New low-cost potash mining in Africa
"We believe that together with Ethiopia, one of the world's fastest growing economies, Allana Potash can foster growth in potash consumption in East Africa over the next several years and the Ethiopian government is fully supportive of our project. They are also fully behind of our strategic partnership with Israel Chemicals Ltd (ICL)."
"The Danakhil mine will provide potash for Ethiopia and Africa, and combined with ICL's agronomic fertilization know-how, our alliance will enable local farmers to increase agricultural output and food security for the region," continued Farhad Abasov.
A feasibility study (FS) has indicated that Allana's mine will have the potential to produce approximately one million tonnes of potash annually over 25 years commencing in a few years. The potash resource is large enough to significantly extend the life of the mine.
Allana plans a solution mining method and the use of the 45-degree Celsius sun-baked grounds of the Danakhil Depression for its solar evaporation process. This mining and processing method will be considerably less costly than the open pit or deep shaft mining done by its competitors. Allana's FS has pegged its capital expenditure for the Danakhil project at about $642 million. Comparatively, capital expenditures necessary to build a solution mine in other parts of the world are estimated to cost billions of dollars.
The Allana-ICL alliance is very unique in the sector and includes a full off-take agreement. ICL will purchase and market the output of the Danakhil mine with a take-or-pay contract for 80 percent of the mine's output every year it is in production.
Currently, ICL operates mines in Israel, Spain and Britain. In 2013, ICL sold over 5 million tonnes of potash worldwide.
Across Africa today, from Mozambique where an estimated 300,000 face famine to the pastoral lands of Sahel and the Horn of Africa where severe food shortages have left millions without basic nutrition, the continent is facing hunger pains almost everywhere you look. Once endowed with the planet's most arable lands, a combination of conflict, outdated farming and irrigation techniques, erosion, degradation of soil quality resulting in low yields and trade barriers has many African nations facing significant food security challenges now and in the future.
To initiate change, The United Nations has declared 2014 as the International Year of Family Farming while the African Union affirmed this year for Agriculture and Food Security. The Director-General of the Food and Agriculture Organization (FAO) of the United Nations Jose Graziano da Silva said Africa has the economic, natural and human resources it needs to promote food security and sustainability in the continent.
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