ASSESSMENTS

Unlocking the Power of Potash in the Horn of Africa

Jan 7, 2020 | 10:30 GMT

Lava rises to the top inside Erta Ale volcano in the Afar region of northeastern Ethiopia. The Ethiopian volcano is home to the world's oldest continuously active lava lake, known as the "Gateway To Hell."

Magma rises to the top of the lava lake inside the Erta Ale volcano in the Afar region of northeastern Ethiopia. In addition to active volcanos, the region is home to high-grade potash reserves, a key ingredient used in fertilizer.

(Joel Santos/Barcroft Media via Getty Images)

Highlights

  • Ethiopia's recent peace deal with Eritrea, along with its ongoing liberalization push, are creating new opportunities to extract potash along the two countries' borders.
  • Growing global demand for fertilizer, as well as the high-grade quality of Eritrea's and Ethiopia's reserves and their proximity to shipping lanes, will continue to drive foreign investor interest.
  • But political instability, unresolved regional disputes and local ethnic tensions risk thwarting Addis Ababa's and Asmara's ability to fully capitalize on the potential multimillion-dollar windfall. 

Following their recent peace deal, Ethiopia and Eritrea are seeking to take advantage of the region's newfound foreign investment interest by tapping into long-ignored natural resources under their soil. One of the most promising resources is potash, a mined salt containing water-soluble potassium that is most often used in fertilizer. High-grade potash reserves split between Ethiopia and neighboring Eritrea are likely worth well into the hundreds of millions of dollars, if not much more. And with global fertilizer demand set to skyrocket in the years ahead, the opening of the region's market couldn't come at a more opportune time. But whether the two countries will be able to turn that promise into profit remains far from certain, as foreign investors may deem the countries' political futures too murky -- and the security challenges still too steep -- despite the possible returns....

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