By ; Ahmed Soliman
Africa Finance Corporation ("AFC" or the “Corporation"), the leading infrastructure solutions provider in Africa, announces a US$150 million strategic investment in Danakali Limited (“Danakali” or the “Company”).
The funds will be used for the development and construction of the Colluli Potash Project (“Colluli” or the “Project”) located in the Danakali region of Eritrea. The Project
is a late-stage, large, long-life and low-cost sulphate of potash (“SOP”) deposit, with estimated reserves of 1.254 Billion tonnes of potassium bearing salts. Colluli is planning to make a 52% potassium oxide product, which is a higher grade than most of its competitors’ products.
With a mine life of approximately 200 years, the Project will be of significant economic and financial benefit to the country, representing up to 10% of the country’s gross domestic product by 2021. The Project will place Eritrea as the only African producer of SOP, which is a premium-quality potash that improves crops’ absorbency of nutrients and resilience to adverse conditions.
Colluli Mining Share Company, the 100% owner of the Project, is controlled through a 50:50 joint venture agreement held by the Eritrean National Mining Corporation and STB Eritrea Pty Ltd, a wholly owned subsidiary of ASX and LSE-listed Danakali (ASX: DNK, LSE: DNK). It has been agreed that Danakali will be the developer and operator of the project moving forward.
Samaila Zubairu, President & CEO of AFC, commented: “Eritrea is a post-conflict country that is in the process of rebuilding itself and its economy. Projects like Colluli create jobs, provide export earnings and tax revenues. AFC is keen to support such projects and the government’s efforts in achieving its aspirations of scaling up infrastructure investments to promote agriculture and industrialization for enhanced productivity and economic growth.”
Mr. Yemane G. Meskel, Eritrea’s Minister of Information added: “This is great news. AFC’s substantial investment will indeed be pivotal in the operations of the world-class Colluli Potash Project. It also constitutes a trailblazer for other investments in several prospective sectors in Eritrea in the new climate of peace and cooperation in the entire Horn of Africa region.”
AFC, an investment grade multilateral finance institution, was established in 2007 with an equity capital base of US$1 billion, to be the catalyst for private sector-led infrastructure investment across Africa. With a current balance sheet of approximately US$5.07 billion, AFC is the second highest investment grade rated multilateral financial institution in Africa with an A3/P2 (Stable outlook) rating from Moody’s Investors Service. AFC successfully raised US$1,150 million (US$650 million and US$500 million) in 2019, US$500 million in 2017 and US$750 million in 2015 through Eurobond issuances; out of its Board-approved US$3 Billion Global Medium-Term Note (MTN) Programme. All Eurobond issues were oversubscribed and attracted investors from Asia, Europe and the USA.
AFC’s investment approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. AFC invests in high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. To date, the Corporation has invested over US$6.6 billion in projects within 30 countries across Africa.
