The Council of Ministers has approved Circum Minerals Ltd, a British mining company’s request to extract potash mineral in the Danakil Depression. The council has agreed to give the company its mining license.
Circum will be the second company following Allana Potash Afar to secure such a license to extract potash mineral in the Afar Regional State. There are currently three international firms involved in potash mining which includes Yara Dallol BV, a subsidiary of Yara International.
The mining license will allow Circum to have exclusive access over 4.9 billion tons of potassium resource contained within 365 square kilometers. It is provided with a license period of 20 years which will be renewable for further 10 years period.
Studies conducted on the potash mineral potential of Ethiopia indicate that the Danakil area alone has a potash bearing salt from 12 billion tons to 14 billion tons.
The company has been in Ethiopia since August 2008 exploring potassium in the region. It secured a license over the deposit back in 2013. Two years after, Circum announced that it has explored a huge stock of potassium in Afar region.
According to the company, in 2013, Circum acquired a 70 percent interest in the Danakil Potash Project from AgriMinco Inc. which retained a 30 percent interest. AgriMinco’s interest was subsequently sold to Premier African Minerals Limited and Circum acquired the remaining 30 percent interest in the Project from PREM in May 2014.
The company has so far invested 50 million dollars to explore the area and conduct a feasibility study.
Upon the approval of the license, Circum will establish a production plant and is expected to produce 2.75 million ton of potash, annually. From this, two million tons of it will be potassium chloride and the rest will be potassium sulphate.
Extraction of potash minerals in the Afar region needs a very low operational cost, an expert from Ministry of Mines and Natural Gas told The Reporter.
Its Danakil potash project is located 600km from major port facilities including Port of Tajura, Djibouti.
The company plans to start the production of potash in the coming five years. According to the company, the capital investment to build the mine will be around 2.3 billion dollars.
“The next step for the company is to bring a strategic investor on board and build an owner’s team who will manage the construction project,” Chris Gilchrist, chief operation officer of the company, said in an email response sent to The Reporter.
“We have already begun the process to find a strategic investor and we have had some discussions and site visits by interested parties,” reads the email.
The price of potash at the international market has shown a significant decline over the years. Back in 2013, it stands around 570 dollars per ton, which is now decline to 214 dollars.
In addition to the export market, the company has shown interest to supply to the local market.
“We have read various news reports in the past regarding foreign companies wishing to build fertilizer plants in Ethiopia, we would be able to supply them with the potash needed to make the fertilizer,” Gilchrist said.
Just in November, 2016 Morocco’s Office Cherifien des Phosphates (OCP) has expressed its interest to set up a fertilizer factory in Ethiopia.