ASX- and LSE-listed Danakali reports that DRA Global has been confirmed as the preferred Engineering, Procurement, Construction & Management (EPCM) provider for the Colluli potash project, subject to completion of detailed contract terms.
The Colluli project is 100 % owned by the Colluli Mining Share Company (CMSC), a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO). It is located in the Danakil Depression region of Eritrea and is approximately 75 km from the Red Sea coast, making it one of the most accessible potash deposits globally. Mineralisation within the Colluli resource commences at just 16 m, making it – says Danakali – the world’s shallowest potash deposit.
DRA will be responsible for all aspects of design, project management, procurement, construction management and supervision as well as commissioning of the complete process plant and associated infrastructure, including provision of all temporary construction facilities. It will also be responsible for awarding major contracts such as early works, earthworks, structural, mechanical, piping, electrical and instrumentation works, laboratory and permanent camp (including life support, freight and logistics).
Danakali, on behalf of CMSC, conducted a competitive EPCM tender process and evaluation for the project based on the Front End Engineering Design study. The tenders were assessed by Danakali and multinational engineering consultants Turner & Townsend against strict, established evaluation criteria. DRA was the standout in a premium field of global engineering groups.
Seamus Cornelius, Danakali Executive Chairman and CMSC Director, said: “We are very pleased to confirm DRA as the project’s preferred EPCM contractor, a global engineering firm of strong repute with extensive experience operating in Africa. We look forward to working with DRA in finalising the last few project sign-off gates and to commence project execution. Danakali and CMSC continue to achieve critical project and corporate milestones on the way to construction, commissioning and production at Colluli.”
“Awarding the execution of this important potash project on the African continent to DRA is testament to DRA’s position as the preferred technical partner for projects in Africa,” said Wray Carvelas, Chief Executive Officer of DRA Global. “DRA is honoured to have been selected by the Colluli Mining Share Company for the execution of the project. We have put together a very strong team for the successful delivery of the project and both our Project Manager and proposed in-Country Manager have experience in delivering projects in Eritrea.”
The EPCM contract is a requirement of potential debt providers and hence is pivotal to the debt fund-raising process.
CMSC has completed a Front End Engineering Design (FEED) for the production of potassium sulphate, otherwise known as SOP. This is a chloride free, specialty fertiliser which carries a substantial price premium relative to the more common potash type, potassium chloride (or MOP).
Colluli will be developed utilising a modular development approach. Module I is expected to produce 472 kt/a of premium SOP. Module II, commencing production in year 6 of the project, will increase total SOP production to 944 kt/a. The development capital for Module I is US$320 million while the incremental Module II development capital is US$202 million.