What has Obama got to do with a discussion about this company? Leave that blame-everything-on-Obama drivel for the political threads.
From all reports Eritrea is relatively stable and has negotiated a very good deal with Danakali so I am willing to consider it to have a low to medium sovereign risk. In regard to country risk I see three potential issues (1) civil unrest in Ethiopia but that apparently is tribal, not religious. Eritrea is about half Muslim and half Christian but that does not seem to be a source of friction and I don't think there is significant risk of tribal friction in Ethiopia spreading to Eritrea (2) the spread of the UAE/Saudi Arabia v Qatar/Iran spat: apparently Ethiopia is tending to side with UAE whilst Qatar may be attempting to win over Eritrea's support. Were there to be a hot war break out in the Gulf it may spread to the Red Sea (3) China: along with several other nations China now has a military base in Djibouti and is showing signs of wanting to increase its influence in the horn of Africa. Usually how China operates is that not only do state bodies get involved but often ostensibly private Chinese entities also pitch in.
So in terms of Danakali operating in Eritrea I rate it as a medium to high risk but countering that is that Colluli is a tier one project: low cost, exceptional quality, huge reserves / long life / plenty of scope to expand.
Actually for me the highest risk of investing in Danakali now is whether it is attempting to get into production at the wrong time in the potash price cycle. It may not be a major factor but I can't get a clear picture of the potash market. What happens with the offtake agreements will be the litmus test in that regard.
Add to My Watchlist
What is My Watchlist?
