Allana Potash focuses on Ethiopia to meet changing demands
Analysts and investors, including heavyweights Warren Buffet and KKR, are projecting that agriculture will be one of the biggest investment areas over the next five to 10 years in the continent."
As a mining-friendly jurisdiction, Ethiopia has been investing billions on its transportation and distribution infrastructure. "Road, rail and port facilities are all being built for us," says Abasov. "Plus we have all the water supply we need for sustained production."
The African market will become a thriving market for potash as the continent's food requirements expand. According to the United Nations, Africa will make up 25% of the world's population by 2050, versus 15% today, and urban dwellers will quadruple during the same period. At the same time, increased demand on available arable land will drive a need for increased crop productivity and yield, which relies on sustainable potash production for fertilizer applications. Ethiopia's Agricultural Transformation Agency reports that 100,000 to 400,000 tonnes of potash will be consumed by Ethiopia, Kenya and other East African nations over the next five years.
"Ultimately Allana's success will hinge on three principles," Abasov says. "First the shallow nature of the deposit and the hot climate offer a significant advantage in terms of cost structure. Second, we are able to attract project financing from large global financial institutions with mandates to spur economic development in emerging nations. In terms of general development, over $3-billion of foreign direct investment has been made in the agriculture sector in Ethiopia alone. Third, the Ethiopian government is extremely supportive. In fact, we are one of only a few projects that are fully permitted. In addition, the federal government is taking on many of the construction expenditures relating to infrastructure building that will help ensure the long term success of our project."
Once production is in full force, Abasov estimates that 30% to 40% of output will be slated for the African market.
"To succeed, we have to make sure we are one of the lowest cost producers on the planet," Kelertas says. "And we will likely be once we're up and running at full capacity."
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