By Frank Jomo
One of India’s leading coal mining companies – New Delhi based Sainik Coal Mining Pvt. Limited has been granted a mining license by the Ethiopian government to exploit and further explore vast potash reserves in the Dallol Depression, in the arid Afar region near the Eritrean border.
The license granted by Ethiopia’s Minister of Mines and Energy Alemayehu Tegenu enables Sainik to mine the potash deposits, which were discovered by an American geologist 37 years ago in Musely and Crescent areas on a large scale. The deposit is estimated as containing 160 million tonnes.
According to Ethiopia’s Reporter Newspaper the mining license grants Sainik an exclusive right for a large scale potash mining within the license area, 10 sq. km for twenty years. The company has also acquired exploration rights for potash and other saline minerals, such as magnesium and calcium.
According to Sainik Director Nitin Wagh, his company anticipates producing one million tonnes of potash per year by and a total of 20.85 million tonnes of potash in the next twenty years. The company plans to use solution mining/evaporation pond techniques to work the deposit. The agreement signed between the company and the Ethiopian government indicates that Sainik has set aside US$451,164,784 for the project.
The agreement further says Sainik intends to process and market the refined product to the international market and to this endeavour, the company is already in talks with large potash consumers for long-term business agreements. Potash is used in the making of fertilizer.
Sainik has been in Ethiopia, especially in the western region hunting for coal reserves for years. The company says it has shelved its plans for coal mining because coal deposits in Ethiopia are not viable for large-scale production.
Before Sainik Coal Mining Company, a Norwegian company was also granted a license by the ministry of Mines and Energy to exploit the potash reserves in the Dallol Depression. However the project was called off following the Ethiopia – Eritrea conflict that reached a climax in 1998. The bloody conflict came to an end in 2000 but the Norwegian company had already made up its mind not to go ahead with the project prompting the Ethiopian government to revoke the license.
Sainik plans to start production in the next two to three years and will be presenting a Bankable Feasibility Study (BFS) to the Ethiopian government in nine months time.