The Colluli potash project is a low-cost, long-life sulphate of potash (SOP) project under development in Eritrea, Eastern Africa. The open-cut, high-grade potash project is being developed by Colluli Mining Share Company (CMSC), a 50:50 joint venture partnership between Australia’s Danakali and Eritrean National Mining Corporation (ENAMCO).
A pre-feasibility study for the project was completed in February 2015 followed by the completion of a definitive feasibility study (DFS) in November 2015, while the mining license was granted in February 2017.
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The front-end engineering and design (FEED) study for the project was completed in January 2018. Although the total productive life is estimated to be approximately 200 years, the current plan calls for the development of the mine in two stages to support an initial operational life of 60 years.
Phase one, involving an estimated capital investment of £220m ($298m), is expected to produce 472,000 tonnes per annum (tpa) of high-quality SOP, while in phase two, the mine is expected to produce up to 944,000tpa of SOP from year six of the project with an additional capital investment of £148m ($202m).
The construction works for the Colluli potash mine are expected to be started in 2021 with the start of production expected in 2022.
Location, geology, and mineralisation
The Colluli potash project is located in the Danakil Depression region of Eritrea, in East Africa, approximately 75km away from the Red Sea coast and approximately 177km southeast of capital Asmara.
The Danakil Depression that commences in Eritrea and extends up to 300km into Ethiopia, is believed to contain more than six billion tonnes of potassium bearing salts.
The Colluli potash deposit is considered to be one of the world’s shallowest evaporite mineralisation with potash resources found just 16m below the surface.
The deposit contains mainly three types of potassium bearing salts including sylvinite, carnallitite, and kainitite.
Apart from SOP, the salt composition at the deposit also allows for the production of other potash products including sulphate of potash-magnesia (SOP-M) and muriate of potash (MOP).
Colluli potash reserves
The Colluli potash mine is estimated to hold 1.1 billion tonnes of SOP ore reserves grading 10.5% potassium oxide (K2O).
The total measured, indicated, and inferred SOP mineral resources at the deposit are estimated to be 1.29 billion tonnes grading 11% K2O.
Mining and ore processing
Colluli will be a simple open-cut mining operation utilising truck and shovel methods complemented by continuous surface miners.
The extracted ore will be sent to a nearby processing plant where it will undergo crushing, flotation, mixing, and drying for the production of the final SOP product.
The saleable SOP product will be trucked via road for sipping to the Massawa port which is located approximately 230km north-west of the project site.
Infrastructure facilities
The Colluli potash project also involves evaporation ponds, a run-of-mine (ROM) pad, a sewage treatment plant, fuel storage tanks, accommodation camp, workshops, warehouses, and a main administrative building.
The water supply for the project is proposed to be met through a pipeline connecting a water desalination plant located at Anfile Bay on the Red Sea coast.
The project also involves the construction of a heavy fuel oil-based power plant on-site to meet the electricity requirement.
Off-take agreement
EuroChem will purchase the entire SOP output of the Colluli phase one potash project under a 10-year binding off-take agreement signed in June 2018.
Financing of the Colluli potash project
Colluli Mining Share Company secured £165m ($200m) of senior debt finance from the Africa Finance Corporation (AFC) and the African Export-Import Bank (Afreximbank) in August 2019.
AFC also agreed for an additional £39m ($50m) of strategic equity investment in Danakali in December 2019.
Contractors involved
Earth Moving Worldwide (EMW) was selected to provide mining services for the Colluli potash project in December 2019.
DRA Global was selected as the engineering, procurement, construction and management (EPCM) contractor for the project in September 2018.
Flour was awarded the FEED contract for the Colluli potash project in January 2017.
