Delivering sustainable solutions in a more competitive world

FINAL Scoping Report for the Yara

Dallol Potash Environmental and Social

Impact Assessment Study

Yara Dallol Potash Project, Danakil Depression, Ethiopia

May 2014

www.erm.com

Yara Dallol BV

FINAL Scoping Report for the Yara Dallol Potash Environmental and Social Impact Assessment Study

May 2014

Reference: 0224244

Prepared by: Environmental Resources Management

Southern Africa (Pty) Ltd. (ERM)

This report has been prepared by Environmental Resources Management the trading name of Environmental Resources Management Limited, with all reasonable skill, care and diligence within the terms of the Contract with the client, incorporating our General Terms and Conditions of Business and taking account of the resources devoted to it by agreement with the client. We disclaim any responsibility to the client and others in respect of any matters outside the scope of the above. This report is confidential to the client and we accept no responsibility of whatsoever nature to third parties to whom this report, or any part thereof, is made known. Any such party relies on the report at their own risk.

For and on behalf of

Environmental Resources Management Approved by: Mike Everett Signed: Position: Partner (Project Manager) Date: May 2014

TABLE OF CONTENTS

1 INTRODUCTION 1-1

1.1 BACKGROUND TO THE YARA DALLOL POTASH PROJECT 1-1

1.2 PURPOSE OF THIS REPORT (SCOPING REPORT) 1-4

1.3 STRUCTURE OF THIS REPORT 1-5

1.4 DETAILS OF THE ESHIA PROJECT TEAM 1-6

1.5 DETAILS OF THE APPLICANT AND ENVIRONMENTAL ASSESSMENT

PRACTITIONER 1-7

2 PROJECT DESCRIPTION 2-1

2.1 PROJECT LOCATION 2-1

2.2 PROJECT BACKGROUND 2-5

2.3 PHASES OF THE PROPOSED YARA DALLOL POTASH PROJECT 2-5

2.4 EMPLOYMENT 2-18

2.5 ANCILLARY INFRASTRUCTURE 2-18

3 PROJECT MOTIVATION 3-1

3.1 DEMAND FOR SOP POTASH 3-1

3.2 GLOBAL POTASH SUPPLY AND DEMAND BALANCES 3-1

3.3 FINANCIAL FEASIBILITY OF THE PROPOSED PROJECT 3-3

3.4 ETHIOPIAN ECONOMY AND CONSEQUENCES FOR THE PROPOSED PROJECT 3-3

4 PROJECT ALTERNATIVES 4-1

4.1 OPEN PIT MINING 4-1

4.2 CONVENTIONAL UNDERGROUND MINING 4-2

4.3 IN-SITU LEACH MINING 4-2

4.4 NO-GO ALTERNATIVE 4-3

5 INSTITUTIONAL AND LEGAL FRAMEWORK OF ETHIOPIA 5-1

5.1 INSTITUTIONAL FRAMEWORK 5-1

5.2 ORGANISATION AND ADMINISTRATIVE STRUCTURE 5-4

5.3 POLICY AND LEGAL FRAMEWORK IN ETHIOPIA 5-7

5.4 NATIONAL STRATEGIES AND PLANS 5-18

5.5 NATIONAL STANDARDS 5-19

5.6 NATIONAL DIRECTIVES AND GUIDELINES 5-20

5.7 REGIONAL PLANS 5-21

5.8 INTERNATIONAL CONVENTIONS, PROTOCOLS AND AGREEMENTS 5-21

5.9 INTERNATIONAL GUIDELINES AND STANDARDS 5-22

5.10 PROPONENT POLICIES, PLANS AND PROCEDURES 5-25

6 THE ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT (ESIA)

PROCESS 6-1

6.1 INTRODUCTION 6-1

6.2 SITE SCREENING ASSESSMENT 6-2

6.3 SCOPING 6-3

6.4 STAKEHOLDER ENGAGEMENT 6-3

6.5 BASELINE DATA COLLECTION 6-4

6.6 INTERACTION WITH DESIGN AND DECISION-MAKING 6-4

6.7 ASSESSMENT OF IMPACTS AND MITIGATION 6-5

7 STAKEHOLDER ENGAGEMENT 7-1

7.1 OBJECTIVES OF STAKEHOLDER ENGAGEMENT 7-1

7.2 APPROACH TO STAKEHOLDER ENGAGEMENT 7-2

7.3 PROJECT STAKEHOLDERS 7-8

7.4 NEXT STEPS IN THE STAKEHOLDER ENGAGEMENT PROCESS 7-11

7.5 FEEDBACK MECHANISM 7-11

7.6 MONITORING AND REPORTING 7-12

8 THE RECEIVING ENVIRONMENT – PHYSICAL AND BIOLOGICAL

CHARACTERISTICS OF THE PROJECT AREA 8-1

8.2 PHYSICAL ENVIRONMENT 8-2

8.3 BIOLOGICAL ENVIRONMENT 8-34

9 THE RECEIVING ENVIRONMENT – SOCIO-ECONOMIC

CHARACTERISTICS OF THE PROJECT AREA 9-1

9.1 SOCIO-ECONOMIC AND HEALTH ENVIRONMENT 9-3

9.2 CULTURAL HERITAGE 9-20

9.3 VISUAL 9-23

10 IDENTIFICATION OF POTENTIAL IMPACTS 10-1

10.1 ENVIRONMENTAL AND SOCIAL RESOURCES AND RECEPTORS 10-1

10.2 POTENTIAL PHYSICAL ENVIRONMENTAL IMPACTS 10-2

10.3 BIOLOGICAL ENVIRONMENT 10-5

10.4 SOCIAL ENVIRONMENT 10-7

11 TERMS OF REFERENCE FOR THE ESIA 11-1

11.1 TERMS OF REFERENCE FOR SPECIALIST STUDIES 11-1

12 CONCLUSION 12-1

13 LIST OF REFERENCES 13-1

List of Annexure

Annex A – Stakeholder Engagement Plan

LIST OF ACRONYMS

Abbreviation Full Definition

ºC Degrees Celsius

AB Anhydrite Bed

ALARP As low as Reasonably Practicable

ANRS Afar National Regional State

BC Before Christ

BDL Below Laboratory Detection Limit

CAPEX Capital Expenditure

CBD Convention on Biological Diversity

CBE Charge Balance Error

CHMP Cultural Heritage Management Plan

CHPs Certified Health Professionals

CI Conservation Important

CITES Convention on International Trade in Endangered Species

CO2 Carbon Dioxide

CSA Central Statistics Agency of Ethiopia

dB Decibels

DOH Depth of Borehole/Well

EC Electrical Conductivity

EEP Ethiopian Electric Power

EEU Ethiopian Electric Utility

EHS Environmental, Health and Safety

EIA Environmental Impact Assessment

EMP Environmental Management Plan

EN Endangered with Extinction

EPA Environmental Protection Authority

EPFIs Equator Principle Financial Institutions

EPRDF Ethiopian People’s Revolutionary Democratic Front

EPs Equator Principles

ERA Ethiopian Road Authority

ERM Environmental Resources Management Southern Africa (Pty) Ltd.

