The Israeli company, ICL, are extremely experienced and will provide Allana Potash with expert assistance
ICL, an Israel-based fertiliser producer, has bought a 16pc share in Allana Potash Afar Plc. Allana received a license to start potash production in Afar last October.
The two companies signed the agreement on Tuesday, March 18, 2014, at Elily Hotel, along the Guinea Conakry Street in Kasanchis.
Allana's potash project is in the Danakil area of the Afar Region.
Allana - a subsidiary of the Toronto Stock Exchange listed Allana Potash Corp, which had a five-year exploration process in the Dallol-Potash Project - secured a 20-year license for production on 310,176 sq kms in Dallol, in an agreement signed with the Ministry of Mines (MoM).
The terms of the agreement between the two companies include the provision of technical assistance resources by ICL for the development and operation of the Project. The alliance comprises of an investment of 25 million dollars by ICL in Allana shares.
"Following its initial investment, ICL will hold 16pc of Allana's regular shares and it may go up to 84pc in the future," Nissim Adar, ICL's general manager, who signed the agreement with Nejib Ababiya, senior vice president of Allana, said.
The alliance also includes an agreement in which ICL, the world's sixth-largest potash producer, will purchase and market the output of the mine.
Allana says it will produce about one million tonnes of potash annually within five years.
For ICL, the partnership is in line with its strategy of broadening its sources of raw materials while focusing on what it calls growth-generating emerging Markets, Adar says.
"We believe that these markets will drive significant growth over the coming years," Adar said.
Programs focused on water supply design, solution mining and evaporation pond operations, procedures and output, as well as production transportation logistics and product storage strategy refinements will be launched in Ethiopia by late March.
ICL, which has potash mines in Israel, Spain and Britain, sold over five million tonnes of potash in 2013.
"The Danakil mine will provide potash for Ethiopia and Africa," Adar said.
ICL is confident that the location of the Danakil mine will provide it with fast and easy access to the Indian Ocean. This will enable it to even better serve its customers in India and South East Asia.
ICL, which is controlled by Israel Corp, said developing sources of raw materials worldwide was an important objective.
For Allana, on the other hand, the partnership helps to ensure a robust financial base, which it says is critical.
"Financial base is important in a critical business like mining," Nejib said.
But apart from the financial side, Allana is also placing its hopes on benefitting from ICL's 60-plus years of technical expertise.
ICL supplies over five million tonnes of potash annually from production facilities located in Europe and Canada, primarily from solar evaporation ponds, the company says.
The potash that will be produced by Allana will be the first for Ethiopia, with local and export markets as its target.