Colluli - Positively Unique
The Danakil region of East Africa is an emerging potash province of significance. Over 6 billion tonnes of potassium bearing salts have been identified to date, and the region has attracted a number of major fertiliser players including ICL and Yara International.
Unlike the current major potash producing basins of the world, the Danakil region contains a variety of potassium bearing salts, providing the opportunity to generate a range of potash fertilisers. The Danakil basin contains the only potash resource in the world that allows such product diversity.
A number of attributes combine to make Colluli an outstanding opportunity. These differentiating factors, shown below, position Colluli as probably the most attractive SOP and potash development project in the world.
Large Resource Suitable for Potash Fertiliser Production
The Colluli resource contains bearing salts including sylvinite (sylvite plus halite), carnallitite (carnallite plus halite) and kainitite (kainite plus halite). The JORC-2012 compliant mineral resource estimate for Colluli stands at 1.289Bt @ 11% K2O for 260Mt of contained SOP. The JORC-2012 compliant ore reserve estimate for Colluli stands at 1.113Bt @ 10% K2O for 216Mt of contained SOP. The resource remains open to the south east of Area A and the north east of Area B. The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves.
With mineralisation commencing at just 16m, the Colluli resource is the shallowest known evaporite deposit globally, and is amenable to open cut mining. Open cut mining is a proven mining method for salts, is a safer mining method than underground mining, and gives better overall resource recovery. The alternate methods for mining potash are underground mining and solution mining. Most underground potash mining utilises the “room and pillar” method, which requires over 50% of the resource to be left in the ground for roof support. Solution mining also sterilizes large portions of the resource for cavern support, with losses further exacerbated by high levels of geological discontinuity of the resource and narrow seams.
The overall conversion of Mineral Resource estimate to Ore Reserve for different mining methods is shown in the figure below.
Figure: Conversion of Mineral Resource to Ore Reserve with different mining methods
- 1. Underground mining methods and applications, company reports
- 2. Danakali Mineral Reserve, Allana Potash , IC Ochoa
In addition to safety and resource recovery benefits, open cut mining utilising surface miners results in a high level of selectivity which is essential for the multi salt composition of the Danakil resource. Highly selective mining ensures that processing operations are not disrupted by chemical and solubility variations arising from the different salt types. Surface mining allows controlled extraction, stockpiling and processing of the different salts and avoids the brine chemistry complexities of solution mining. The figure below represents how the Colluli Resource could potentially be mined.
Figure : Simple representation of mining method of the Colluli Resource
The growth increment of open cut mines is not determined by underground workings or hoist shaft capacity which are key drivers of underground mining capacity additions. The open cut mining method allows moderate, less capital intensive growth.
Close Proximity to Coast
Only 75km separates the Colluli site from the Red Sea coast line making it one of the most accessible potash deposits in the world. The Port of Massawa is located 180km away and is connected to the Colluli site via the coastal road. The proximity to coast gives the project access to the global export market via one of the busiest trade routes in the world.
Figure: Distance of Colluli to coast and comparative distance to coast for key SOP areas
- 1. Company announcements: Allana Potash, Circum
- 2. Danakali Analysis
Favourable Combination of Salts for Production of SOP
The Colluli resource contains kainite, sylvite and carnallite ores. Sylvite and carnallite both produce potassium chloride, which is then combined with kainite to form high purity potassium sulphate.
Kainite is the most important salt globally for the primary production of potassium sulphate. Kainite is typically precipitated from potassium rich brines, and then processed to generate potassium sulphate.
In the decomposition of kainite, excess sulphate is generated which, through the addition of potassium chloride, substantially increases the product yield via a highly thermodynamically and kinetically favourable process. The combination of potassium chloride and kainite is the lowest energy input, highest yield conversion route to product potassium sulphate.
Figure : Simplified process flow for the production of SOP from the Colluli Resource
Combining kainite with potassium chloride is commercially proven and primarily utilised by operations producing SOP from potassium rich brines. Brine producers that cannot generate potassium chloride from the resource, typically purchase potassium chloride from the market to combine with kainite
Salts Extracted in Solid Form
Extraction of the salts in solid form, using open cut mining methods, is a key positive differentiator of Colluli. All primary production of potassium sulphate from kainite throughout the world commence with low potassium content brines which require substantial solar evaporation to generate a harvest salt for subsequent processing. In some cases, depending on the ambient conditions, this process can take over two years. Salts in solid form allow immediate processing, and substantially reduces the size of the solar ponds required for evaporation.
One of the most important benefits of having the salts in solid form is the immediate generation of final product, hence revenue, relative to solution mining or brine operations which have substantial lead times associated with the generation of harvest salts for subsequent processing. In contrast, brine operations have a substantial lead time between the time of the capital investment and the time to generate product and revenue.
Unrivaled Ability to Diversify Potash Types
The diversity of potassium bearing salts in the Danakil region allows the production of a variety of potash types including potassium sulphate (SOP), potassium magnesium sulphate (SOP-M), gypsum and potassium chloride (MOP). No other potash resource in the world allows such diversification.
Table : Potential of the Colluli Resource against potash types
High Purity Product
Pilot test studies completed on the Colluli salts with the Colluli process design demonstrate that Colluli will be at the top of the quality spectrum. Typical sulphate of potash contains approximately 94% potassium sulphate, in contrast, the Colluli process is expected to generate product with purity of 98%. Standard, granular and soluble products can be generated for distribution to the market. Pilot tests from the Colluli salts have generated product samples for marketing purposes which are now being distributed to prospective customers.
- 1. Company websites
- 2. DNK: Colluli Salt Plant Samples
Logistically Superior to Key Markets of the Future
Colluli is geographically advantaged relative to the key potash markets of the future. Demand for fertiliser is driven by population growth which directly translates to food demand. Almost 95% of the population growth over the next three decades will occur in Africa, India and South East Asia. The relative location of the Colluli resource to these key markets gives it a significant logistics advantage and unrivalled access to the potash markets of the future.
Substantial Project Upside
In addition to the potassium bearing salts, Colluli contains appreciable amounts of rock salt, magnesium chloride and gypsum. All of these products have established global markets. The rocksalt, magnesium chloride and portions of gypsum must be mined to access the potassium bearing salts, resulting in low production costs for these materials.
Resource definition has determined a +300 million tonne JORC 2012 compliant rock salt Mineral Resource with grades suitable for de-icing and other applications.
Rock salt must be extracted and is currently considered waste material in the DFS mine plan and project economics creating upside potential for commercialisation. Discussions continue with potential offtakers for the rock salt.
Lowest Estimated Capital Intensity and Operating Costs
Colluli is one of only two advanced potash projects in the world with development capital costs less than US$450m, and at only US$298m Colluli demonstrates industry leading capital intensity which enhances both the Project’s returns and fundability. This is achieved as a consequence of the reduced evaporation pond footprint, hence substantially smaller surface foot print. Operating costs are also substantially lowered as a result of efficient infrastructure use facilitated by salt extraction in solid form and low energy input conversion to SOP. There are clear economies of scale as the project transitions from Phase I to Phase II, which convincingly place Colluli at the bottom of the cost curve.