Engineering & Mining Journal

SEP 2018

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Page 54 of 75

HORN OF AFRICA SEPTEMBER 2018 • E&MJ 53 Potash Potential Apart from Bisha, Eritrea is almost entire- ly dependent on agriculture for economic growth. Other mining companies are also now looking at setting up operations. Australian firm Danakali has toiled for years to drum up investor support for its proposed 1-billion-ton-per-year potential potash mine that straddles the border be- tween Eritrea and Ethiopia. There is enough potash available to keep the operation, named Colluli, going for two centuries according to Danakali's investor prospectus. The mine will cost around $900 million to develop. In July, a couple weeks after the peace agreement, Danakali tested the waters with investors by listing it on the Lon- don Stock Exchange. Projects like these are usually regarded as high-risk invest- ments, but Danakali has the advantage of the region's conflicts coming to an end. Danakali also signed an offtake agree- ment with EuroChem Trading for a min- imum of 87%, and up to 100% of the sulphate of potash production from Module 1 of Colluli. The key terms of the offtake agreement include that Euro- Chem will take, pay, market and distri- bute up to 100% of Colluli Module 1, said Bell Potter analyst David Coats in a note to clients. "The binding offtake agreement is a major milestone and bolsters Danakali's case to potential project financiers," Pot- ter said. "We see it as a major de-risking event for the funding and comercializa- tion of the Colluli project, supported fur- ther by the London listing." Logistics Evolution The ending of the war has also drastical- ly shaped logistics. Previously, the port enclave of Djibouti was the only access to the sea for landlocked Ethiopia. More than 95% of goods going in and out of the country do so via Djibouti. A brand-new Chinese-funded rail line has now opened between Addis Ababa and Djibouti, cutting a three-day road journey to just eight hours. It is unclear as of yet, if the rail line will be useful for transporting bulk ores, as it is dedicated to container freight. This is unusual since most-recent rail linkages around Africa are designed to move bulk. However, containerized ore has been done before. Bisha itself uses sealed con- tainers to move copper concentrate to Er- itrea's Massawa port. These are stacked warfside until a bulk vessel arrives, then using a rotator system, the containers are lifted and tipped into the vessel, after which returned to the mine. Ethiopia, meanwhile, is eager to devel- op its own mining industry. Until now, it's depended on small-scale gold and opal production. The country does have proven reserves of platinum, niobium, tantalum, nickel, cooper, chrome and manganese, among others. "We are the fastest growing economy in Africa, but we cannot hope to keep this up if we only depend on agriculture," said Motuma Mekassa, formerly mines min- ister but now moved to key portfolio of defense. Speaking on the sidelines of a mining symposium in Cape Town earlier this year, Mekassa said the country had begun setting itself up to become a mod- ern, diverse economy. "We see mining as a way to diversify our economy, and will play a great part in our future development," Mekassa said. Ethiopia has a single large-scale gold mine, Lega Dembi, in the southern area of the country. This is owned by Mohammed International Development Research and Organization Companies (Midroc), a company that belongs to Saudi-Ethiopian billionaire Mohammed Hussein Al Amoudi. Al Amoudi is enormously influential in Ethiopia, but recently had his wings Ethiopia's changing politics have made much-needed reforms possible, says Control Risks analyst Barnaby Fletcher. (Photo: Control Risks) Source: NYSTROM Herff Jones Education Division.

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