ESDPRP Ethiopian Sustainable Development & Poverty Reduction Programme

ESIA Environmental and Social Impact Assessment

EWCA Ethiopian Wildlife Conservation Authority

FDRE Federal Democratic Republic of Ethiopia

FGC Female Genital Cutting

FGD Focus Group Discussions

FHH Female Headed Households

GDP Gross Domestic Product

GHG Greenhouse Gases

GIS Geographic Information System

GMWL Global Meteoric Water Line

GNI Gross National Income

GNIP Global Network of Isotopes in Precipitation

GPS Global Positioning System

GTP Growth and Transformation Plan (2010/11 to 2014/15)

HEW Health Extension Worker

HIV/AIDS Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome

Hf Halite Formation

IA Impact Assessment

IFC International Financing Corporation

ISL In-situ Leaching

ISR In-situ Recovery

IT Information Technology

ITCZ Intertropical Convergence Zone

Abbreviation Full Definition

K2SO4 Sulphate of Potash

KA Kebele Administration

KCl Potassium Chloride

KII Key Informant Interviews

KOPs Key Observation Points

LMWL Local Meteoric Water Line

m bgl Meters Below Ground Level

mbrp Meters Below Reference Point (top of casing)

MDG Millennium Development Goal

MoM The Ethiopian Ministry of Mines

mV Milli-Volts

mS/m Milli-Siemens per Meter

MWL Meteoric Water Line

NA Not Applicable

NGOs Non-Governmental Organizations

NM Not Measured

NMP Noise Management Plan

NO2 Nitrous Dioxide

NPi National Pollutant Inventory

NT Near Threatened

NTO National Tourism Operator and Travel Agency

NTS Non-technical Summary

OHTL Electrical Overhead Transmission Line

OPEX Operational Expenditure

ORP Oxidation - Reduction Potential

PASDEP Plan for Accelerated and Sustained Development to End Poverty (from 2005/06 to 2009/10)

PLA Participatory Learning and Action

PM Particulate Matter

PRA Participatory Rural Appraisal

PSs Performance Standards

Qaf1 Quaternary Alluvial Fan 1

Qaf2 Quaternary Alluvial Fan 2

Qb Quaternary Basalt

Qs Mudflat Sediment

RPDs Relative percentage differences

SEP Stakeholder Engagement Plan

SO2 Sulphur Dioxide

SOP Sulphate of Potash

Sp Solfatra

STIs Sexually Transmitted Infections

SWL Static Water Level

T Temperature

ToR Terms of Reference

TU Tritium Units

USEPA United States Environmental Protection agency

VU Vulnerable to Extinction

VSP Vertical Seismic Profiling

WHO World Health Organization

ZTV Zone of Theoretical Visibility

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1 INTRODUCTION

1.1 BACKGROUND TO THE YARA DALLOL POTASH PROJECT

Yara International is an international chemical company that includes in its

upstream process world-scale ammonia and fertilizer plants, and phosphate

mines. These upstream processes produce ammonia, urea, nitrates, NPKs and

other nitrogen-based products, as well as phosphoric acid and feed

phosphates. Ammonia, urea and nitric acid form the starting point for Yara

International’s diverse portfolio of crop nutrition and industrial products and

environmental solutions. Yara International is the world’s largest producer of

ammonia, nitrate and complex fertilisers; in 2012 Yara International sold

~20.2 million tons of fertilizer on six continents.

To complement these upstream processes, Yara International has recently

started a subsidiary company, Yara Dallol BV, which is involved in the

exploration and mining development of potash concessions in Ethiopia. These

concessions are located in the Danakil Depression, Afar National Regional

State (ANRS), Ethiopia (Figure 1.1). Yara International, through its subsidiary,

proposes to develop a potash mine – the Yara Dallol BV Potash Project

(hereafter referred to as the proposed Project) within their concession areas.

These concession areas are known as Musley (10.1km2), North Musley

(18.7km2) and Crescent (35.3km2) (Figure 1.2). The resource potential of this

area is significant, and has the potential to produce 600,000 metric tonnes of

potash per annum. The Project will produce Sulphate of Potash (SOP or

K2SO4); this product is used extensively with chlorine sensitive plants like

citrus fruit trees.

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Figure 1.1 Location of the Proposed Yara Dallol Potash Project

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Figure 1.2 Location of the Yara Dallol BV Concessions

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Under the Ethiopian Environmental Impact Assessment (EIA) Proclamation

(No. 299/2002), the proposed Project requires an EIA and authorisation by the

Ministry of Environmental Protection and Authority (MoEF) before any

mining activities may commence. Yara Dallol BV have appointed

Environmental Resources Management Southern Africa (Pty) Limited

(hereafter referred to as ERM) as independent environmental practitioners to

undertake an Environmental and Social Impact Assessment (ESIA) (1) for the

proposed Project.

The objective of this ESIA is to assess the potential environmental and social

impacts associated with the planning, construction, operation and

decommissioning phases of the proposed Project. Yara Dallol BV has not yet

commenced mining, and are currently carrying out exploration activities to

assess the financial feasibility of the proposed mine. Exploration entails field

investigations involving drilling, sampling, mapping of the target mineral

resource, pilot testing, process development and ancillary investigations to

determine the overall economic feasibility of the proposed Project.

Yara Dallol BV is one of three companies that are currently carrying out

exploration activities in the Danakil Depression. Although this ESIA will

assess the potential cumulative impacts associated with other mining activities

in the Danakil Depression, it will not specifically assess the direct

environmental and social impacts associated with each of these companies’

mining activities. Furthermore, at this stage of the proposed Project, the

routing of all linear infrastructure, including transport routes, power lines and

water pipelines to site and from site have not yet been finalised. This ancillary

infrastructure will need to be considered under separate environmental and

social studies by the third parties establishing this infrastructure.

