Eritrea has one of the world's most brutal dictatorships, but could a huge potash mine be an economic game changer? 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. 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. I am not receiving compensation for it (other than from Seeking Alpha). Gensource Potash : Strategic Business Relationship and Project Update, Analysts Are Bullish on Top Materials Stocks: Albemarle (ALB), Nutrien (NTR), DraftKings To Rally Around 38%? 6. 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. US Level 1 ADR . There are 70 Subscribers monitoring this project. GDP dropped by -0.6% in 2020 in the wake of the Covid-19 pandemic and a locust invasion. Phase one, involving an estimated capital investment of 220m ($298m), is expected to produce 472,000 tonnes per annum (tpa) of high-quality SOP, while in phase two, the mine is expected to produce up to 944,000tpa of SOP from year six of the project with an additional capital investment of 148m ($202m). The border with Sudan was closed until early 2019 because relations were so bad. "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. Afwerki has become close to Abiy and is a sworn enemy of the Tigray Peoples Liberation Front, which ruled Ethiopia when the two countries fought a border war. function GTranslateFireEvent(element,event){try{if(document.createEventObject){var evt=document.createEventObject();element.fireEvent('on'+event,evt)}else{var evt=document.createEvent('HTMLEvents');evt.initEvent(event,true,true);element.dispatchEvent(evt)}}catch(e){}} To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. It is a member of the African Union, the UN and the Intergovernmental Authority on Development which deals with issues around drought and desertification in the Horn of Africa but it is the only African country (out of 55) not to sign up to the African Continental Free Trade Area, the huge free trade area that went live on 1 January 2021. The Colluli potash project also involves evaporation ponds, a run-of-mine (ROM) pad, a sewage treatment plant, fuel storage tanks, accommodation camp, workshops, warehouses, and a main administrative building. The relative location of the Colluli resource to these critical markets gives it a significant logistics advantage and unrivalled access to the potash markets of the future. 2 0 obj Soraya Narfeldt, CEO of RA International, said: We are delighted to have been chosen as the preferred contractor to work with Danakali and its partners on this project which we see as globally significant. 10. Is this happening to you frequently? Simplified process flow for the production of SOP from the Colluli resource, from this source. Das wrde mich fr Eritrea sehr freuen und hoffe das es den Menschen dort zugute kommt.Ich liebe dieses Land zumal meine Tochter einen eritreischen Vater hat.. The FEED economic estimates, from the same source as Fig. In the initial phase of operations, the mine would produce more than 472,000 tonnes a year of sulphate of potash (SOP), a premium grade fertilizer. EuroChem is an outstanding partner with global reach and extensive fertiliser capabilities. Eritrea is an ancient civilisation dating back thousands of years and was inhabited by early humans. The project is the only known source of potash that allows extraction of the fertilizer in solid form. products, such as Sulphate of PotashMagnesium (SOP-M), muriate of potash The FEED results and the recent completion of test work and additional verification provide a higher level of financial certainty to project financiers, further de-risking the investment proposition. It is strategically important as it has access to the Red Sea, the Suez Canal and to Europe, as well as to the waters of the Persian Gulf and beyond to the Indian Ocean. The Colluli potash project is a low-cost, long-life sulphate of potash (SOP) fertiliser project under development by the Colluli Mining Share Company, a 50-50 joint venture partnership between the Australian start-up Danakali and the Eritrean National Mining Corporation. 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. Mineral & Phosphate Mining in the US industry outlook (2022-2027) poll Average industry growth 2022-2027: x.x lock Purchase this report or a membership to unlock the average company profit margin for this industry. 03 October 2022. We are confident in RA Internationals capabilities to deliver a high-quality product and service.. Visit our privacy policy for more information about our services, how we may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. They have significant experience in executing projects of the scale and quality required for the Colluli project. US Level 1 ADR's OTC-DNKLY, CUSIP.23585T101 The world's largest JORC compliant solid salt, Sulphate of . Potassium is one of three key fertiliser macro-nutrients essential for healthy soil and plant growth. Members of The Natural Resources Hub get exclusive ideas and guidance to navigate any climate. 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. But when [Afwerki] discovers that his authority is being questioned after independence, he begins reacting in the same way. Only 1% of the population has access to the internet, according to the World Bank. The company expects to start full commercial production in mid-December 2022. Eritrea's north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. RA, listed on the London Stock Exchanges AIM board, specialises in building, operating and maintaining facilities in remote and challenging conditions across Africa, providing complex humanitarian, governmental, mining, and other commercial developments and services, Danakali says. 