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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.

Danakali unique graphic RGB

Large Resource

The Colluli deposit comprises a massive JORC-2012 compliant Ore Reserve estimate of 1,100Mt @ 10.5% K2O for 203Mt of contained SOP equivalent [1], providing a mine life of almost 200 years.

Shallow Mineralisation

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

Colluli is only 75km from the Red Sea coast (87km from a potential port export terminal at Anfile Bay) and 230km from the Port of Massawa, making Colluli the closest SOP deposit to a coastline (see illustration below compared to Australian projects and other projects in the Danakil Depression). The proximity to the coast and established port infrastructure gives Colluli unrivalled access to the global export markets via one of the busiest trade routes in the world.

The alternative product exporting option at Anfile Bay will be subject to further review and has the potential to unlock significant value for Colluli, by enabling the low-cost export of additional volumes resulting from (i) additional modules, and (ii) the expansion of the product suite (including non-potash materials).

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

Colluli has a high degree of expandability and multi-commodity potential.

The modular development approach delivers low upfront development costs and a high degree of expandability, underpinning a scalable, long life project. Module I will be utilised as a platform for growth.

The Project has significant multi-commodity potential presenting major additional value upside. The potassium salt composition in the resource provides the option to diversify the potash product suite as the project grows.

Colluli has unrivalled potash product versatility. Potash products including SOP, MOP, and SOP-M all have the potential to be produced at Colluli.

The production of other agri and salt products including Rock Salt, Kieserite, Gypsum and Magnesium Chloride, is also possible from the Colluli resource. A port development at Anfile Bay could assist in unlocking this potential.

Industry Leading Capital Intensity and Operating Costs

Colluli’s industry leading capital intensity achieved in the DFS further reduced in FEED as a result of lower development capital requirements for Module I and increased annual production rate. For most up-to-date information on the sector, company, jurisdiction and peers, see the latest investor presentation.

If operating in 2016, Danakali would’ve been the lowest cost SOP producer outside of China.


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. CMSC has a Board of 5 being 3 members from DNK and 2 from ENAMCO.

ownership structure

Funding of Colluli

CMSC will seek to fund the initial project development costs with a mixture of third party secured debt (up to 70%) and shareholder contribution. The shareholder contribution is Danakali’s obligation where 50% is contributed as equity in CMSC and 50% through an Interest Free Loan receivable from CMSC. Any shortfall in the 70% third party debt component will be underwritten by Danakali on market terms with repayment and security consistent with third-party debt.

After CMSC’s third-party debt is serviced, 50% of the funds available for distribution will be preferentially repaid to Danakali to settle the Interest Free Loan. This preferential payment to Danakali occurs until such time as the Loan is repaid. The remaining 50% of CMSC’s funds available will be distributed evenly across the JV ownership.

The funding described above is only applicable until construction of the first Module is complete. On commencement of production at Colluli, subsequent shareholder contributions follow JV ownership.


  • Danakali Ltd - Notice of Annual General Meeting

    Monday, 05 July 2021

  • Project Update - High Purity SOP Production using Filtered Seawater reduces Capex and Opex

    Thursday, 17 June 2021