1.2 PURPOSE OF THIS REPORT (SCOPING REPORT)

This Scoping Report has been compiled as part of the ESIA process for the

proposed Project. The ESIA process is being conducted in accordance to the

Environmental Impact Assessment Proclamation (No. 299 of 2002), the World

Bank Safeguard Policies and the IFC performance standards. The main

objectives of this report are to:

Present a description of the proposed Project and the relevant alternatives;

Present the ESIA process and the relevant legislation that will be adhered

to;

(1) The use of the term ESIA as opposed to EIA is to emphasise that the process will not only assess environmental impacts

but will also assess potential socio-economic impacts of the proposed Project.

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Present the physical, biological and socio-economic characteristics of the

Project Area (1);

Present the issues raised during the initial pre-scoping field visits and pre-

scoping public consultation meetings held;

Identify the environmental and socio-economic issues related with the

proposed Project, on which the ESIA study shall be focused; and

Present an outline of the Terms of Reference for the various specialist

studies that will assess the identified environmental and social issues.

1.3 STRUCTURE OF THIS REPORT

The structure of the remainder of this report is as follows.

Table 1.1 Report Structure

Chapter Contents

Chapter 1 – Introduction Presents a brief background to the proposed

Project, the ESIA process and the purpose and

structure of the report.

Chapter 2 – Project Description Describes the Project Area and the proposed Project

components.

Chapter 3 – Project Motivation Describes the need and motivates the rationale for

the proposed Project.

Chapter 4 – Project Alternatives Discusses the Project alternatives that have been

considered thus far in the ESIA process.

Chapter 5 – Institutional and Legal

Framework of Ethiopia

Describes the legislative, policy and administrative

requirements, as well as international best practise

applicable to the proposed Project.

Chapter 6 – The ESIA Process Describes the EISA Process to be followed for the

proposed Project.

Chapter 7 –Stakeholder Engagement Summarises the Stakeholder Engagement Plan for

the proposed Project.

Chapter 8 – The Receiving Environment –

Physical and Biological Characteristics of

the Project Area

Describes the receiving physical and biophysical

setting of the Project Area.

(1) Please Note – the Project Area is defined as Yara Dallol BV’s three concession areas (namely the Musley, North Musley

and Crescent concessions), but also includes the surface areas outside of Yara Dallol BV’s concession areas that will be

used for linear infrastructure (including pipelines and access roads located outside of the concession area that will connect

to water and power supply corridors and to other main routes), as well as alluvial fans located outside of the Yara Dallol

BV concession areas, that will potentially be used as a source of water supply to the proposed Project. These areas directly

between and to the west of Yara Dallol BV’s concession area included in Allana Potash Corp’s concession areas. The areas

directly to the north of Yara Dallol BV’s concession area are included in the G&B Central Africa Resources Plc concession.

This is illustrated in Figure 2.2 in Chapter 2 of this report.

Please Note – this Scoping Report does not present a full baseline assessment or an assessment

of the environmental and socio-economic impacts. Rather it is a guide (Terms of Reference) to

Phase 2 of the ESIA process. Definitive answers shall be presented in Phase 2.

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Chapter Contents

Chapter 9 – The Receiving Environment –

Socio-economic Characteristics of the

Project Area

Describes the receiving socio-economic

characteristics of the Project Area.

Chapter 10 - Identification of Potential

Impacts

Describes the potential environmental and social

impacts that have been identified as part of the

Phase 1 Scoping Study.

Chapter 11 - Terms of Reference for ESIA Provides the Terms of Reference (ToR) for the next

phase (Phase 2) of the ESIA process.

Chapter 12 - Conclusions

Summarises the key findings of Phase 1 (Scoping

Phase).

References Contains a list of references used in compiling this

scoping report.

The main report is supported by the following annexes.

Table 1.2 List of Annexures

Annex Contents

Annex A – Stakeholder Engagement Plan

This document outlines the Stakeholder

Engagement Plan for the Project.

1.4 DETAILS OF THE ESHIA PROJECT TEAM

A list of the people on the ERM Project team is provided in Table 1.3. As far as

possible, ERM used Ethiopian companies for the specialist studies, but used

expertise from outside Ethiopia where local expertise was lacking.

Table 1.3 ERM Project Team

Activity Person and Company

Overall Project Management and compilation of reports, assessments and management plans

­ Mike Everett (ERM)

­ Dieter Rodewald (ERM)

GIS and Mapping Support ­ Michael Longhurst (ERM)

Ecology

­ Andrew Cauldwell (ERM)

­ Professor Brook Lemma (Ethiopian – ESSD Consultancy)

­ Teklehaimanot Haileselassie (Ethiopian – ESSD Consultancy)

Hydrogeology ­ Andreas Stoll (ERM)

­ Meris Mills (ERM)

Socio-economic and Stakeholder Engagement

­ David Shandler (ERM)

­ Belinda Ridley (ERM)

­ Nomsa Fulbrook-Bhembe (ERM)

­ Janet Mkhabela (ERM)

­ Samuel Hailu (Ethiopian – TS Environmental)

­ Hirut Yibabe (Ethiopian – Independent Specialist)

­ Dr Ali Hassan Muhaba (Ethiopian – Independent Specialist)

Archaeology and Cultural Heritage ­ Emlen Myers (ERM)

­ Doug Park (ERM)

­ Dr. Hailu Zeleke (Ethiopian – Independent Specialist)

Visual ­ Peter Austin (ERM)

Air Quality ­ Dr Chris HazellMarshall (ERM)

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Activity Person and Company

­ Yves Verlinden (ERM)

Noise study ­ Rod Linnett (ERM)

­ George Chatzigiannidis (ERM)

­ Justin Kmelisch (ERM)

1.5 DETAILS OF THE APPLICANT AND ENVIRONMENTAL ASSESSMENT PRACTITIONER

Any comments on the Scoping Report and Terms of Reference should be

provided to Yara Dallol BV and ERM at the following addresses.

Proponent: Yara Dallol BV

3rd Floor Oasis Building,

Near Edna Mall, Addis Ababa,

Ethiopia

Contact: Mr Sanjay Singh Rathore

Project Manager

Tel: +251 (0) 9141 524 489

Consultant: Environmental Resources Management

Unit 6, St Helier Office Park

c/o St Helier Rd & Forbes Drive

Gillitts, Durban

South Africa

Contact: Mr Mike Everett

Project Director

Tel: +27 (0) 31 767 2080

Email: mike.everett@erm.com

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2 PROJECT DESCRIPTION

This Chapter provides a description of the proposed Project and associated

phases, related activities and ancillary infrastructure. This description is

preliminary and for information purposes only. Additional information will

be made available in the ESIA report.

