Thursday, February 2, 2023
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BusinessGov’t takes over Allana Potash’s concession

Gov’t takes over Allana Potash’s concession

By Dawit Taye and Kaleyesus Bekele

The Government of Ethiopia has taken over the potash mine concession of Allana Potash Afar in the Afar Regional State, Danakil Depression.

Following a controversial tax claim by the Ethiopian Revenues and Customs Authority (ERCA), Allana Potash Afar, a subsidiary company of Israel Chemicals (ICL), ceased its operation and evacuated its expats staff from Ethiopia. Allana Potash Afar was founded by Allana Potash of Canada to prospect and develop potash mineral in the Danakil Depression, the shallowest and hottest place on the planet.

In 2015 ICL bought all the shares of Allana Potash, a Canadian company listed in the Toronto Stock exchange and acquired the Ethiopian subsidiary, Allana Potash Afar, owner of the potash concession in the Danakil Depression. ICL had asked the Ministry of Mines, Petroleum and Natural Gas (MoMPG) to transfer the mining license of Allana Potash and while the ministry was processing the request ERCA filed a tax claim amounting to 50 million dollars. Consequently, ICL refused to settle the tax claim and pulled out of Ethiopia.

Allana Potash Afar relinquished the concession and laid-off all the local staff. Since then the potash development project was abandoned. Few site workers were guarding the trucks and machineries of the company which were prone to theft. Executives of ICL (Allana Potash Afar) were asking the MMPG to officially handover the concession. However, the ministry was unable to take over the mine as the former could not present a tax clearance from ERCA.  

The ministry repeatedly tried to invite executives of Allan Potash Afar to a round table discussion but for no avail. Sources said executives of Allana Potash Afar were reluctant to come back to Ethiopia fear of reprisal. After waiting for more than six months ERCA and MMPG last week took over all the properties and the concession from site workers. Reliable sources told The Reporter that experts of the ministries handed over the properties to the Ministry of Defense Forces. Sources said defense forces are now guarding the properties of the company.   

Allana Potash had undertaken exploration work and discovered a potash mineral deposit on the 300sqkm of land amounting to 3.2 billion tons. Potash is mainly used to produce fertilizers. Allana Potash had committed itself to develop the mine at a cost of 700 million dollars. But the company was unable to raise the required capital due to the nose diving price of potash in the international market.

Accordingly, Allana Potash sold all its shares to ICL was de-listed from the Toronto Stock Exchange. ICL on its part had a plan to develop the potash mine and build three fertilizer blending plants at a cost of one billion dollars. The potash development project was expected to create 3,000 jobs and annual revenue of 400 million dollars.

ICL is the 6th largest potash fertilizer producer in the world and the 2nd in west Europe. ICL is a publicly traded company listed in the New York stock exchange with a capital of 12 billion dollars. Head quartered in Tel Aviv, the company earns an annual turnover of over six billion dollars. The company was established by the State of Israel in 1968 and was privatized in the 1990s.

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