Danakali Ltd (ASX:DNK, LSE:DNK, OTC:SBMSF) is on track to produce potentially economic quantities of magnesium chloride from its sulphate of potash (SoP) production hub in Eritrea, East Africa.
Taking into account two ore sources, DNK’s flagship Colluli asset could produce 55.8 million tonnes of magnesium chloride in the first 60 years of SoP production.
Magnesium chloride is a key ingredient in magnesium oxide and magnesium production — a market with a compound annual growth rate of 8.8% through 2027.
As it stands, the magnesium chloride by-product sits outside financial, economic or front-end engineering and design (FEED) studies at Colluli.
But that could stand to change as Danakali investigates where the value lies in this versatile by-product.
Chance to produce other valuable products
Speaking to the finding, Danakali chairman Seamus Cornelius said Colluli was a tremendously large, rich and versatile ore body. He said it was also the world’s largest SoP reserve.
“We remain focused on funding the development of the Colluli Project to produce high-quality SoP in the first instance, but we know that Colluli has the potential to produce many other valuable products.
“If an economic analysis of the beneficiation of our magnesium chloride from the bischofite brine stacks up, our current mass balance equations suggests we could potentially produce up to 115,000 tonnes per annum of magnesium from the magnesium chloride produced from SoP modules one and two.
“Beneficiation to magnesium will require substantial energy input, which may be satisfied from the geothermal potential in the area.”
Potential beyond SoP market
The Colluli asset already hosts a JORC-compliant SoP reserve, weighing in at 1.1 billion tonnes.
Now, with a process design for the project complete, Danakali is able to consider the value of any by-products that will come from its process plant.
While Danakali’s primary focus remains developing the Colluli Project to export premium SoP to its target markets, test results demonstrate high purity manganese chloride is produced as a direct by-product of Colluli’s SoP production.
What’s more, this offshoot is suitable for potential export to regional markets or beneficiation.
Notably, Bischofite brines from Colluli’s first two modules — targeted in SoP production alone — are forecast to produce 27 million tonnes of magnesium chloride in the first 60 years at an annual production rate of 450,000 tonnes.
What is magnesium used for?
Magnesium chloride is the primary feedstock in magnesium oxide and magnesium production — a key metal in the agriculture, chemical, steel, automotive and construction industries.
As a lightweight-yet-robust material, magnesium can be alloyed with aluminium to create vehicle parts, electrical housings and connectors.
According to Grand View Research, the global metal magnesium market size was valued at US$3.5 billion in 2019.
It’s expected to grow at a compound annual growth rate of 8.8% from 2020 to 2027.