Circum minerals Ltd has discovered vast quantities of potash for making fertiliser at Danakil basin in the Afar region of northeastern Ethiopia.
The privately-owned firm has already identified several Asian institutions interested in getting involved in developing the highly valued potash deposit located about 600 kilometres from Addis Ababa.
The company through its subsidiary Circum Minerals Potash Ltd holds 100 per cent stake of an exploration license covering 365 square kilometres of Danakil project about 85km from the Red Sea on the coast of Eritrea.
Potash is an ingredient in manufacturing potassium fertilisers. Canada is the largest producer of potash with Saskatchewan region producing 90 per cent of the country’s output and about 50 per cent of the world’s supply.
“Given its location on the doorstep of Asian markets, this discovery has the potential to change the dynamics of the industry and become a future source of potash,” said Circum’s chairman Stephen Dattels.
The firm acquired rights to the potash deposits in 2013 and has been privately financed through among others issuance of shares raising $50 million to date. African Minerals Exploration & Development Fund II SICAR, a private equity group focusing on natural resources, owns part of Circum.
Potash occurs from depths of 85 metres below surface meaning the Danakil project will have low capital expenditure and low operating costs. Preliminary estimates for the initial project are between $750 to $900 per ton of annual production.
The primary exit of potash from Ethiopia will be Tadjoura port in Djibouti, which will have the lowest transportation cost of any major potash supplier to the Indian, Malaysian, Indonesian, Thailand and South China markets.
Djibouti’s state-owned port authority is set to hold discussions for Circum to be allocated storage facilities at the brand new bulk terminal expected to be complete in the first quarter of 2016.
Circum is process of completing a private placing of about $30 million through Smith & Williamson Corporate Finance Ltd of Britain to fund optimising phase of one of definitive feasibility study (DFS).