Adnan Adams Mohammed
The Institute of Economic Affairs (IEA) has cautioned the Government of Ghana on the lithium mining agreement it signed with Barari DV Ghana Limited.
The Institute has indicated that, the agreement requires ratification by parliament as per Article 268 of the 1992 Constitution in order to be legally effective.
A swathe of land was leased to the Barari DV Ghana at Ewoyaa in the Mfantsiman Municipality in the Central region and granted rights to mine lithium and ‘other associated minerals’, for a term of 15 years from the date of the agreement. Already, the Minority in Parliament has called on the government and the beneficiary company to present the agreement for ratification before it is executed.
“The IEA firmly believes that the terms of the agreement, which the Minister of Lands and Natural Resources and the Chief Executive Officer of the Minerals Commission, have touted as favourable to Ghana and surpassing those of other lithium leases around the world, is not different in principle and substance from any Ghana’s previous colonial-type agreements, which over the years, have yielded very little to the overall benefit of the average Ghanaian”, it said in a statement released last week.
The Institute said “in modern best-practice, the exploitation or extraction of mineral resources is covered by either a joint-venture agreement – whereby the host country takes an agreed ownership in the mining company – or a service contract – whereby the host country contracts the mining company, selected through a transparent and competitive bidding process, to mine the mineral and be reimbursed for its cost of production plus a profit margin”.
It urged parliament to exercise caution and patience to secure a modern, best practice-based arrangement that will guarantee maximum benefit for the people of the Republic Ghana, “instead of the usual colonial-type lease that benefits foreign companies’, masquerading as investors, and their local cohorts”.
“The IEA recognises Ghana’s natural resources as the low-hanging fruits that can be leveraged to accelerate the development of the country and eradicate poverty within a generation. It is inexcusable that we continue to sell our birthright cheaply only to descend on Western capitals to seek reparation for the slave trade or beg for aid. President Paul Kagame could not have put it more eloquently when he said: If the Owners of Natural Resources Go around Begging, Then You Should Know There’s Something Wrong with Their Minds.”
“Yes, Ghana is rich, let us finally take full and meaningful control of the management of our wealth”, it added.
Ghana government granted Atlantic Lithium’s (ASX: A11) local subsidiary a mining permit for its flagship Ewoyaa project, which will be the West African country’s first lithium operation.
The 15-year permit allows the Australian miner’s unit Barari DV Ghana Limited to start building a lithium mine in the country’s Cape Coast region, around 100 km southwest of capital city Accra.
The decision comes after Atlantic Lithum’s almost six years of exploration and is part of Ghana’s strategy to tap into the global move towards electric vehicles and renewables.
The Ministry of Lands and Natural Resources has increased the royalty rate to 10% from the standard 5% and the state’s interest in the project to 13% from 10%, it said in a statement.
As part of the deal, Ghana’s sovereign wealth fund, the Minerals Income Investment Fund (MIIF), will acquire 6% in Ewoyaa and 3.06% in Atlantic Lithium, which will be required to list on the Ghana Stock Exchange.
The company will also work on developing a lithium processing plant to maximize the economic benefit of a mineral it has often shipped to China for processing, the ministry added.
“The Mining Lease is a major endorsement of the viability of the project and a landmark de-risking milestone in its advancement towards production,” Atlantic Lithium chairman, Neil Herbert, said in a statement.
“The Government of Ghana, which is eager to build upon its mining history that spans back over a century and diversify away from its long-standing gold production, has remained incredibly cooperative throughout our application process and we wholeheartedly welcome their support,” Herbert said.
Half of the lithium produced at Ewoyaa will be sent to a refinery of US-based Piedmont Lithium (NASDAQ, ASX: PLL), which is the Australian firm’s second-largest shareholder and has agreed to provide most of the funds for building the mine.
Atlantic Lithium aims to produce a total of 3.6 million tonnes of spodumene concentrate, or 350,000 tonnes annually, over 12 years from the site. That would make it the world’s 10th-biggest project, according to the company.
