Ethiopia's potential as a source of industrial minerals is beginning to be realised, with a growing number of exploration and mining projects underway amid rapidly increasing foreign investment.

The Ministry of Mines has granted 72 industrial minerals exploration licences, with 61 going to foreign companies, eight to Ethiopian/foreign joint ventures and three to local companies. Some 52 mining licences have also been approved, with 28 to foreign companies, 17 to Ethiopian/foreign joint ventures and seven to local companies.

The licences are for minerals including potash, limestone, marble, pumice, clay, gypsum, basalt, silica sand and gemstone, salt and soda ash. Other industrial minerals have also been identified (see table for quantities).

Potash has become the focus of much of the attention in Ethiopia's industrial minerals sector, with 18 exploration projects currently underway. The most significant is at the Dallol potash site in the Danakil depression in the north of the country, which is being explored by Canadian potash specialist, Allana Potash.

The site has potash resources of approximately 1.3bn tonnes measured and indicated with an inferred resource of 588m tones.

Allana is now in the final phases of a feasibility study, and plans to begin production in late 2014 or early 2015.

Allana Potash increased its potash resources in Ethiopia when it doubled the size of its site last year following a buyout of Nova-Ethio Potash Corp, increasing the size of its land acquisition in the Danakil depression to 312 kilometer square from 154 kilometer square.

There are several advantages in mining potash in Ethiopia. First, Ethiopia has one of the shallowest deposits in the world. The reserves are consistent at 100 metres, compared with up to two kilometres elsewhere, so production costs are very low.

Second, the weather is very hot and dry, with temperatures between 45-60°C in the Danakil depression; it's a great place for solar evaporation, which also means very low energy costs.

Due to these factors, the Dallol potash project will "potentially be one of the lowest-cost potash operations in the world."

Ethiopia also benefits from its prime location; it is the closest potash producer to India, most of south east Asia, and most of China.

Asia, including China, India, Indonesia, Malaysia and Vietnam, will be the major markets for the potash produced at Dallol, with Africa also being an important market.

In addition to Ethiopia's increasingly open economy, foreign investors have been attracted by the relative political stability and competitive investment and taxation codes, the minister said, adding that improvements in infrastructure is a key factor.

As part of the country's Growth and Transformation Plan for 2011-15, 72,000 km of new roads are to be constructed by the end of 2015, while the power availability is targeted to increase to 8,000 MW by 2015.

Two roads have been specifically built by the government for the Dallol potash project, linking the site to the port in neighbouring Djibouti, which land-locked Ethiopia uses to ship export goods, Abasov said. Another road is planned to link the site with Mekele, the major city in the north of Ethiopia.

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