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Danakali managing director Paul Donaldson, The sun sets over the Eritrean capital of Asmara
formerly site general manager at BHP Billiton Ltd’s

Area C iron ore mine in the Pilbara, has been with
the junior developer for three years

to its Eritrean investment – the Canadian stories which come out of the media,” Construction Group Co. Ltd (SFECO)

miner has spent more than $US420 mil- he said. “We find Eritrea a safe, easy to started production at the Zara gold

lion in building Bisha – and its ability to get around country and the government mine. SFECO acquired the project from

return funds to shareholders proves busi- agencies are very easy to get on with. ASX-listed Chalice Gold Mines Ltd in a

ness can be undertaken in Eritrea. “And, the successes in the country are $US114 million deal in 2012.

The country sits in relative isolation not just in mining. The Government has Colluli, Bisha and Zara are all held

“from the international community. It hasdone exceptionally well in meeting the in JV with the Eritrean National Mining

been in dispute over parts of its borderSustainable Development Goals with a Company (ENAMCO). Australian inves-
with Ethiopia since gaining in-
dependence in 1993 and is tors may have lowered their
currently subject to several UN
Security Council Resolutions We have always maintained averseness to African geopoli-
imposing various military and the relationship with the tics in recent years but it still
economic sanctions, in view of remains when it comes to legis-

Government and the JV is an lated state participation.
Donaldson admits the pres-
enabler of success for Danakali.
evidence that it has supported ence of ENAMCO in the project

armed opposition groups in the is a perceived stumbling block

disputed border region. This for investors but he argues the

comes despite it being Ethiopia which focus on spending in health, education opposite is in fact true in Colluli’s case.

has failed to accept the demarcation set and agriculture. There are new industrial “The reason people mostly sit on the

out by the UN’s Eritrea-Ethiopia Bound- projects being built, including food pro- sidelines really comes down to a lack

ary Commission. cessing and cold storage facilities and a of understanding of Eritrea and our re-

The ongoing dispute with Ethiopia has new port expansion at Massawa.” lationship with the Government and

also led to President Isaias Afworki’s Mining also continues to expand. Ear- the JV with ENAMCO in particular,” he

Government imposing mandatory and, lier this year, Chinese group Shanghai said. “We have always maintained the

in some cases, indefinite relationship with the Gov-

military conscription in the ernment and the JV is an

country which has drawn enabler of success for

the ire of Western human Danakali. They have al-

rights groups. lowed us to negotiate our

Eritreans now comprise way through a number of

the fifth largest group of government processes we

Mediterranean Sea arriv- perhaps wouldn’t have fully

als into Europe, according understood; having the JV

to the UNHCR, with esti- partner helps enormously.”

mates of many as 5,000 Under the agreement,

people fleeing the country the project is held 50/50

each month while the Eri- between Danakali and

trean Government puts the ENAMCO with the ASX-

figure closer to 1,000. listed company retaining

Donaldson argues Da- three of the five board po-

nakali’s experience in the sitions in JV vehicle Col-

country does not fit with luli Mining Share Company

western media reports. Danakali country manager Zeray Leake speaks with leaders of the local (CMSC)

“Our experiences don’t Afari community. The small community is situated 30km from Colluli The plan is to fund Col-

align with the negative and is the only village within 80km of the project luli on a 70:30 debt-to-

AUSTRALIA’S PAYDIRT DECEMBER 2016 - JANUARY 2017 PAGE 49