Danakali sells stake in flagship Colluli potash project in Eritrea To Chinese buyer

Australia’s Danakali (ASX: DNK) has completed the sale of its 50% stake in the Colluli potash project in Eritrea, 13 years after partnering with the Eritrean National Mining Corp. (ENAMCO) to build the mine.

The buyers, Chinese company Sichuan Road and Bridge Group, have paid a first instalment of US$105 million. A second tranche payment of US$16 million is expected within the next six months, Danakali said.

The Colluli potash project is considered one of the world’s most significant and lowest-cost sources of sulphate of potash (SOP), a premium grade fertilizer.

The project has the world’s largest JORC-compliant reserve at 1.1 billion tonnes. It also contains other fertilizer products, such as muriate of potash (MOP) and gypsum, along with rock salt.

There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required.

A United Nations report published in 2019 suggested that Colluli could significantly boost the economy of Eritrea.

The project is the only known source of potash that allows extraction of the fertilizer in solid form. It also has access to solar, wind and geothermal energy systems – the East African rift. 

The operating environment weighed heavily on Danakali’s decision, as Eritrea is ruled by one of the world’s most oppressive regimes and was until 2018 on the UN’s sanctions list.