I
read an article on Wall
Street Journal (03/25/2010) about the massive Potash mines in Ethiopia. The Journal
reports that the Chinese Sovereign fund is contemplating of acquiring a
majority stake in the Dallol potash mines operation, hitherto undertaken by a
speculative mines company based in Britain (BHP) and before that Slinik of India
and another company from Norway.
HooraH
For general information sake, potash has been mined in Ethiopia since the Xiv
century. Potash was such a significant strategic mineral that it was only
easily mined in the Dallol and Danakil depressions until the outset of World War I and since
the mid 196OS it was universal knowledge of the existence of this massive (200
million ton conservatively speaking) potash deposit in the mining circles. The
mining authorities in the imperial regime and Dergue were not competent and
didn't have conducive policy to let it flourish save for the gold mining
enterprise in Kibre Mengist.
The policy of the EPRDF was much more forthcoming. The ministry allowed a
number of companies to undertake mining and prospecting in much of Ethiopia.
These days, long closed and abandoned mining enterprises are seeing ever more
interest. Tulu Kapi, a once closed mine in Western Ethiopia, is now to be
considered amongst the most promising gold mines in the World.
However, the Potash deposits which were flooded by Shabia in the late sixties
were some of the most important ones. Potash is worth its weight in gold for it
isn't only a major export commodity but also can be used as fertilizer in
agriculture. The US Company which dug 300 bore holes for it has documented its
massive existence in 1967. While this being the case, the Ministry of Mines
assigned the exploitation of this strategic mineral to little known speculative
companies from Norway, India and England while it was obvious that it required
massive investments, amounting to conservatively speaking $200 million dollars.
While the companies from Norway and England are speculative, meaning they are
companies which seek quick buck, I had confidence in the Indian company which
had deep pockets. Its intention was big news on important industry publication
and web sites. For unknown reasons, the Indian company's concession isn't
producing even though three years have gone since.
Especially the news is troublesome since Potash is an organic fertilizer in
high demand in Ethiopia. May I remind you, that Ethiopia imported 700,000 tons
of Urea last year at a cost of hundreds of millions of dollars while sitting on
a ' gold mine of sort' for potash is, unlike urea, a natural organic one while
the former is a byproduct of petroleum, thus synthetic. I can’t emphasize more
the importance of this mineral for both our bottom line literally and
figuratively. The fact that the Danakil Depression is literally spewing this
vital byproduct of Mother Nature, we have to import its synthetic cousin from
as far away as Norway tying up commerce at Djibouti and eating up our valuable foreign
reserve.
I think the reason is obvious that those handing out licenses for mining at the
Ministry are not aware of the whole scenario. For once, the whole mining Endeavour
throughout the West is comprised of strictly unethical and under financed
companies, which are based mostly in Canada and are listed on secondary and
extremely speculative stock
exchanges like Vancouver and Toronto are unaccountable and
for the most part trade in pennies. These companies might come up with a couple
of thousands or even hundreds
of thousands of dollars to secure their prospecting rights but
only far and few in between do posses the financial muscle like the big boys (
Chinese Mineral united and other well established companies). The fact that BHP
which was awarded the right to the potash mines without having produced
verified and audited independent and had to issue a couple of millions of
stock to penny stock
investors soon after securing the right to the mines proves
beyond doubt that we have to be aware of such companies which are descendants
of those who flocked to California
dingo the Great Gold Rush. While all sort of interlopers- speculators
were roaming the Danakil, our Nation spent hundreds of millions importing
synthetic Urea, even though the fact that billions of dollars worth of Potash
was available as far as the eyes can see under our nose, so to speak. (Potash
was selling as high as $1000/ ton but is currently trading at around $500). The
US company which drilled in the area in the 1960s conservatively estimates the
exploitable potash deposit around 200 million tons. (You do the math).
Similar snafus were made when a little known Jordanian company was awarded the
right to the Callub Natural
gas fields a decade or so ago. These days, I know that there are
numerous indigenous and foreign enterprises seeking for all sorts of minerals.
I wish them luck. I am not against modern day adventurists seeking ' Eldorado'
in Ethiopia. I just think the Potash deposits didn't need speculators but
serious investors like the Chinese Sovereign fund which has $300 billion under management.
While at this topic, what is the Ministry to do with the Indian company which
signed on to tap the mines in Dec 2007? How competent is its legal
department to wedge the necessary legal battles to recoup damages, if
any? As we speak, I understand a couple of Indian companies are
fighting between themselves over who will build the massive Tendaho Sugar which is being financed by Indian Govt while
the shortage of sugar is a big news back home. Legal expertise can be bought or
gotten ' pro bono' for those who seek it. If we can’t afford it, we could beg
for it or assign cases on contingency bases.
Tazabiw 03/26/10