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. The SOP quality spectrum, from the same source as Fig. 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. Previously, in London, he was editor of Investment Adviser and news editor of Financial Adviser, both of which belong to the Financial Times Group, Namibian Investment Promotion and Development Board, Dubais new family office rules can drive economic growth for the UAE, Opinion: New Brexit deal can only be a good thing for Northern Ireland, African FDI into mines on the rise as continent steps up its role in energy transition, How proptech is driving sustainability: Lessons from Stockholm, How Montrals unique agtech community is boosting local food production, EU to launch quest for raw materials critical for cleantech, Finding a cure: How cell and gene therapies could revolutionise medicine, China Shanghai Corporation for Foreign Economic and Technological Cooperation, Norway PESTLE Insights - A Macroeconomic Outlook Report, PESTLE Insights: Macroeconomic Outlook Report - Norway. taxation and exports, and from jobs and skills and economic development of the A Front-End Engineering Design (FEED) study confirmed an advanced stage and economically attractive Project. providing 10,000 direct and indirect local jobs. 2023 Glacier Media Group, All Rights Reserved, selling its 50% stake in the Colluli potash project, Botswana mining growth seen flat amid dim diamond outlook, Harmony Gold CEO says gold sector consolidation inevitable, BHP seeks to tighten grip on South Americas copper sector, Quest for worlds biggest diamonds gives De Beers a headache, https://www.hrw.org/world-report/2021/country-chapters/eritrea, https://www.dandc.eu/en/article/how-government-eritrea-became-one-worlds-most-repressive-regimes, https://www.hurstpublishers.com/book/understanding-eritrea-2/, Canada injects $75 million into BHPs Jansen potash mine, Russia raises fertilizer export quota by 500,000 tonnes, World to face potash price crunchas Brazil Potash propels Autazes project toward production, Europes largest rare earths deposit found in Sweden. These authors includeSilver Coast Research, , among others. All primary production of potassium sulphate from kainitite worldwide commence with low potassium content brines, which require substantial solar evaporation to generate a harvest salt for subsequent processing. MiningOther CommoditiesIndustrial Minerals, Danakali (50%) and Eritrean National Mining Corporation (ENAMCO, 50%). as being forecasted back in 2015 has been removed from the supply side (Fig. Following the agreement, Collulis position as an economically attractive SOP greenfield development project has been reinforced. By. The Danakil Depression is located in the Southern region of Eritrea and extends over 300km into Eastern Ethiopia. Eritrea has one of the most erratic economies in the world, partly due to chronic drought and highly variable agricultural output: its GDP surged by 31% in 2014 before plummeting by -20.6% in 2015. I am not receiving compensation for it (other than from Seeking Alpha). 2022 The Colluli potash project is a low-cost, long-life sulphate of potash (SOP) project under development in Eritrea, Eastern Africa. development of the project, and the expected significant boost to royalties, Producer of 3 0 obj There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required. Therefore, the Eritrean government has a strong incentive to see the project be built, in production, and run successfully. The Colluli process is expected to generate a product with a purity of 94.5%. It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt. The Colluli potash deposit is considered to be one of the worlds shallowest evaporite mineralisation with potash resources found just 16m below the surface. The appointment of RA International is testament to sound execution of our growth strategy, highlighting continued new business momentum with another significant award in the mining sector., Your email address will not be published. The front-end engineering and design (FEED) study for the project was completed in January 2018. Finance > M-a. In July, the Eritrean Ministry of Energy & Mines paved the way for construction to start at the project after accepting the Colluli Notice of Commencement of Mine Development. Potash, an important fertiliser, is found in abundance in certain parts of Ethiopia and Eritrea. finished in June, will take the company a step closer to the construction phase with the move towards diplomatic relations between the once feuding countries Posted by Daniel Gleeson on 21st August 2020. BHP officials met with Argentinian authorities this week, expressing interest in increasing investments in the San Juan province. 9). 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. 