‘s () () () (FRA: SO3) The Colluli Sulphate of Potash (SOP) project in Eritrea is expected to be a global game changer with the potential to become the world’s leading producer of zero carbon SOPs.

The company, which has one of the largest reserves of high-salt solid SOPs in the world with 1.1 billion tonnes or 200 years of mine life, is fully licensed.

Colluli is the only ideal resource in the world for the production of SOPs that can be extracted in solid form.

It also has access to solar, wind and one of the world’s largest geothermal energy systems – the East African Rift.

Colluli Mining Share Company (CMSC) is a 50/50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO).

Strong zero carbon potential

Colluli may disrupt incumbents in the market, with the ability to move all carbon-intensive Mannheim SOP production around the world.

The company plans to switch to renewables because it has options to access solar, wind and geothermal power.

The Danakil Basin has predictable sunshine, the African rift system is well endowed with geothermal energy potential, and there are predictable wind resources.

In May 2021, the company demonstrated economic, construction, operational and environmental optimizations in the Intake Water Treatment Area (WITA) using filtered seawater in extensive testing as part of the process. of pre-development of the SOP.

It will now rely on a combination of a beach water intake, a smaller pumping station, and greater renewable energy to pump filtered seawater to the SOP treatment plant in the Colluli mining site.

Lower costs and higher volumes

It has lower open pit costs and higher volumes than underground mining, making it one of the cheapest SOP producers in the world.

With a depth of 16 meters, its capital expenditure, including working capital, amounts to 320 million US dollars, with a production target of around 1 million tonnes per year.

The first two phases of strategic growth will produce 944,000 tonnes per year (tpa).

It also has robust returns with a net present value (NPV) of $ 439 million and an internal rate of return of 31%.

The company has secured US $ 221 million in senior debt and equity project financing.

Market potential

The SOP is currently under-implemented in areas that expect the highest population growth rate, the majority of which are close to Colluli.

It is close to established SOP markets in Europe, the Middle East, Southeast Asia and developing markets in Africa.

Demand is driven by the rapid growth of the middle class in developing countries, changing food preferences and global population growth.

It has a 10-year take-or-pay levy agreement with EuroChem for up to 100% of its production.

SOP supply and demand dynamics support a robust pricing environment, providing attractive margins for low-cost primary producers like Danakali.

As of 2014, the average price premium of SOP over muriate of potash (MOP) is $ 221 per tonne.

Transport links

In addition, no other SOP project is located closer to the port infrastructure with the port capacity of Massawa.

The future development of the port of Anfile Bay, approximately 87 kilometers from the site, will create “an unparalleled global port advantage”.

Multi-product potential

Colluli can easily grow into a high-end multi-product fertilizer producer.

Once Anfile Bay is developed, a number of its products will be available for commercialization, the company said.

Impact of COVID-19

The company said no major impact on its operating costs was expected due to the COVID-19 pandemic.

Access to the Colluli site is secure and the company can bring people into the country with the one-week quarantine period.

It is ready to operate, its integration into renewable energies being studied by.

Its reverse osmosis plant is nearing completion and final geotechnical studies are required.