Danakali Ltd’s (ASX:DNK) (LON:DNK) Colluli Mining Share Company (CMSC) has appointed Aggreko PLC (LON:AGK) as preferred power supply contractor for the 12MW thermal heavy fuel oil (HFO) power plant at Colluli Potash Project in Eritrea, East Africa.
Aggreko will provide full scope of support services for the supply, commissioning and maintenance of the power plant, then transfer to CMSC, under a five-year buy-own-operate-transfer contract.
The supplier will also provide the funding for the power solution, which provides certainty over the delivery of this preferred solution.
Single power provider
Danakali chief executive officer Niels Wage said: “With 55 years of experience in delivering high-quality, reliable service to a large number of projects we are confident they (Aggreko) have the capabilities to provide our power needs for Colluli.
“At the early stages of the project development, the HFO solution will provide us with flexibility and reliability, and as confirmed by SEIA, Colluli will have a relatively small impact on the environment.
“Going forward, once project development is in more of a steady-state, we will look to diversify our energy sources towards renewables available in the Danakil region, as per our commitment to sustainable and environmentally friendly solutions.”
The costs of the power solution provided by Aggreko over the five-year contract period is lower than the FEED study results.
This power solution is scalable and can increase or decrease according to CMSC’s needs.
The agreement is subject to:
➢ The conclusion of ongoing negotiations to optimise the scope of works, contract pricing and execution; and
➢ Board approval of the final investment decision.
Delivering complex power plant solutions
Aggreko has nearly 60 years of experience in delivering complex power plant solutions to projects in challenging locations.
They are world-leading providers of mobile, modular, temperature control and energy services.
The company provides short-term hire and longer-term power solutions to a diversified customer base in mining, oil & gas, utilities, petrochemicals & refining.
It operates in around 100 countries around the world, of which 35 are in the African continent, including providing off-grid power solution to a mining company in Eritrea since 2012.
Colluli is 100%-owned by CMSC, a 50:50 joint venture between Danakali and the Eritrean National Mining Corporation (ENAMCO).
The Colluli project is in the Danakil Depression region of Eritrea and around 75 kilometres from the Red Sea coast, making it one of the most accessible potash deposits globally.