Junior company Danakali Ltd., on behalf of Colluli Mining Share Co., said June 11 that it has a binding take-or-pay offtake agreement with EuroChem Trading GmbH for up to 100 percent of Module I Sulfate of Potash (SOP) production from the Colluli Potash Project. The Project, located in Eritrea, East Africa, is 100 percent owned by CMSC, a 50:50 joint venture between Danakali and the Eritrean National Mining Corp.
EuroChem will take, pay, market and distribute up to 100 percent (minimum 87 percent) of Colluli Module I SOP production. EuroChem may use a portion of Colluli SOP to product NPKS at its facilities in Antwerp, Belgium and Nevinnomyssk, Russia. The balance of SOP provided to EuroChem will be sold through their international channels. CMSC has the option to sell up to 13 percent through alternative sales channels.
The term of the agreement is 10 years from the date of commissioning of the Colluli SOP processing plant, with an option to extend for a further 3 years if agreed by EuroChem and CMSC. EuroChem may terminate the agreement if first commercial production has not occurred by July 1, 2022; well beyond CMSC’s production commencement expectations. Either party may terminate the agreement if a project financing agreement has not been executed and first drawdown achieved within 14 months of the signing of the agreement. The Danakali and CMSC boards, and the Eritrean Ministry of Energy and Mines, have approved CMSC’s entry into the agreement.