Danakali remains well-placed to become zero-carbon potash producer

Danakali Ltd (ASX:DNK) (LON:DNK) (OTCMKTS:SMBSF) (FRA:SO3) has set itself up for success in 2021 following a period of significant change, as it seeks to become a zero-carbon sulphate of potash (SOP) producer.

SOP is a premium potassium fertiliser required for healthy plant growth, plant metabolism, optimisation of crop yields and quality of produce.

It is a necessary fertiliser for high-value, chloride sensitive crops such as avocados, cocoa, coffee beans, grapes, berries and tree nuts, and helps transform arid and acidic soils.

As recently reported by Proactive, Danakali is evaluating the renewable energy options of solar, wind and geothermal energy as it attempts to convert its Colluli Project in Eritrea to a zero-carbon footprint.

Early assessment work on the solar and wind energy potential of Colluli has been completed and confirmed these renewable energy sources can be incorporated into the future generation of power for the project.

Set up for big 2021

The company’s 2020 financial report reveals Danakali has $9.7 million in cash and commenting on its position, chairman Seamus Cornelius said shareholders could look forward to positive developments in 2021.

“Our initial goal is to create a responsible, environmentally-friendly, zero carbon, premium fertiliser business that clearly links Colluli SOP with the production of nutritious crops, bolsters global food and nutrition security, and improves millions of lives,” he said.

“The Colluli resource comprises three potassium bearing salts in solid form: Sylvinite, Carnallitite and Kainitite.

“These salts are suitable for high yield, low energy production of Sulphate of Potash (SOP), which is a high-quality potash fertiliser carrying a price premium over the more common Muriate of Potash (MOP).

“SOP is chlorine-free and is commonly applied to high-value crops such as fruit, vegetables, nuts, and coffee. Economic resources for primary production of SOP are geologically scarce and there are few current primary producers.”

Key project developments

Danakali made several key developments towards that goal throughout 2020 and into 2021, highlighted by the Eritrean Ministry of Energy & Mines accepting the Notice of Commencement of Mine Development for Colluli.

The company also released its first-ever sustainability report, which outlined Danakali’s ongoing and planned contributions of its Colluli Potash Project to sustainable development in Eritrea.

As reported by Proactive, Danakali will now work with preferred power provider, Aggreko PLC (LSE:AGK) (OTCMKTS:ARGKF) (FRA:4A4B) to provide full scope of support services for the supply, commissioning, and maintenance of the power plant for the project, then transfer to Colluli, under a five-year contract.

The use of beach wells as the water intake alternative was confirmed as a valid optimisation, with final test work underway to confirm details of the filtered seawater optimisation for the process plant.

Earlier this year the company also undertook a successful restructure, which saw the CEO role made redundant, Cornelius step into the chairman role and board fees slashed by a third.

Dr Rod McEachern, a former director for Process and Product Innovation at Nutrien and PotashCorp, was appointed a chief operating officer while three new directors were appointed to the board.

- Daniel Paproth

Story by ProactiveInvestors