ASX- and LSE-listed potash company Danakali says its Eritrea-based Colluli potash project’s engineering, procurement and construction management (EPCM) Phase 2 is nearing completion.

The front-end engineering design (FEED) and schedule of the Colluli project is now in its final stage, on budget and scheduled for completion by June.

The Colluli project is 100% owned by the Colluli Mining Share Company, which is a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation.

The three key objectives set for the EPCM Phase 2 include an update of the FEED capital estimate, the revision of the FEED project schedule and identification of key test work required to ensure full preparedness for EPCM Phase 3.

Danakali notes that completion of the identified test work items provides key data necessary to finalise process plant design development and will allow advancement into EPCM Phase 3 with clear direction.

Further, several plant enhancement opportunities to improve project design will be presented at the end of EPCM Phase 2.

Danakali states that, despite the Covid-19 pandemic and its disruption to businesses and operations, all EPCM Phase 2 works have continued and all vendor and contractor packages have now been received in complete form.

The company notes that the receipt of these bids enables engineering, project delivery and operations management group DRA Global to finalise the tender evaluation process to provide a technically compliant and commercially favourable estimate.

The Colluli project is located in the Danakil Depression region of Eritrea, in East Africa, and is about 75 km from the Red Sea coast. The company states that this locality makes it one of the “most accessible potash deposits in the world”.

Mineralisation within the Colluli resource commences at 16 m, which also makes it the  shallowest known potash deposit.

The Colluli resource is amenable to opencut mining, which allows higher overall resource recovery to be achieved, is generally safer than underground mining and is advantageous for modular growth.

The potassium sulphate, or sulphate of potash (SoP), to be produced at the mine is a chloride free, specialty fertiliser which carries a substantial price premium relative to the more common potash type – potassium chloride.

Danakali notes that economic resources for the production of SoP are scarce.