Allana Potash May Begin Extracting Mineral From Ethiopian Deposit in 2013

Allana Potash Corp., a Canadian explorer for the fertilizer ingredient, may begin extracting the mineral from Ethiopia’s northeastern Afar region in 2013, said Vice President Nejib Abba Biya.

The company, based in Toronto, has been exploring the Dallol Depression in Ethiopia and had “very, very encouraging” results, Nejib said in a mobile-phone interview today from Addis Ababa, the capital. Allana expects to extract 1 billion metric tons from its 150 square-kilometer (58 square-mile) concession.

The depression contains “a few billion tons” of deposits, he said. “It will last for a long time.”

Ethiopia is the cheapest place to extract potash, after Jordan, because the deposits are only 100 meters (328 feet) below the surface, compared with 1,000 meters in Brazil and Canada where the grade is the same, according to Biya. Potash is a mineral containing potassium that is used as plant food.

In addition to Allana, BHP Billiton Plc, Sainik Potash Plc of India, and G&B African Resources Ltd., based in the British Virgin Islands, are also prospecting in Afar, Mines and Energy Minister Alemayehu Tegenu said in a mobile phone interview today from Addis Ababa.

Ethiopia’s government plans to build a railway link to Afar as part of a five-year economic plan announced last month. The potential for potash exploration in the region is “huge,” Alemayehu said.

Mining in the area may last as long as 50 years, during which time Ethiopia’s government will levy a corporate tax rate of as much as 30 percent “once Allana’s costs have been covered,” Nejib said.

“It is a very exciting time for Ethiopia,” he said. “A lot of investors are looking. It’s one of the least explored countries in the world.”

To contact the reporter on this story: William Davison in Addis Ababa via Johannesburg at  pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.

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