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Colluli Mining Share Company signs deal for Eritrean potash project

Colluli Mining Share Company (CMSC) has signed a mining agreement with the Eritrean Ministry of Energy and Mines for a potash project in the West African country’s Danakil region.

CMSC is a 50:50 joint venture between Danakali Limited and the Eritrean National Mining Corporation (ENAMCO). It owns 100% of the Colluli Potash Project.

Danakali managing director Paul Donaldson said: "This is a very significant milestone for both Danakali and the Colluli Mining Share Company.

"It represents the combined contribution of many key team members and stakeholders, including the Eritrean Ministry of Energy and Mines, our joint venture partners, ENAMCO, the Danakali study team and supporting consultants, the CMSC team, and the Eritrean Ministry of Land, Water and Environment."

This contract offers CMSC exclusive exploitation rights of all mineral resources within the agreement area.

The firm has also gained the exclusive right for one or more mining licences within the agreement area. The company has also acquired exclusive right of land use within the agreement area over the resource life.

This agreement area covers around 100km² and comprises the entire Colluli resource, which includes a JORC-2012 mineral resource estimate of 1.3 billion tonnes of potassium bearing salts. In addition, it also possesses an ore reserve estimate of more than 1.1 billion tonnes, a rock salt mineral resource estimate in excess of 300 million tonnes and a kieserite (magnesium sulphate) mineral resource estimate exceeding 80 million tonnes.

The agreement will enable the company to now submit an application for mining licences, each covering up to a maximum of 10km².

Once conditions of the mining licences are met, the agreement is applicable to the development phase, operational phase, and reclamation and closure phases of the project.

CMSC will then be able to undertake exploration, feasibility work, development, operation, and reclamation and closure concurrently within the license area. 

This agreement also enables CMSC to construct all industrial, administrative, residential, medical and other buildings and facilities necessary for mining operations. In addition, the company is entitled to gain access to roads, bridges, airfields, port facilities and other transportation facilities, power and fuel.

The firm signed the agreement following completion and submission of the definitive feasibility study (DFS) for production of sulphate of potash (SOP) fertiliser. A comprehensive social and environmental impact assessment and associated management plans were also performed, as well as a series of pre-and post DFS engagements with local and regional communities and stakeholders.

The Eritrean Ministry of Land, Water and Environment granted approval for the social and environmental impact assessment in December 2016 after a series of engagements with the project team in Asmara, and a visit to site by the delegated Impact Review Committee.