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Move fast to prepare for unseen circumstances, says former Allana CEO

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"You will get whacked by unforeseen circumstances, that's for sure", Farhad Abasov, chairman of Yeni Group told the Agrimoney Investment Forum, describing the sale of Allana Potash during a time of plummeting plant nutrient prices.

The Yeni Group focuses on incubating start-ups in the agricultural, mining and renewable energy sectors.

Allana Potash's Danakhil development in Ethiopia came at a turbulent time in the sector, as prices for the plant nutrient collapsed following the 2013 break of the BPC potash cartel.

Cartel collapse

Potash prices turned sharply south as former BPC-member Uralkali pledged a change in policy, with a shift from rigid supply discipline to increased output.

For Allana Potash, in the process of developing a large facility in Ethiopia, the price move posed an unforeseen threat.

"If we weren't ahead of our competition we would have been in a very bad place," Mr Abasov said.

But in 2015 Allana Potash was sold for C$170m to Israel Chemicals, a large fertilizer producer at around a 50% premium to its traded value before the deal was announced.

Time is of the essence

Mr Abasov ascribed the eventual successful sale of the project, at a time of plummeting potash prices, to the speed at which it had been bought to fruition.

"Everyone is smart, you just have to work harder than anyone else, the key is to be fast and more efficient than anyone else".

This speed of completion required working on a literal 24-hour schedule.

The Danakhil depression is one of the hottest places on earthy, with temperatures sometimes reaching over 60%, forcing the team to work overnight to escape the heat.

Cost advantages

Despite the remoteness of the site, the investment benefited from "significant and sustainable advantages," Mr Abasov said.

The potash deposits lie close the surface, and the heat that delayed construction also allows the extracted potash solution to be extracted in evaporation ponds, meaning much lower energy costs.

And Ethiopia is ideally positioned near some big potash markets, in particularly India, a major importer.

Low corruption, openness to investment

Mr Abasov said he was initially cagey about investing in Ethiopia, which has been ruled by a succession of Communist and Revolutionary Socialist parties, after growing up in the Soviet-bloc.

"I barely ran away from those socialsts, I though 'I don't want to go to Ethiopia'" he said.

But he spoke favourably of the investment possibilities in Ethiopia, particularly in agriculture.

Mr Abasov flagged the low rate of corruption, and a government eagerness to attract foreign investment.

He also noted the high returns to be made in agricultural investments in the country.

By Shweta Upadhyaya

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