The information presented in this Chapter was received from Novopro Projects

(the Project Management Company appointed for the proposed Yara Dallol

Potash Project) and is derived from the Mining Feasibility Study for the

proposed Project, which was compiled by Ercosplan (2012), and information

from the ongoing Definitive Feasibility Study currently being completed by

Novopro.

2.1 PROJECT LOCATION

As is previously mentioned, Yara Dallol BV holds concession areas in the

Danakil Depression in north-eastern Ethiopia. The Project Area is

approximately 605km north east of the capital Addis Ababa and 388km North

West of Djibouti. The Yara Dallol BV concession areas are defined as (also

refer to Table 2.1 and Figure 2.1) –

1. Musley: 10.1km2 (about 2km x 5km), under application for license for

exploration activities.

2. North Musley: 18.7km2 (about 4km x 5km, trapezoid shape), licensed for

exploration activities.

3. Crescent: 35.3km2 polygon, licensed for exploration activities.

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Table 2.1 Coordinates of the Yara Dallol BV Concession Areas in the Danakil

Depression, Ethiopia

Crescent Exploration

License Area

North Musley

Exploration License Area

Musley Mining

License Area

Corner

Easting

(m)

Northing

(m)

Easting

(m)

Northing

(m)

Easting

(m)

Northing

(m)

1 637472 1570413 628226 1581465 632807 1570088

2 633859 1579906 629949 1576367 631612 1574997

3 638489 1581590 629994 1576346 633590 1575415

4 638813 1581592 633332 1577691 634755 1570528

5 640876 1575907 631905 1582219

6 639558 1576435

7 638042 1575912

8 637659 1573867

9 638746 1570887

Please Note - coordinates are given in geographic format, zone 37, hemisphere N of the Adindan, Ethiopia

datum (Ellipsoid: Clarke 1880)

Figure 2.1 Yara Dallol BV Concession Areas

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As such, the total area of all three concession areas is 64.1km2.

Yara Dallol BV is one of three concession holders within this area of the

Danakil Depression. Other concession holders include:

1. Allana Potash Corp. - Allana has completed their feasibility study and has

obtained approval from the ministry of mines to continue with the

development of their potash mining project. They are currently in the

process of searching for investors.

2. G&B Central Africa Resources Plc - G&B is conducting exploration work

in their license areas. Exploration commenced with drilling in May 2011

and to date the company has completed over 25 exploration holes.

These concession holders, together with their concession areas are illustrated

in Figure 2.2. This Figure provides context as to the location of these

concession areas, relative to the Yara concession, within the broader region.

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Figure 2.2 Concession Areas in the Danakil Depression

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2.2 PROJECT BACKGROUND

The Yara Dallol Potash Project has been ongoing since 2008. In 2012 Yara

International obtained majority shares in the project.

The early engineering work was completed by the engineering firm Ercosplan.

Ercosplan completed a Mining Feasibility Study report in September 2012

summarizing the work to date.

A new project team was assembled comprised of Novopro Project

Development and Management, and Agapito, a firm specializing in the design

of underground mines, with extensive solution mining expertise. After

reviewing the data available from the Mining Feasibility Study, the team

completed an Engineering Scoping Study based upon a simplified and more

site-specific process, and prepared a preliminary design and associated project

CAPEX and OPEX estimates corresponding to the new design proposed. This

Engineering Scoping Study was approved by Yara International resulting in

the initiation of a Definitive Feasibility Study in September 2013 and

scheduled to finish in January 2015.

2.3 PHASES OF THE PROPOSED YARA DALLOL POTASH PROJECT

In general, mining projects are developed in the following set phases:

Exploration;

Engineering Scoping Study

Pre-Feasibility Study

Definitive Feasibility Study

Preparation for Execution (bridge engineering, contracting etc.);

Execution (detailed engineering and construction);

Operation (mining); and

Decommissioning and Closure.

Each of these phases have a different combination of activities and the

commencement of each phase is dependent on the outcome and success of its

predecessor. It must be noted that the scope of the Project proposed and the

associated ESIA study relates to the construction, operation and

decommissioning and closure phases. However, the recommendations of the

ESIA study and management/mitigation measures in the associated social

and environmental management plans will need to be taken into account

during the planning phase of the proposed Project.

The above mentioned Project phases are discussed in this Section.

2.3.1 Exploration Phase

To date, the proposed Project has performed a considerable amount of work

on the characterisation of resource within its concession. This Section details

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the exploration activities undertaken by Yara Dallol BV between October 2008

and September 2012.

Geological Exploration

In total, over 40 holes have been drilled to date. These drill holes targeted the

following deposit horizons (the configurations of these are presented in Figure

2.3):

Sylvinite

Upper Carnallitite

Lower Carnallitite

Kainitite

Figure 2.3 Deposit Horizons

During the process of drilling and coring wells, extracted material from the

various mineral deposits were analysed in terms of the purity and quantity of

extractable resources available for exploitation. The testing of mineral

resources contributed to determine the overall economic feasibility of the

proposed Project. The results of exploration drilling activities are presented in

Table 2.2.

Surface

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Table 2.2 Thickness and Average Grade of the Deposit Horizons in the Potash bearing Drill Holes for the Yara Dallol Potash Project

Thickness

(m)

Sylvite wt% Halite

wt%

Carnallitite

wt%

Kainite wt% Kieserit

wt%

Anhydrite

wt%

Polyhalite

wt%

Insolubles

wt%

KCl

wt%

Sylvinite Member (28 holes for calculation)

Average 3.35 27.83 57.19 3.92 0.95 - 7.65 0.63 1.72 27.83

Minimum 0.34 11.36 45.16 0.02 - - 0.37 - - 11.36

Maximum 6.7 46.42 70.25 16.90 16.90 - 20.79 12.98 26.97 46.42

Upper Carnallitite (22 holes for calculation)

Average 3.29 1.83 27.07 53.20 2.55 1.46 4.67 0.06 0.15 16.68

Minimum 0.20 - 11.06 1.74 - - 0.48 - - 4.72

Maximum 17.75 8.73 65.08 81.91 50.13 6.10 9.54 1.18 0.80 25.65

Lower Carnallitite (26 holes for calculation)

Average 6.32 0.09 20.26 30.83 2.82 37.93 1.81 - 0.92 8.84

Minimum 2.00 - 11.43 0.24 - 0.23 0.31 - - 0.06

Maximum 34.55 2.27 65.55 48.89 20.27 52.46 16.16 - 14.57 13.76

Kainitite Member (28 holes for calculation)

Average 6.80 0.07 32.75 1.11 61.16 3.54 0.73 0.43 0.33 19.77

Minimum 1.50 - 21.05 - 0.33 0.01 - - - 12.21

Maximum 9.45 0.48 94.90 5.13 78.33 14.20 7.07 1.84 8.05 23.89

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Figure 2.4 below shows the drilling rig used to produce the aforementioned

core samples. Furthermore, Figure 2.5 provides an example of a core sample.

