Danakali pursuing benchmark-setting sustainable framework at Colluli project

30th July 2020 By: Tasneem Bulbulia - Senior Contributing Editor Online

Dual-listed Danakali is taking a proactive approach to its Colluli sulphate of potash (SoP) project, in Eritrea, with the aim to "get ahead" before construction and ensure the project makes a positive contribution − environmentally and socially − to the country and region.

Danakali CEO Niels Wage said during a July 30 webinar that Colluli represents a great opportunity for the company, Eritrea and Africa, as the project is one of the most advanced SoP projects globally, with a commercially proven production process, high-value product and significant diversification potential.

The company plans to develop a world-class project and is sourcing consulting and expertise in terms of environmental and social management, as well as human rights compliance from the onset, to put together a programme for executing the project.

Wage indicated that the company aimed to make a meaningful contribution to the country and region, and further to that, wanted to set a benchmark for how a mining project should be undertaken in Africa.

Danakali’s vision is therefore to bring the project into production by adopting principles of risk management and resource utilisation; ensure positive impacts for the environment, employees, the industry, and surrounding communities; and create long-term value and relationships with partners and suppliers.

“It is important to us that the things we do are centred around the people where we work, the planet and simplicity,” noted Wage.

All Eritrean mines require a joint venture structure with the Eritrean National Mining Company (Enamco). Danakali and Enamco each own 50% of the Colluli Mining Share Company (CMSC) and CMSC owns 100% of the project.

The project is close to construction.

Wage indicated that the project boasts the potential for premium fertiliser, is very close to the sea and infrastructure and, as a shallow deposit, presents an economically viable project to bring final product.

He added that it is a one-billion-tonne project, with potential for almost 200 years of mining rights, which "is unheard of in the industry".

“The project has great potential, with a lot of scalability, and we are really excited about it,” Wage enthused.

Moreover, he noted that the company is at an advanced stage in terms of securing financing for the project. Danakali already has commitments in terms of senior debts and equity from two African banks.

The shallowness of the deposit makes it low cost, simple and efficient in terms of mining, he noted.

Danakali already secured a binding offtake agreement with Eurochem, which Wage indicated gives the company security for cash flow, as well as a great opportunity to use Eurochem’s network around the world. 

The mine boasts the potential for premium product SoP, a form of potash with no chloride, which Wage noted was a high-value fertiliser for crops globally, making it an attractive product to mine and produce.

Wage emphasised that sustainability was important for all companies, but even more so for mining firms, given the considerable impact they can have on people’s lives.

“it is important to realise the impact we can have and manage it in the best way for all stakeholders.”

Danakali therefore aims to develop this project in a way that ensures that both the negative and positive impacts are addressed and managed in the best way possible.

In this regard, Wage noted that the company was using the United Nations’ Sustainable Development Goals (SGD) as a framework to develop its own sustainability framework programme for the project.

He cited a UN report from early 2019, which looked at the impact of the project on the country and the region, and how much it could actually help in achieving the SDGs for Eritrea. Wage enthused that the company was pleased that this independent report found that the project could contribute toward meeting 13 of the  17 SDGs in the country.

Moreover, to mitigate the impact on the environment and communities, Danakali is looking at the International Finance Corporation principle of performing standards and adopting these into the framework it is developing.

This framework aims to have an effective system in place that always adheres to the latest environmental regulations, indicated Wage.

Moreover, it targets zero harm on both people and the environment.