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. The project, 50/50 owned by Australian mining company Danakali and the Eritrean Government, is rapidly progressing towards construction. Click HERE for a free trial now. Colluli is located about 75 kilometres from the Red Sea coast, making it among the most accessible premium potash deposits globally. The project has now obtained all licenses and permits within the license area and has also been granted all required permits, licences and authorisations for infrastructure construction and development outside the Colluli mining license area. "We have found Eritrea to be very transparent and consistent across the board," Seamus Cornelius, Danakali's executive chairman, said in an interview. Fig. (MOP) and gypsum, along with rock salt. One-third of the country's GDP is made up of remittances sent home by Eritreans living in Europe and other developed countries. Colluli, furthermore, boasts the shallowest evaporite mineralisation globally and consequently has significant mining, logistics and, in turn, capital and operating cost benefits over other potash development projects in the Danakil Depression and elsewhere. I'd like to emphasize that the articles contributed by these authors are the product of their respective independent research and analysis. Additionally, it will provide comprehensive camp services incorporating catering, cleaning, laundry, pest and vector control, grounds keeping and waste management. Colluli is 75km from the Red Sea coast, providing unrivalled future logistics potential. The removal of Eritrea from the sanction list opened up the country for foreign investments, thus significantly reducing geopolitical risk. Reverso Context-: The report also identified how the mine could help Eritrea Eritrea has historically struggled to attract large investments because of its unfavourable business climate. x][sF~w""s)d;9>u^v0@ROcTE&Agdjyr8_N>}\O_,g|yrqKbzlwGouQB b-*dkGO?-M^e1?!;=^RxGN{t2k JSUUSx=ce :jc`s>h. 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. Open-cut solid salt mining beats underground solid salt mining, lacustrine brine, and playa brine in operating costs. Business intelligence for leaders in foreign direct investment. Over 100kg of Colluli product was tested at Ludman Industries in the USA for product compaction behaviour. A comparison of the Colluli and competing greenfield SOP development projects in terms of the distance to the export port, from the same source as Fig. The cost curve of SOP production as of 2018, from the same source as Fig. A big economic change will come to eritrea, proud to be an nseritrea. A comparison of Colluli with vertically-integrated SOP producing competitors, from the same source as Fig. Colluli is only 75km from the Red Sea coast, 87km from a port planned at the Anfile Bay, and 230km from the existing Port of Massawa, making it the SOP deposit closest to a coastline and giving it an advantage over competing projects in neighboring Ethiopia, such as the Yara Dallol project of Yara International ASA (. partnerships for the SDGs. The Australian company Danakali is developing the Colluli potash project in Eritrea and expects to bring it into production in 2022. Value: R 200 Million+. Shallowest known evaporite deposit globally. This post has been syndicated from a third-party source. Commonly, Potash refers to Potassium Chloride or Muriate of Potash (MOP), however, a number of other potash variants exist with premium potash types containing micro-nutrients as well as macro nutrients such as potassium sulphate, potassium magnesium sulphate and potassium nitrate. On July 9, 2018, a joint declaration of peace and friendship was signed between Eritrea and Ethiopia. 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. . Colluli, which Danakali shares with the Eritrean National Mining Corporation, is scoped to produce 472,000 tons a year of potash in sulphate (SOP) in its first phase before scaling up to second phase production of 944,000 tons annually. This project has been viewed 588 times. Surface mining allows controlled extraction, predictable production rates and efficient stockpiling of additional economic salts know to us. DANAKALI focuses on developing the Colluli potash project in Eritrea, which is wholly owned by Colluli Mining Share Company . However, in July 2018, a peace agreement was finally reached between Afwerki and Ethiopias Prime Minister, Abiy Ahmed. 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). Materials handling trials have also been completed to determine the anti-caking requirements for the final SOP product. 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. Colluli is the premier greenfield development project globally. Colluli Potash Project is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Company (ENAMCO). Fig. Anyone can write a book, as long as is a white person, you would buy it even a white homeless from NYC. The JORC-2012 compliant mineral resource estimate, from this source. Eritrea one of the worlds most repressive and secretive states, known as the North Korea of Africa is poised to disrupt the global supply chain of fertiliser. The government monitors telephone and internet traffic and runs an extensive domestic surveillance system. It then plans to distribute 90% of the net proceeds to shareholders and will continue as a listed company to identify new projects and potential new alternative growth opportunities. 