Figure 2.4 Core Sample Drilling Rig

Figure 2.5 Example of Core Sample

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Preliminary Seismic Surveys

The Project has performed a preliminary vertical seismic profiling survey

(VSP) of four drill holes (CONF 002; EXPL 03C; EXPL 07 and EXPL F – refer to

Figure 2.6) to determine the seismic velocity depth structure of the complete

Musley deposit. The results of this survey are used to define the most efficient

layout for a future 2D high resolution seismic survey.

The main goals of the preliminary seismic surveys are to provide an image of

the subsurface and establish the continuity of the potash horizons as well as

an overall structure of the deposit.

An example of the outcome of the preliminary vertical seismic profiling

survey interpretation is included in Figure 2.6.

Figure 2.6 Example of the Outcome of the Preliminary Vertical Seismic Profiling Survey

Interpretation

Establishment of a Site Camp

During the exploration phase a camp was established growing from 10

persons to its present day capacity of approximately 220 people. This camp

provides shelter and services to the project personnel who participate in the

Yara Dallol Potash Project. The camp is equipped with a clinic and has a full-

time medic on site. The clinic also regularly treats locals with medical

emergencies.

2.3.2 Planning and Engineering Phase

The exploration phase (as described in Section 2.3.1) is currently guiding the

detailed planning and engineering phase, and it is during this phase that the

ESIA team will work closely with the engineering design team. This allows

possible Project processes, layout and design alternatives to be investigated,

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and the identification and assessment of impacts and establishment of suitable

mitigation/management measures that can be incorporated into the overall

Project design. These anticipated impacts and associated mitigation measures

will be presented in the form of an ESIA Report and associated Management

Plans.

It is expected that the planning and engineering phase of the proposed Project

will commence in April 2015 for duration of a year ending in April 2016.

2.3.3 Construction Phase

The construction phase cannot commence prior to the completion of the

Definitive Feasibility Study and the Bridge Engineering Phase as well as the

approval of the associated ESIA Study by The Ethiopian Ministry of Mines

(MoM). On the assumption that the mine will be established and that all

relevant rights and permits will be obtained, it is assumed that construction

will commence in May 2015 for duration of approximately 31 months ending

in November 2017. The construction phase will likely include the following

initial construction activities:

Construction of access roads;

Construction of Brine and Water Pipelines

Establishment of a staff accommodation;

Establishment of the office and support facilities;

Establishment of a mine processing facility;

Establishment of evaporation ponds;

Solution mining preparation.

2.3.4 Operational Phase

Once the construction phase of the proposed Project is complete, the

operational phase will commence. Early estimates indicate a potential life of

mine of over 18 years for the North Musley concession.

Solution Mining

Mining Area

As is mentioned earlier in this Chapter, the proposed Yara Dallol Potash

Project has three concession areas. Based on data collected during the

exploration phase the resource within these three concessions has been

divided into the following three zones (refer to Figure 2.7):

Zone 1 – located to the west of the fault zone where all four beds of

interest are not interrupted by the Bischofite interburden. This area has a

thinly bedded Sylvinite and Upper Carnallitite, with moderately thick

Lower Carnallitite and Kainitite beds. In this zone, the proposed cavern

height extends from the floor of the Kainitite bed to the roof of the

Sylvinite bed.

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Zone 2 – consists of the Sylvinite and Upper Carnallitite beds situated

above the Bischofite on the east side of the fault zone. The sump for the

caverns in this zone will be constrained to lie above the Bischofite bed

within the Upper Carnallitite bed.

Zone 3 – comprised of the down dip Lower Carnallitite and Kainitite

lower beds. The caverns in the lower beds will have the following design

constraints:

­ The roof is not allowed to penetrate the Bischofite interburden;

and

­ The base of the cavern rests at the bottom of the Kainitite bed

with the sump penetrating the lower salts.

A generalised cross-section through the different mineralisation beds is

illustrated in Figure 2.7.

Figure 2.7 Cross Section Showing Typical Caverns in Zones 1, 2 and 3

Optimal Locations for Solution Mining

Factors determining the most optimal locations for solution mining include:

Depth of the resource zone and the ability to maintain necessary vertical

and lateral pressures.

Rock mechanics and characteristics of geologic units including density,

shear strength and creep strain rates.

Solubility of mineralized units to determine brine concentration of

particular minerals.

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Geometry of the resource zone including thickness, sequence and

inclination (dip) of the ore bearing zones

Taking these factors into account, Zone 1 in North Musley was chosen as the

location for initial mining (refer to Figure 2.8).

Zones 2 and 3 (Figure 2.8) were not considered at this time due to significant

challenges, including –

Excessive (greater than 15%) inclination, which results in significant brine

dilution;

Limited resource thickness (in the case of Zone 2); and

Excessive depths and temperatures in the case of the Crescent concession.

All zones at Musley were not considered because of several issues, including –

Uncertainty about the extent of the influence associated with the former

Parsons Mine;

The shallow depth of the mineralization (1);

The lack of success with pilot wells in 2011 and 2012; and

The unconsolidated nature of the overlying materials.

(1) Please Note - because of the shallow depth the overburden is not consolidated and cannot support a cavern at a shallow

depth. The roof would collapse.

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Figure 2.8 Project Area illustrating Operational Zones

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Mining Layout

The following layouts were developed for the establishment of caverns

located in Zone 1 on the North Musley concession area.

472 caverns are proposed in this mining area, each with a 40m radius, and a

minimum pillar width of 42m (refer to Figure 2.9). Assuming an average

mineralized thickness of 17.33m and recovery of 80% of the final brines, the

average cavern life in Zone 1 of North Musley is estimated at 1.38 years.

The number of caverns required to achieve an annual production rate of

600kilotonnes per year (ktpy) of Sulphate of Potash (SOP), is estimated to be

30 and the number of caverns that will need to be replaced each year is

estimated to be approximately 26. The mine life for mining in Zone 1 in the

North Musley area at this production rate was estimated to be approximately

25 years.

