by William Davison

July 19 (Bloomberg) — BHP Billiton Ltd., the world’s largest mining company, plans to exit its Ethiopian potash project, the Mines Ministry and the company said.

The Melbourne, Australia-based miner informed the ministry of its intention to end its exploration for the fertilizer ingredient about two weeks ago, spokesman Bacha Faji said in a phone interview today from Addis Ababa, the capital.

“They already informed the ministry they want to leave,” Bacha said. No other companies have expressed an interest in taking over the concession in the northeastern Danakil area of Ethiopia’s Afar region, which has been held by BHP for about three years, he said.

The Horn of Africa nation, which relies on coffee for about a third of its export earnings, is encouraging foreign mining investment under a plan to diversify its $30 billion economy away from reliance on agriculture.

“We have made a decision to discontinue exploration activities in Ethiopia,” BHP spokeswoman Deirdra McCracken said
today in a phone interview from London. “This was because following completion of sufficient work it’s not expected to meet BHP’s investment criteria.”

She gave no further details on BHP’s operations in the concession, which is located in the Afar region along the borders of Eritrea and Djibouti.

Ancient Mines

The geologically active Danakil is part of Africa’s Great Rift Valley and has areas as much as 125 meters (410 feet) below sea level, according to the CIA World Fact Book.

The local Afar people have mined salt there and carried it to market by camel for centuries, and it has been the site of kidnappings of tourists, including five who were killed in January, which the government blamed on Eritrean-backed rebels.

The largest concession in the Danakil is the 481 square kilometers (300 square miles) held by Toronto-based Ethiopian Potash Corp., according to its website.

There are “undoubtedly billions of tons of resources” in the Danakil area, Bruce Cumming, a director of EPC, said in an interview in Addis Ababa on July 12. “It’s estimated there are 120 million tons in the southwest corner alone,” of EPC’s concession, he said.

The other companies operating in the Danakil are Allana Potash Corp., Canada’s Nova Potash Corp. and Ethiopotash BV, Bacha said, while South Boulder Mines Ltd. has a concession across the border in Eritrea.

Allana may begin exporting potash at the end of 2014 and produce 2 million tons a year by 2018, it said July 4. South Boulder Mines, which is based in Perth, Australia, hopes to earn
$500 million a year from foreign sales starting 2018.