Ethiopia Mulls New Potash Partner after Failed Deal with Israel Chemicals

A June 2015 filing by Israel Chemicals Ltd, or ICL, said a feasibility study showed the mine could yield as much as 1 million metric tons a year of potash for a quarter of a century.

By Nizar Manek (Bloomberg)

Ethiopia is considering finding a new partner to develop a potash mine abandoned last year by Israel Chemicals Ltd. (ICL), which has sought compensation at an arbitration court after accusing the government of failing to support the project.

Several companies are interested in developing potash deposits in the country’s northeastern Afar region, Mines Minister Motuma Mekassa said in an interview Wednesday (September 13) in the capital, Addis Ababa. The government is eager to begin work on the project as long as there are no legal hindrances from the arbitration process currently under way in The Hague, though no discussions with prospective investors have taken place yet, he said.

“If the legal procedures allow us, we won’t wait for the decision of the arbitration court,” Motuma said. “We need as a government to develop the potash as soon as possible.”

Ethiopia, Africa’s fastest-growing economy over the past decade, plans to increase mining’s contribution to gross domestic product by more than five-fold to 10 percent by 2025. Oslo-based Yara International ASA plans to establish a $700 million potash plant in Ethiopia’s low-lying Danakil area, while British Virgin Islands-registered Circum Minerals Ltd. said in March it’s been granted a license to mine there.

A June 2015 filing by Israel Chemicals, or ICL, said a feasibility study showed the mine, also in Danakil, could yield as much as 1 million metric tons a year of potash for a quarter of a century. Potash prices traded at $217 per ton on Aug. 31, having dropped 55 percent since hitting a five-year high of $483 in February 2012.

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