Figure 2.9 Cavern and Pillar Geometry for North Musley

The radius of the caverns (40m) was chosen as a trade-off between the

desirability of maximizing the volume produced per well and the need to

minimize brine dilution in the roof and floor of the cavern. The 40m radius

results in a cavern footprint of 5,026m2.

The caverns are to be accessed by a single well that will be used for both

injection and production. This will be accomplished by means of an inner

string.

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Brine Extraction

To satisfy a 600ktpy SOP production rate (based on a 85% plant recovery), a

production brine flow rate of 807m3/h is required, with an injection of

900m3/h of solvent water. This will equate to 30 caverns having to be

operated simultaneously (assuming that each cavern will have a brine flow

rate of 27m3/h).

Based on laboratory solubility testing, it is expected that brine composition in

the North Musley concession area will be as follows (refer to Table 2.3):

Table 2.3 Brine Composition and Respective Concentrations for the Various Potash

Members in the North Musley Concession

Potash Member

Brine Grade

Brine Density

(g/ml)

KCl

(g/l)

NaCl

(g/l)

MgCl2

(g/l)

MgSO4

(g/l)

Sylvinite 105.0 228.0 3.0 1.0 1.200

Upper Carnallitite 59.0 79.0 62.0 65.0 1.182

Lower Carnallitite/Kieserite 35.0 72.0 42.0 132.0 1.208

Kainitite 82.0 104.0 86.0 138.0 1.288

Resource Recovery

The recoverable resource has been estimated based on the geologic model, the

cavern shapes and the density and thickness of potash bearing members and

is presented in Table 2.4.

Table 2.4 Summary of Minable Resource (Tonnes) for Zone 1 of the North Musley

Concession

Parameter Value

Number of caverns 388

Sylvinite (tons) 5,988,286

Upper Carnallitite (tons) 1,180,942

Bischofite (tons) 177,667

Lower Carnallitite (tons) 11,896,695

Kainitite (tons) 16,407,980

Total resource in 388 caverns (tons) 35,473,903

Post Solution Mining Process – Processing

From the caverns, it is proposed to pump brine to a series of solar evaporation

ponds in which brine will be evaporated resulting in the crystallisation of

potassium-, magnesium- and sodium-bearing salts. These salts will then be

removed from the evaporation ponds and directed to a conversion reactor

whereby potassium chloride (KCl) salts are converted to potassium-

magnesium sulphate salts (K2SO4 & MgSO4).

These sulphate salts will then enter a flotation circuit whereby potassium-

magnesium sulphate salts will be separated from the undesired NaCl salt. In

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this process, the desired K2SO4 & MgSO4 will float to the top of the vessels,

while the undesired NaCl will remain at the bottom of the vessel.

Both streams (K2SO4 & MgSO4 and NaCl) will then be collected and

dewatered. The effluent from the dewatering process will be directed back to

the evaporation ponds, NaCl will be discarded to the tailings pile and K2SO4 &

MgSO4 salts will be sent to the SOP Crystallizer.

The SOP crystallizer will through the use of fresh water convert the K2SO4 &

MgSO4 salts to SOP (K2SO4) crystals. The K2SO4 crystals are then further

dewatered and dried producing the SOP product.

The above mentioned process has been designed to produce approximately

600 ktpa (79mtph) of SOP product. The processing plant will be designed to

produce both granular and standard grade SOP with flexibility to fluctuate the

quantity of each based on market conditions.

2.3.5 Process Utilities

Water Requirements

Solution Mining Requirements

Water for solution mining will be sourced from a series of water wells that are

proposed in the alluvial fans within the Project Area. A groundwater

assessment project for the Dallol Area was undertaken by the Water Works

Design and Supervision Enterprise - December 2013. The assessment

concludes that Yara’s total water demand can be drawn from these alluvial

fans in an environmentally and socially sustainable way. An additional

hydrogeological study to verify this conclusion is currently underway and

should be completed by late 2014.

Since the fans are located some distance from the production well fields, water

will need to be transported via dedicated pump stations. A water well

pipeline will transport the water to the plant. Water from these alluvial fans

will have the following characteristics (refer to Table 2.5):

Table 2.5 Solution Mining Water Properties

Parameter Unit Data

Volume m3/h 900

Temperature °C 45

Total TDS Ppm ≤15,000

Process Water Requirements

Process water used in the purification process will also be pumped from the

alluvial fans. Process water for the proposed Project has the following

characteristics (refer to Table 2.6):

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Table 2.6 Process Water Properties

Parameter Unit Data

Volume m3/h 750

Temperature °C 45

Total TDS ppm ≤1,000

This water will also be used as firefighting water.

Potable Water

Potable water is to be used for drinking and sanitary needs. A potable water

system will be put in place that will meet regulatory requirements in terms of

quality. It is estimated that 30m3/h of potable water will be required during

the operational phase of the proposed Project.

Waste Water

Waste water produced by equipment and regular maintenance will be

recycled in the operational process. Waste water shall not contain foreign

contaminants prohibited by environmental laws and regulation.

Sanitary waste water from toilets and urinals shall be collected in an

underground sewer system that will be constructed as part of the processing

plant’s sanitary facilities. A self-contained treatment system will be put in

place to treat sanitary water. As part of this treatment process, sludge will be

removed every 8 to 12 months and disposed of by a licensed contractor.

Treated waste water will be re-used in the production process.

Solid Waste

Solid waste with the exception of the process tailings will be either recovered

by pre-qualified contractors at the processing plant site or disposed of as per

applicable regulations.

Waste Brine

Waste brine consists of excess MgCl2 brine from the tailings stockpile

produced by rainwater and purge brine from the SOP production process.

This waste brine will be returned back into the caverns that they came from

once the caverns have ceased producing production grade brine.

Electricity

Electricity will be sourced from Ethiopian Electric Power (EEP). EEP is

planning to bring a 230kV electrical line to a common substation proposed in

the greater Project Area. From this substation each of the mining companies is

responsible to source their own power, likely through a 132kV line. The

average load of the facility is estimated to be less than 25 MW.

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Diesel Fuel

Diesel fuel will be used to fuel machinery for product drying, emergency

power generation as well as for vehicles. Blanket oil (for use in solution wells)

may also be diesel oil. Alternatives to using diesel oil as blanket oil are being

investigated and the results will be available prior to operation. The diesel

will be delivered via tanker truck from a depot. Diesel requirements are

expected to be approximately 41,700 litres/day.

Compressed Air

The plant will require two compressed air systems; one for use in the

processing plant and one for instrumentation use.

