Government Support

Ethiopia is a stable, progressive, fast-growing and investment-friendly jurisdiction. Ethiopia has one of the largest populations and highest GDP growth rates in Africa and enjoys major multilateral support as well as being the seat of the African Union. In particular, Ethiopia has established itself as a favorable destination for inbound foreign investment from major countries around the world.

The government of Ethiopia is fully committed to developing its natural resources and mining industry viewing it to be in the national interest to foster and encourage private investment in the country. In particular, the government is committed to supporting the country’s emerging potash industry, which could see the development of multiple producers in the Danakil Depression with Circum being the largest producer.

Government support to date has included the construction of the major supply access road to the basin from Mekele city and the approval for the construction of a new road between Ahmed Ela to Afdera which will reduce the total distance from the mine site to the new port of Tadjoura in Djibouti by over 200 kilometers. The road is expected to be completed in 2018.

With the objective of improving the rail network of the country, the Ethiopian government established the Ethiopian Railways Corporation (ERC) in 2007. The ERC has recognized eight principal rail corridors that it intends to develop, with total distance covered by these routes being approximately 4,700 kilometers. Future plans for the Danakil Potash Project’s product transport include the development of a potential rail link to connect the Danakil Basin to the Ethiopian national rail network, which will have a rail corridor to the port of Tadjoura.

The government of Ethiopia is also investing in a US$45-50 million power transmission line and construction of a substation that will deliver ample power to the Danakil Basin for its future potash producers. The aim is to transmit 180 MW to a new Dallol sub-station through a double circuit 230 kV line from an existing sub-station in Mekele, which has the required excess capacity to do so. The construction of the power line is expected to be completed in 2019.

In neighbouring Djibouti, the country’s government supported the development of a new bulk terminal port facility at Tadjoura, which was completed in June 2017 and will provide access to key markets in India and China. The Djibouti Port Authority has made provision for the storage and export of potash by the companies currently operating in the Danakil region.