ECP buys Djibouti salt producer for $30m

The pan-African investor, nearing full deployment of its first independently raised fund, is betting that the East African nation’s biggest saltwater lake can produce four million tons of salt by 2012. The fresh capital will be used for buying equipment and facility renovations.

Africa-focussed private equity firm Emerging Capital Partners (ECP) has purchased a $30 million (€19 million) controlling stake in a salt production and export company based in the small East African nation of Djibouti.

The company, Salt Investment, will use the fresh capital for buying production equipment and constructing or renovating storage units, shipping platforms, housing sites and other facilities, according to a statement released by ECP. The investment was made through a Mauritius special purpose vehicle.

“Its one of the worlds’ best deposits of salt. The natural conditions for making salt about the best in the world,” Hurley Doddy, chief operating officer of ECP, told PEO.

Doddy also pointed out that Djibouti's proximity both to the sea and the Middle East will result in significant advantages in shipping costs.

ECP is banking on the potentially lucrative salt deposits in Lake Assal, Djibouti’s largest lake and the lowest altitudinal point in Africa. A pure brine feed from the neighboring Red Sea and an ideally hot and dry climate accounts for the lake’s status as the most saline body of water on earth.

ECP estimates that Salt Investment can produce and export roughly four million tons of salt from Lake Assal by 2012. That salt would be refined for deicing, chemical applications and industrial feedstock, meeting a growing demand for the commodity throughout the developing world.

Djibouti enjoys a reputation as one of the more stable political and economic climates on the Horn of Africa. Djibouti borders Ethiopia, Eritrea and Somalia.

“This give us good confidence that despite some instability in the region in places like Eritrea and Somalia which are having difficult times that our operation in Djibouti will be just fine,” said Doddy.
 
Washington DC-based ECP made the investment through its $523 million ECP Africa Fund II, the firm’s first independently raised pan-Africa vehicle since spinning out from EMP Global in 2000. Led by chief executive Tom Gibian, the firm is nearing full deployment of that fund, closed last May.

ECP is currently raising its second independent pan-Africa fund since spinning out of EMP Global.