2.4 EMPLOYMENT

The project has been employing since 2008 (as part of the exploration phase)

and has built a positive relationship with staff and the local inhabitants. The

number of local inhabitants employed has increased since 2008. Should the

proposed Project go ahead into the construction and operational phases

skilled construction workers, general helpers, management, drillers, unskilled

labour etc. will all be required. It is expected that the proposed Project will

employ 370 and 600 persons during the construction and operational phases

respectively.

2.5 ANCILLARY INFRASTRUCTURE

At this stage of the Project all ancillary infrastructure, including transport

routes outside of the concession areas, electrical overhead transmission lines

(OHTL) from Mekele, post transport product processing and Port

infrastructure have not yet been finalised. This Section does however provide a

brief summary of what ancillary infrastructure is proposed.

2.5.1 Transport Route

Currently the site is connected to Mekele by a new, paved 2 lane road that

traverses the highlands down to the Project Site. It is proposed to use this

during the exploration, planning and possibly construction phases of the

proposed Project; however, once the Project becomes operational it is

estimated that this road will need to carry a 40ton tandem dump truck every 7

to 15 minutes, thus posing a significant safety risk for the proposed Project.

Furthermore, if other potash mining projects become operational in the greater

Project Area, this traffic volume will increase significantly.

As such, Yara Dallol BV is working closely with the Ethiopian Road Authority

(ERA) to identify a safe and economically feasible transport route through to

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Tadjoura Port, Djibouti. Until this road is constructed the most viable route to

port is shown in Figure 2.10.

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Figure 2.10 Proposed Transport Routes from the Project Site through to Tadjoura Port, Djibouti

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2.5.2 Electrical Overhead Transmission Lines

The EEP has committed to bringing in a 230kV OHTL from a Mekele

substation to an electrical substation proposed in the greater Project Area. The

preliminary design of this line has been completed by EEP and once a potash

mining company in the Danakil Depression progresses to construction, the

EEP will start the construction of this OHTL.

2.5.3 Post Transport Product Processing

The SOP product from the site may require some post transportation

processing to meet clients specifications prior to export. This processing could

include screening of the product. The location of this post transportation

processing has not yet been determined.

2.5.4 Port Infrastructure

The Port Authority of Djibouti is currently developing the Tadjoura port to

assist Northern Ethiopia with exports. As such, it is proposed to transport SOP

product from site through to Tadjoura Port, Djibouti for export. This port is

currently under construction and will be completed by February 2016 before

the proposed Yara Dallol potash Project commences with mining operations.

Facilities at the port will include –

A large covered storage shed;

A truck unloading facility;

Potential post transportation processing infrastructure;

Equipment for loading SOP product onto a common conveyor; and

Support areas including offices, customs, washrooms etc.

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3 PROJECT MOTIVATION

Yara International is a leading global fertilizer company with sales of fertilizer

to about 150 countries globally. As part of Yara Internationals overall strategy,

the company has developed a global search for raw materials that can be

developed and used as a source to Yara International’s global fertilizer

production.

The potash resource in the Danakil Depression has been known for decades

and is, from a resource perspective, considered to represent an interesting

potential for production of potash.

3.1 DEMAND FOR SOP POTASH

As is mentioned in Chapter 2, the proposed Project will produce a potash type

known as Sulphate of Potash (SOP), which has certain agronomic advantages

(such as a low chlorine concentration) that are necessary for certain high value

cash crops (mainly fruits and vegetables).

As a result, SOP is valued in the market as a premium potash type, and

therefore has a higher retail price over MOP. SOP is mainly used for chlorine

sensitive crops, especially high value crops (fruits and vegetables), and is a

favourable substitute to MOP for these applications. However, this said, the

extent that SOP can be used as a substitute of MOP will depend on future

price differences. Yara, with its global marketing and distribution division,

will be targeting these high value crop segments in Africa, Asia, South Europe

and South America.

3.2 GLOBAL POTASH SUPPLY AND DEMAND BALANCES

Estimated global consumption of potash in 2013 was 56 million tons and more

than 90% of this consumption was covered by MOP. In the same year, only 8%

of global potash consumption was supplied by SOP (approximately 4.48

million tons).

The reason for this is that the production of SOP is secondary to that of MOP –

essentially SOP is produced by dissolving MOP in sulphuric acid, a much

more costly process. Furthermore, about 50% of global SOP production is

located in China with low utilization rates due to inland climatic conditions

and logistical cost hampering exports.

About 80% of global production and sales of SOP is managed by 4 companies.

Fertecon (2013) (cited by Yara International 2013) is estimating a global SOP

utilization of approximately 7 million tons by 2020 (refer to Figure 3.1),

implying an annual growth of approximately 7%. The estimated growth rate

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will depend on numerous factors, including the extent of substitution of MOP

by SOP.

Figure 3.1 SOP Consumption

Approximately 40% of global SOP production is exported. China, in spite of

its position as a main producer of SOP globally, is also the main importer of

SOP. Furthermore, import volumes are relatively moderate and relatively

evenly distributed between a large number of countries globally (refer to

Figure 3.2), thus indicating that SOP is mainly used for the less extensive, high

value segments of agriculture.

Figure 3.2 Largest SOP Importing Countries Globally

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3.3 FINANCIAL FEASIBILITY OF THE PROPOSED PROJECT

A comprehensive financial feasibility evaluation of the proposed Project has

not yet been completed; however, preliminary economic evaluations carried

out in the early stages of the Project have indicated that the proposed Project

will be financially feasible. Feasibility will be refined as the project develops

and will be concluded as part of the detailed feasibility study.

Key factors influencing Project feasibility include availability of sufficient

quality water, verification of the solution mining technique proposed and

establishing a financially feasible and safe logistical chain to the export port in

Djibouti.

3.4 ETHIOPIAN ECONOMY AND CONSEQUENCES FOR THE PROPOSED PROJECT

Ethiopia is the second most populated country in sub-Saharan Africa with a

population of about 91.7 million in 2012. The economy has experienced a

strong and broad based growth over the past decade, averaging close to 11%

per year. The economic growth has been the basis for being on track in

meeting the targets set out in the Millennium Development Goal (the

Millennium Development Goal is discussed in more detail in Chapter 5). In line

with Ethiopia meeting their economic and social objectives, the proposed

Project will be a source of infrastructure development in the Danakil

Depressions (viz. roads, power supply, provision education and health

facilities etc.).

