Ethiopia: Israel Chemicals to Build Three Fertilizer Factories in Ethiopia

Israel Chemicals Ltd (ICL), the Israel fertilizer giant that is investing in the Afar potash mine, is planning to build three fertilizer factories in Ethiopia.

In a written response to The Reporter, Amir Avramovitz, director of corporate communications and public affairs, said that ICL is in advanced discussions with the Ethiopian government about the construction of three or more fertilizer blending plants in the country to produce world class mixed nutrient fertilizers. Avramovitz said that acquisition of Allana will enable ICL to accelerate the development of Allana’s concession to mine potash in Ethiopia.

Last week ICL agreed to buy the 84 percent outstanding shares of Allana Potash, owner of the Danakil potash mine. Last year ICL bought 16 percent shares on Allana for USD 25 million and last week concluded a deal to acquire the remaining shares valued at around 150 million Canadian dollars. The deal is subject to shareholders’ approval.

“Acquiring ownership of Allana will enable ICL to control the development of the Danakil project, accelerate pre-construction engineering design work, as well as secure project financing and reduce the company’s risks associated with the project. ICL also believes that owning all of Allana will better enable it to fully leverage its decades of expertise worldwide in potash extraction, production and marketing activities to bring the Dallol project to fruition. Acquiring Allana will further contribute to ICL’s commitment to the project, thereby increasing the potential of its successful development,” Avramovitz said.

ICL believes that the Ethiopian government is fully supportive of developing the country’s potash resources in order to unlock the potential of agriculture in Ethiopia, increase productivity and improve balanced fertilization, especially among Ethiopia’s smallholder farmers. According to ICL, the Ethiopian government has indicated its interest in supporting ICL’s efforts through the development of the required infrastructure and provision of natural resources that will be required to develop the large-scale mining project at Dallol.

ICL is investing in the Ethiopian fertilizer market development. According to Avramovitz, the company has invested approximately USD 400,000 since early 2014 into farmers’ education in project called “Potash For Growth”. ICL is closely working with the Ethiopian Agricultural Transformation Agency (ATA) on the farmer’s education project. Avramovitz said the investment on farmers’ education will continue in 2015 and 2016.

This will be followed by additional agronomic work to enable farmers make optimal use of the new blends, according to site and crop-specific needs. 

 

According to Avramovitz, in addition to potash ICL is conducting investigatons on additional products that could be mined in the Danakil mine. “These investigations are in an early stage.”

ICL has already started to invest in the detailed engineering of the project itself and expects to make a final project investment decision at its board of directors before the end of the year. First sales of potash are expected within three years.

ICL is expected to invest more than one billion dollars in the potash mine and fertilizer blending plants.

The mine and the plants will create hundreds of direct jobs and thousands of jobs in the form of contractors and suppliers. According to Avramovitz, over 90 percent of these employees will be Ethiopian citizens that will be recruited in the local market. ICL plans to have a massive training and education program that will enable it to create a world-class workforce.

Allana’s potash mine in the Afar Regional State, in the Dallol depression, an area of covers 300 sq. km. More than 200 sq. km of the area is underlain with potash material. The potash mineral deposit is estimated at 3.2 billion tonnes of potash deposit in the ground. The mine is valued at 1.2 billion dollars with a mine life of 25 years.

Ethiopia annually imports more than 1.2 million metric tons of fertilizers at the cost of more than 300 million dollars. If the Danakil potash mine project comes to fruition, Ethiopia could save a significant amount of foreign currency from the import substitute and generate hundreds of millions of dollars from potash export.