5). It hosts the youngest evaporite deposit and the largest unexploited potash basin in the world. He covered foreign investment in Latin America for 13 years and for the past three years has lived in sub-Saharan Africa and written widely about the subject from that continent's perspective. You are talking about the garbage written by Plaut ? I wrote this article myself, and it expresses my own opinions. 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 November 2020, a conflict broke out in the mountainous region of Ethiopia, called Tigray, between Tigrayan forces and the Ethiopian federal troops. Danakali is developing the tier-1 Colluli potash project, Eritrea, which boasts the world's lowest costs and >200 years of mine life. He is an alone, he is DICTATORSHIP! Niels Wage, CEO of Danakali, said: I am pleased to announce the appointment of RA International as our preferred accommodation and support services contractor. stream The economy expanded by 2.9% in 2021 and is forecast to surge by 4.8% this year, according to the International Monetary Fund. Profit was boosted by higher metal grades and prices. Colluli contains three potassium-bearing salts in solid form, namely. endobj The company has completed a front-end engineering design for the production of potassium sulphate, otherwise known as sulphate of potash or SOP. These circumstances have resulted in it becoming one of the most isolated states in the world. Over 6Bt of potassium bearing salts suitable for the production of potash fertilisers have been identified in the region to date. February 25, 2022. Extraction of the salts in solid form is a crucial positive differentiator of Colluli. Our 3 Top Picks. Danakali is just one of many deep-value natural resources ideas covered by Laurentian Research. This is a report that was prepared by independent consultants and initiated and funded by the United Nations Development Programme (UNDP) on the potential contributions of Colluli to Eritrea's Sustainable Development Goals has been released. 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? mine-life. 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. To lower infrastructure uncertainties, in August and October 2020, respectively, Danakali appointed RA International Group PLC as the preferred contractor for the supply of accommodation, support services, and other infrastructure buildings, and Aggreko (AGK.LSE) as its preferred power supply contractor for its 12MW HFO power plant at Colluli under a five-year BOOT contract, removing a major infrastructure uncertainty. 8. Agnico Eagle's EPS beat expectations; guidance maintained. Both are below. What are the best countries for cryptocurrency adoption? This article lost credibility in characterizing the country of Eritrea as most oppressive regime. Below, let's look at Danakali Ltd. (DNK.ASX) (OTCPK:SBMSF) (OTCPK:DNKLY), which operates in Eritrea. 4. Danakali, an Australian company that has been developing the Colluli potash project in Eritrea, was recently granted permission by the Eritrean Ministry of Energy and Mines to commence commercial production at Colluli. Eritreas north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. ColluliMining Share company (CMSC,) a 50:50 Joint Venture between Danakali Limited (DNK) and Eritrean National Mining Corporation (ENAMCO) Codes: ASX: DNK, SO3-FRA, SO3-BER. According to the article below the mine will require 1,115 workers during the construction phase and 600 thereafter. The document estimated that Colluli would contribute 3% of It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt. The Colluli potash project is located in the Danakil Depression region of Eritrea, in East Africa, approximately 75km away from the Red Sea coast and approximately 177km southeast of capital Asmara. In 1993, after a brutal war of independence from Ethiopia lasting almost three decades and led by Isaias Afwerki Eritrea became a sovereign country. A United Nations report published in 2019suggested that Colluli could significantly boost the economy of Eritrea. Eritreas north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. During the long struggle, the people of Eritrea managed to forge a common national consciousness but, with peace established, they faced the task of overcoming their ethnic and religious differences in order to raise the country from poverty made worse by years of drought, neglect and war. Danakali, currently undervalued and standing for a massive re-rating upon the first production, should be considered by risk-tolerant investors with a long time horizon. 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. Since then, potash price has fallen from the neighborhood of US$600/t MOP to as low as USS$200/t MOP by 2017, and has since been fluctuating between US$200/t and US$270/t. I have taken a starter position and plan to build a position of meaningful size in the next couple of years. Colluli is a major sulphate of potash (SOP) project located in Eritrea, Eastern Africa. 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). 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% . It also said that all vendor and contractor packages have now been received. 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. Eritrea has huge tourism potential, but it is hard for foreign visitors to obtain a visa. The accommodation camp, meanwhile, has been designed to accommodate 600 personnel during the production phase with the flexibility to accommodate 1,115 during the construction phase. % 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.