The proposed Project will be an important source of foreign currency inflows

and taxes, as well as creating significant direct and indirect employment in

regions such as the Afar National Regional State (ANRS). Also, large mining

projects in the ANRS will require a wide range of competencies presently not

available in the region. As such, should large mining projects in the region go

ahead, they will act as a catalyst for development of the regions educational

system.

As a result of the above potential long term benefits to the Ethiopian economy,

Federal Government has shown a strong interest and commitment to support

the proposed Project. This is evident in that the Ethiopian Government has

commenced with the development of roads in the Project Area, improved the

level of security in the greater area and exempt investor companies operating

in the Project Area from import duty taxes.

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4 PROJECT ALTERNATIVES

This Chapter contains a description of the alternatives that have been identified

for the proposed Yara Dallol Potash Project to date.

Alternative mining methods considered, as opposed to solution mining,

include:

Open Pit Mining;

Conventional Underground Mining; and

In-situ Leach Mining.

These alternative mining techniques are presented below.

4.1 OPEN PIT MINING

Open-pit mining, open-cut mining or opencast mining is a surface mining

technique of extracting rock or minerals from the earth by their removal from

an open pit or borrow. This form of mining differs from extractive methods

that require tunneling into the earth such as long wall mining. Open-pit mines

are used when deposits of commercially useful minerals or rock are found

near the surface; that is, where the overburden (surface material covering the

valuable deposit) is relatively thin or the material of interest is structurally

unsuitable for tunneling (as would be the case for sand, cinder, and gravel).

For minerals that occur deep below the surface - where the overburden is

thick or the mineral occurs as veins in hard rock - underground mining

methods extract the valued material (Wikipedia, 2014).

This method of mining has been considered; however, for successful

implementation this method would require shallow potash deposits and a

groundwater depth that is below mineralised material member. The depth of

mineralised material in the Project Area ranges between 75m and 250m.

Although the upper deposits may be easily accessible, reaching to a depth of

250m in this area would prove costly. Furthermore, to access the mineralised

material a large volume of overburden would need to be removed. This

increased effort to access the mineralised material together with high

overburden (waste material) to product ratio would result in the proposed

Project not being financially feasible. Furthermore, the Project Area is prone to

runoff from the western highlands, and as a result the salt plains (in which

this mining technique would be employed) would be regularly flooded, thus

resulting in the flooding of open pit mining operations and the need for

extensive dewatering. For these reasons open pit mining is not feasible.

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4.2 CONVENTIONAL UNDERGROUND MINING

Conventional Mining in this deposit would be done using the Room-and-

Pillar or continuous mining technique. Room and pillar mining is commonly

done in flat or gently dipping bedded ores. Pillars are left in place in a regular

pattern while the rooms are mined out. In many room and pillar mines, the

pillars are taken out, starting at the farthest point from the mine haulage exit,

retreating, and letting the roof come down upon the floor. Room and pillar

methods are well adapted to mechanization, and are used in deposits such as

coal, potash, phosphate, salt, oil shale, and bedded uranium ores (Wikipedia,

2014).

Conventional underground mining was employed in the Project Area by

PARSONS in the 1960’s. The use of this method for potash mining requires,

contrary to underground mining of other commodities, a hydrologic

protection layer between the mineralised material and groundwater bearing

overburden. This protection layer prevents water and brine from entering the

mine. In an underground mining operation for other commodities,

underground workings can be dewatered; however, for potash mines, water

entering the mine is saturated brine, and over time non salt saturated water

will enter mine workings. Non saturated water dissolves salt bearing material,

resulting in an increased dissolution process and increased water retention.

Eventually water retention is so high that dewatering underground workings

is not feasible. The conventional underground PARSONS mine had to be

abandoned, because of excessive water inflows.

During the exploration phase of the proposed Project it became evident that

the material overlying the Sylvinite Member is porous and that there is no

adequate hydrologic protection layer above the Sylvinite Member.

The absence of a hydrologic protection layer above the Sylvinite Member

means that conventional underground mining of this part of the deposit is not

feasible. For this reason conventional underground mining is not feasible.

4.3 IN-SITU LEACH MINING

In-situ leaching (ISL), also called in-situ recovery (ISR) or solution mining, is a

mining process used to recover minerals such as copper and uranium through

boreholes drilled into a deposit, in-situ (Wikipedia, 2014).

The process initially involves drilling of holes into the ore deposit. Explosive

or hydraulic fracturing may be used to create open pathways in the deposit

for solution to penetrate. Leaching solution is pumped into the deposit where

it makes contact with the ore. The solution bearing the dissolved ore content is

then pumped to the surface and processed. This process allows the extraction

of metals and salts from an ore body without the need for conventional

mining involving drill-and-blast, open-cut or underground mining

(Wikipedia, 2014).

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For In-situ Leach mining it is necessary that:

Cavern preparation can be done in a salt layer below the deposit; and

There is a minimal dip of the deposit that allows the development of

gallery caverns (initial caverns located under the planned mining area).

The presence of highly soluble Bischofite below the Sylvinite/Upper

Carnallitite Member in Zone 2 (refer to Chapter 2) makes cavern preparation

below these Members impossible. The Bischofite material in the lower part of

the developing cavern is more soluble and will dissolve more easily than the

Sylvinite member. As a result, production brine will have a high MgCl2 (waste

salt) content and, consequently, a relatively low KCl (product salt) content.

The presence of Bischofite also prevents the development of gallery caverns,

as gallery caverns will come in contact with Bischofite resulting in the

dissolution of Bischofite and a high MgCl2 concentration in production brine.

For this reason In-situ Leach mining was not considered further.

4.4 NO-GO ALTERNATIVE

As per ESIA best practice, any comparative assessment of project alternatives

must include a no-go option. For the purposes of this report the no-go

alternative will be that the Yara Dallol Potash Project is not established in its

entirety. In this alternative no direct socio-economic advantages are

anticipated. If Yara Dallol BV did not establish a potash mine in the area then

other mining concession holders would. The key potential disadvantages

associated with the no-go alternative include:

Lost opportunity to supply an ever increasing global demand for SOP.

Short-term loss of utilisation of significant potash bearing reserves in the

Danakil Depression.

Loss of the opportunity of employment and development of the Afar.

Loss of revenue streams in Ethiopia, which in turn will affect local,

regional and national government revenues.

Loss of opportunity for private investment within Ethiopia, which is a key

initiative by the Ethiopian Government.

The no-go alternative is a feasible option; however, if Yara Dallol BV did not

establish a potash mine in the area then other mining concession holders

would. As such, this alternative is not considered reasonable and will not be

considered any further in this report.