JERUSALEM,Feb. 13 (Xinhua) — Israel Chemicals (ICL), the world’s sixth largest potash producer, announced Thursday it will partner with Allana Potash of Canada to develop a potash mine in Ethiopia.
The so-called Danakhil potash project is located in the Dallol region of Ethiopia’s northeast Afar province.
“The Danakhil mine will provide potash for Ethiopia and Africa, and, combined with ICL’s agronomic fertilization know-how, will enable local farmers to increase agricultural output and food for the region,” said Stefan Borgas, president and CEO of ICL.
A feasibility study had indicated that the mine will produce approximately 1 million tons of potash annually within a period of five years.
The strategic alliance comprises a 23 million U.S. dollar investment by Israel Chemicals in units of Allana shares and warrants. Following the completion of the investment, ICL will hold about 16 percent of Allana’s regular shares. Proceeds of the investment will be used by Allana to develop and advance the Danakhil mine project.
Under the deal, ICL will purchase and market the output of the Danakhil mine.
ICL said that broadening its sources of raw materials is an important strategic objective, especially in light of its “need to ensure additional alternatives when the time comes to extend the franchise to produce potash from the Dead Sea, which expires in 2030.” It also cited “uncertainty regarding the business and regulatory environment in Israel” as a main drive for the expansion to Africa.
Currently, ICL operates mines in Israel, Spain and Britain. In 2013, it sold over 5 million tons of potash worldwide.