By Jillian Mitchell
Situated in the horn of northeastern Africa is Ethiopia, a country known for its expansive and enticing landscape—a notable 1.13-million square kilometres of towering jacaranda trees, arid desert, tropical oases, and open skies. But what lies beneath this wondrous landscape has rendered the oldest country in Africa a strong economic contender, and fostered an attractive investment climate for large-scale potash mining.
In 2009, Canadian-based Allana Potash Corp. entered into an agreement to acquire a mining exploration project known as the Dallol Project—an area spanning 160 kilometres in what is known as the Danakhil Depression. As Richard Kelertas, senior vice-president of Corporate Development for Allana Potash Corp. explains, it did not take long for word of the project to spread amongst the local population—and the nearby village of 20 grew to approximately 500 by 2012.
“Ethiopia, to give it credit, is one of the most stable, fastest-growing economies in all of Africa. It’s been absolutely an eye-opener, certainly for me,” says Kelertas, who has worked as an analyst in the Canadian capital markets industry for the past 25 years. “There is likely enough potash on our concession, in the sylvinite form, to operate a one-million tonne per year —solution mining operation—for at least 25 to 30 years. ”
In September 2011, Allana engaged Ercosplan to complete a Feasibility Study (FS) for the project using solution mining and solar evaporation. To support the FS, which is expected to be completed by year end, Allana initiated a number of additional studies on the project, such as geotechnical drilling of large diameter cores, pilot evaporation ponds, and solution cavern development. Today, after several years of exploration work, the company is moving forward to planned production by late 2014, early 2015.
With a reverence akin to that of the Ethiopian people, Allana Potash has approached this project with an eco-friendly mining practice (solution mining). As Kelertas states, this process is environmentally responsible and extremely low-cost, as the property contains sufficient underground water resources and the mineral deposits are close to surface.
“Essentially, we have to drill many large diameter holes, put a 1.5-metre diameter pipe down each hole (100 to 300 metres down), pump in water, and pull up the potash salt brine.” As the project is amid an arid, unpopulated dessert, solar evaporation is the low-cost alternative to expensive fossil-fuelled evaporators, says Kelertas.
The senior vice-president was thoroughly impressed with the support the company has received from the Ethiopian government.
“Allana’s relationship with the Ethiopian government is very strong and this has greatly assisted the rapid advancement of the project.”
Ethiopia is a country with mine-friendly laws, and in addition to the strong and promising technical aspects of the project, the Ethiopian government strongly supports mining initiatives in the country. Specifically, as an infrastructure initiative, railway and road construction (to link the Dallol area to the ports of Tadjourah and Doraleh in Djibouti) have been taking place. These improvements in the Danakhil region, shares Kelertas, will greatly enhance the economics of the project.
“In terms of the social benefits, not only will we be paying income tax and royalties to the government, we plan to employ 80 to 85 per cent locals in all aspects of our operations—and the wages that we plan to pay will be substantially more than what the average domestic daily wage is,” says Kelertas. “A whole list of things can improve because of the amount of money flowing into the region—social infrastructure, such as healthcare, education, and sanitation. That should improve the standard of living measurably for the people who are working with us and the communities we serve.”
Allana’s ability to produce one million tons per year has not been the subject of a feasibility study and there is no certainty that the proposed capacity will be economically viable.by