AAMEG Africa Awards 2020: Emerging ESG Leader Nominee – Danakali

By AAMEG | 5 November 2020


Company Description

Danakali Limited is a company focused on the development of the Colluli Potash Project, which is located in the Danakil Depression region of Eritrea, East Africa and is 100% owned by the Colluli Mining Share Company (CMSC). CMSC is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Corporation (ENAMCO).

Sulphate of Potash (SOP) is a highly valued, chloride free, premium potash fertiliser containing both potassium and sulphur, which are essential crop nutrients. Colluli is a 200-year project which will produce SOP at low capital and operating costs. Based in Eritrea, Colluli has the potential to make a significant social impact on Eritrea and the surrounding region. Colluli is located in the Danakil Depression region of Eritrea and is approximately 230km by road south-east of the port of Massawa, which is Eritrea’s key import/export facility. The Danakil Depression contains significant volumes of potash bearing salts and commences in Eritrea and extends south across the border into Ethiopia.

Located approximately 75km from the Red Sea coast, Colluli has unrivalled logistics advantages. The project is the shallowest known evaporite mineralisation globally and consequently has significant mining, logistics and, in turn, capital and operating cost benefits over other potash projects. The resource will be developed via open-cut mining: a proven, high productivity method which provides higher resource recoveries relative to other methods and is generally safer. The Project carries a significantly lower level of complexity due to predictable processing plant feed grades and production rates coupled with simple, commercially proven mineral processing technology.

The Colluli resource comprises the right combination of potassium bearing salts in solid form to deliver high yield, low energy production of Sulphate of Potash (SOP). SOP is suitable for application to fruits, vegetables, coffee plants and other chloride intolerant crops and is set to underpin the change in dietary behaviours as the world develops. Colluli has an unrivalled potential to transform Africa’s agriculture and food security.

The team is on track with development, planning to enter production in 2022, and with future cash flows for Module I production already secured through an offtake agreement with one of the largest fertiliser producers EuroChem.

Approach to environmental, social and governance (ESG) matters

As a company, we have selected to frame our business strategy in alignment with the UN SDGs, the IFC Standards for Environmental and Social Performance, Equator Principles, World Bank Group Environment, Health and Safety Guidelines and other evolving national and international best practices. Our company is governed by our Sustainable Development Framework (SDF) which outlines our goals and objectives for our various streams of the business. Our core values detailed in our inaugural Sustainability report include people, planet, performance, integrity and simplicity.

This report underpins our commitment to best practice and transparent reporting on ESG and demonstrates Colluli’s potential to positively impact Eritrea’s ability to meet its United Nations Sustainable Development Goals (UN SDGs).

Our comprehensive reporting has been praised by leading professionals who have review the Colluli Project, such as Ibrahim Sagna, Global Head & Director of the Advisory & Capital Markets at at Afreximbank, who has noted how Danakali’s approach to ESG is heavily documented, something which he said makes the project one to watch closely as it “is really taking the requirement of SDG to a whole new level”. Our clear and detailed reporting shows our commitment to ESG matters as it demonstrates the guiding principles that define our internal conduct and ensure our relationships with the external operating environment will not be compromised.

When we were preparing this report, we had a number of key objectives, including showing how we engage with our stakeholders in Eritrea and what impact we have on the local community. As such, our report illustrates the positive impact the Colluli Project has on national, regional and local communities over the long term through infrastructure, job creation, and broad economic benefits. Colluli will contribute to the Eritrean economy in a substantial way and have a positive impact on the Sustainable Development Agenda of Eritrea. These were the concluding findings of a recent UNDP report on the potential contributions of Colluli to Eritrea’s Sustainable Development Goals, The Report was independently undertaken during 2018 by senior economists on behalf of the UNDP.  It assesses a wide range of econometric data and includes findings from engagements with Eritrean government officials, relevant public institutions and other Colluli stakeholders. The report shows that Colluli is more than just a great asset but also has the potential to support Eritrea’s economy – contributing 3% of Eritrea’s GDP, contribute towards 13 of the UN sustainable development goals, increase agricultural productivity and support 10,000 direct/indirect local jobs by 2021 across different sectors. As such, one can see that not only do we stand out for our commitment to reporting on ESG, but senior economists and leading officials have confirmed that the Project will have transformational impact, guided by a sustainable business strategy and framework.

Example of a Company initiative in Africa that aligns with one or more aspects of an ESG topic

Given we are planning to enter production in 2022, this section is not applicable given the stage of our project.

Other useful supporting information

Potash demand potential looks potent / Talk with Humphrey Knight, CRU / Oct 2020

Danakali outlines huge potash potential on its Africa doorstep / Sep 2020

Danakali Talks on global food systems and nutrition security with the Food Professor Dr Sylvain Charlebois / Sep 2020

‘Peerless’: Danakali is building the best SOP project in the world / Aug 2020

Investor webinar. Danakali eyes finish line for Eritrea potash project / Aug 2020

These premium-grade potash plays are forging ahead as demand remains strong / Aug 2020

Danakali Talks on the role of potash in stable and sustainable food chains with Newcastle University / Aug 2020

DNK’s African ‘Colluli’ potash project has world-beater potential / Aug 2020

Investor webinar. Framework for Sustainability excellence / Jul 2020

Danakali Talks on soil fertility in Africa with African Plant Nutrition Institute / Jun 2020

Investor webinar. Colluli SOP Project ready for take-off / Jun 2020