allAfrica.com: Ethiopia: Indian Company to Develop Potash Mine (Page 1 of 1)

Mr. Parson, an American geologist who explored the Afar Region between 1967-1969, discovered a huge amount of potash mineral in the Dallol Depression, northern part of the Afar Regional State. The Dallol Depression, the shallowest and hotest place in the world, is 100 meters below sea level.

Potash mineral is used as fertilizer. The potash deposit found in the Dallol Depression in Musely and Crescent localities near the Ethio-Eritrean border is estimated at 160 million metric tonnes. But the proven reserve is 130 million metric tonnes. Though the potash deposit was discovered 37 years ago, it has not been utilized.

Sainik Coal Mining Pvt. Ltd., an India Company, and the Ethiopian Ministry of Mines and Energy (MME) on Monday signed an agreement that enables the company to mine the potash deposit on a large-scale. The agreement was signed by the Minister of Mines and Energy, Alemayehu Tegenu and Mr. Nitin Wagh, director of Sainik at the Sheraton Addis.

The mining license grants Sainik an exclusive right for a large scale potash mining within the license area, 10 sq. km for twenty years. The company has also acquired exploration rights for potash and other saline minerals, such as magnesium and calcium. Sainik plans to obtain the minerals by applying solution mining. The company anticipates producing one million metric tonnes of potash per year. According to the agreement, the company will produce 20.85 million metric tonnes of potash in the coming twenty years. Sainik has allocated USD 451,164,784 for the potash mining. The mining project is believed to create job opportunities for 576 citizens. The company mainly plans to process and market the refined product to the international market. The company is already into talks with large potash consumers for long-term supply agreements.

Sainik member of the New Delhi based Sainik group was established 15 years ago. It is engaged in coal mining in India. First, the company came to Ethiopia some years back to look into coal mining opportunities. After assessing the coal deposit in western Ethiopia, the company came to know that the coal deposit was not viable for large-scale production. "We gave up on the coal mine and decided to venture into the potash mine," Wagh said. Sainik has committed itself to start production after 30 months. The deposit can be utilized in the coming 40 years.

"We would apply a lot of water into the potash ore. Then the solution would be exposed to heat. The water would evaporate and the mineral can be mined," Wagh said. The company plans to transport the mineral from Dallol to Djibouti by road. Officials of MME told Sainik that a road will be constructed from Dallol to Afdera (150 Km). This week Sainikss delegation comprising seven experts left for Dallol. The experts would camp there and will conduct surveys.

"The group will confirm the mining area. They would check the coordinates and they would collect samples for chemical analysis," Wagh said. The group will prepare pre-feasibility studies to be submitted to the MME by next month. "Then we will know the amount of investment and the kind of machineries we need. The nearest port to the potash mine is Assab. But at the moment it is impossible to use this port," Wagh added.

A Norwegion company Norex Skydro previously planned to develop the potash mine in the late 1990s. The company had signed mineral development agreement with the MME. However, the company suspended the project because of the Ethio-Eritrea conflict that flared up in May 1998. The company was reluctant to resume the operation even after the end of the two-year bloody war. And MME revoked the mining license it granted Norex.

The Ethiopian government says it has created a favorable environment that permits and fosters the private capital participation in mineral development. "This has been materialized by the issuance of stable and efficient administrative, legislative and regulatory frameworks that would attract private investment," says Minister Alemayehu. "As a result, so far we have granted 79 licenses which have been issued to 55 companies. We hope to engage more investors in the near future," he added. "The agreement we signed with Sainik Coal Mining Company for the production of potash is the outcome of this concerted effort. It is known that Ethiopia and India have longstanding relations and this agreement will further strengthen our relations more than ever. Currently, the involvement of Indian investors is progressively increasing. We have them in different sectors of the economy being involved in various development projects. The recent cooperation on electricity financing and development is the manifestation of this strong tie," Alemayehu said.

Apart from highly skilled expatriates the company agreed to employ qualified Ethiopian nationals for various jobs in the project. The project is believed to bring in huge investment to Ethiopia and to boost the economy. Sainik will present a bankable feasibility study to the MME in nine month's time. It is expected to launch a pilot project after 23 months.

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