Location Gives Tiny State Prime Access to Big Riches
By JEFFREY GETTLEMAN
Published: May 30, 2008
For centuries, nomads have dropped down from the rocky hills around here to carve bricks of salt from an ancient lake and haul them away on the backs of camels.
U.S.-led company Salt Investment SA has launched a $70 million operation to industrialize the collection of Djibouti’s plentiful salt.
Workers loads thousands of pounds of sugar onto a ship that will eventually make its way to the Persian Gulf. Due to its close proximity to Yemen, Djibouti’s port has seen business booming as more companies are using the port to get their goods to the Gulf.
Djibouti sits along some of the world’s busiest shipping lanes.
But a new salt miner is giving it a try, and he may be a harbinger of what’s happening here.
As a salt person, my first impression was why was all this salt just sitting here, said Daniel R. Sutton, an American salt miner who is overseeing a new $70 million operation to industrialize the collection of Djibouti’s plentiful salt.
There’s 50 square miles of salt. It runs 20 to 30 feet deep. This could be huge.
Djibouti is becoming the little country of big dreams. Hundreds of millions of dollars of overseas investment is pouring in, promising to turn this sleepy, sweltering mini-state, which right now does not even have a stoplight, into something of an African trade center.
There are gold miners from India, geothermal experts from Iceland, Turkish hotel managers, Saudi oil engineers, French bankers and American military contractors. Tycoons from Dubai are pumping in a billion dollars just on their own, largely for the country’s port, a gateway to the region. There is even a project on paper to build a multibillion-dollar, 18-mile bridge across the Red Sea, captained by Tarek bin Laden, the half brother of Osama bin Laden.
Djibouti does not have many people about 500,000 and few outsiders have heard of it. Its soil is mostly sand, it is unearthly hot often more than 100 degrees and just about everything, from bottled water to rice to gasoline, is imported.
But if there was ever an example of location, location, location, it is here.
Djibouti sits at the mouth of the Red Sea, where Africa and Asia nearly touch. It overlooks some of the busiest shipping lanes in the world, especially for oil heading from the Persian Gulf to Europe and the United States. And because of its strategic position, both France and the United States have military bases here.
Shipping is already big business in this country and it’s getting even bigger, with investors from Dubai hoping to expand the Port of Djibouti to 3 million containers a year from its current capacity of 300,000. Dubai World, a large holding company, has also bought a controlling share in a local airline and built an industrial park, new roads and a $200 million, five-star hotel, with gurgling fountains and possibly the greenest lawn in the Horn of Africa.
Djibouti is perfectly positioned to become a services and logistics hub, explained Jerome Martins Oliveira, the chief executive officer of the port, which is operated by a subsidiary of Dubai World.
He said Djibouti could become the central link between the raw materials of Africa and the oil wealth of Arabia, with Dubai as its main partner.
Dubai is actually the country’s model for development, said Djibouti’s foreign minister, Mahmoud Ali Youssouf. We’re a small country with a big port, he said And we’re even better located than Dubai.
Clearly, little Djibouti has a long way to go. While Dubai, one of the seven United Arab Emirates and a very rich city-state, is building the world’s tallest building, the highest building here is six stories.
Djibouti is ranked 149 out of 177 on the United Nations human development index, which measures life span, education and income.
But Djibouti’s smallness it basically has one city, known as Djibouti town is a virtue, business people say.
If you need something, the government responds very fast, said Nikhil Bhuta, the chief financial officer for the JB Group, an Indian mining company. Mr. Bhuta said he had set up mines across Africa but never had he experienced such generous terms of business, like the deal he struck with the Djiboutian government to split gold profits 80 percent for his company, 20 percent for the government.
In Africa, you never even get 50 percent, he said.
Other selling points are a stable currency that is pegged to the American dollar, excellent French food and the fact that Djibouti is an outpost of relative stability in the Horn of Africa, a region constantly plagued by war, famine and drought sometimes all at the same time.
If you want to participate in the development of this region, Djibouti is the only place to be, said Ould Amar Yahya, the director of a commercial bank that opened a branch in Djibouti a year ago. Ethiopia has too many regulations. Sudan has the embargo. Eritrea has serious problems, and Somalia is too violent.
But there’s a very visible cloud on the horizon: Eritrea. Djibouti’s prickly neighbor recently moved more than 1,000 soldiers into a disputed border zone, and Djiboutian officials fear war may break out at any moment. The troops are heavily armed and literally inches apart.
We’ve got a lot going on right now, Mr. Youssouf said. Maybe the Eritreans are jealous.
Local customs can also be a bit of a minefield. The population here is predominantly Muslim, divided between Somalis and Afars, a nomadic group that plies the desert and sticks to its traditions.
Mr. Sutton said that shortly after he arrived to begin the salt mining operation, an Afar chief threatened to kill him.
He was about 4-foot-tall with a 6-foot stick, Mr. Sutton said.
The chief was apparently angry that Mr. Sutton had not paid his respects. The chief’s people live around the salt flats.
Mr. Sutton said that he had agreed to hire as many Afars as possible and that he and the chief are now friends.