, the building of new production capacity has been lagging in the past few years, thanks to low potash prices. The deposit is located in the Danakil depression region of Eritrea, about 75km away from the Red Sea coast and 177km south-east of Asmara, the capital city (with a population of 960,000 people). For the area a high-temperature geothermal reservoir was identified in Alid with estimates of a potential heat of 250 to 300 degrees Celsius. The water supply for the project is proposed to be met through a pipeline connecting a water desalination plant located at Anfile Bay on the Red Sea coast. The UN says forced labour and detention without trial are common. The proximity to the coast and the established port infrastructure in the Port of Massawa gives Colluli unrivalled access to global export markets, and it also decreases logistics costs from the mine gate onto the ship estimated at US$73/t. and mag chloride to be commercialized with minimal further processing required. seriously, this Man is a lobbyist of TPLF A group designated as a Terrorist Organisation in Ethiopia. Due to this change if you are seeing this message for the first time please make sure you reset your password using the Forgot your password Link. The project has a 200-year lifecycle and is expected to start operating in 2022. Potash demand is largely driven by the need to increase crop production and by improved potash application rates, particularly in developing countries such as Asia, Africa, and Latin America, where potash has been historically under-applied relative to scientifically-recommended levels (Fig.