The Minister for Lands and Natural Resources, Samuel Abdulai Jinapor, has praised the advantageous terms secured in the Lithium Lease, emphasizing their purpose to bolster Ghana’s benefits.
He hailed the transaction as an outstanding mineral exploitation agreement, not only within Africa but globally.
He assured that the government, throughout the negotiation process for the lithium deal, prioritized the paramount interests of the Ghanaian people.
Details of 15-year mining lease
The 15-year mining lease, granted to Barari DV Ghana Limited (“Barari”), encompasses 42.63 square kilometers in and around Ewoyaa in the Mfantseman Municipality of the Central Region.
Key details of the Lithium Lease include an estimated average production of about 350,000 tonnes of concentrate at 5.5-6% lithium oxide.
The construction and development cost is anticipated to be $185 million, with a projected timeline of at least 14 months.
Furthermore, the Lithium will generate other minerals such as Feldspar, Kaolin, and quartz (silica).
The average sale price of lithium concentrate over the life of the mine is set at $1,410 per tonne.
Mr Jinapor highlighted several innovative provisions in the Lease, including doubling royalties from 5% to 10%, an increase in the State’s free carried interest from 10% to 13% and additional Government participation through shares held by the Minerals Income Investment Fund (MIIF).
Others are increased Ghanaian participation through listing on the Ghana Stock Exchange, a 1% Growth and Sustainability Levy, a 1% Community Development Fund, and a requirement for the company to build a chemical plant or collaborate with existing ones in Ghana for value addition.
In response to growing concerns and criticisms, Mr. Jinapor, defended the terms of Ghana’s Lithium deal, presenting comparative data to highlight the favorable terms secured by the country.
Ghana’s deal compared to other countries
Mr. Jinapor emphasized that Ghana achieved a 10% stake in the Lithium deal, whereas other associated minerals in the mining sector typically pay five percent.
To provide context, he compared Ghana’s royalties with other Lithium-producing nations, noting that Australia levies five percent, Chile 8-26%, Mali six percent, and Zimbabwe five percent.
He also pointed out that Ghana secured a higher Corporate Income Tax of 35%, surpassing Australia’s 30%, Mali’s 30%, and Zimbabwe’s 25%.
Regarding the Free Carried Interest, Mr. Jinapor highlighted that the negotiated 13% is higher than the standard 10% for the rest of the mining sector.
A similar comparison with other Lithium-producing countries revealed that Mali imposes a 10% Free Carried Interest, while Zimbabwe does not have such an arrangement.
Fiscal regime
In terms of the fiscal regime, the Minister outlined that the mining company involved in the Lithium deal will pay a 2.5% Ghana Education Trust Fund (GETFund) Levy, another 2.5% for the National Health Insurance Levy (NHIL), and an additional one percent for the Growth and Sustainability Levy.
Ghana’s current stake is 19%
He noted the 19% state participation in Barari DV Limited and underlined the inclusion of a clause mandating the establishment of a lithium refinery within Ghana as evidence of the government’s dedication to the project’s success.
Ghana’s stake to increase to 30%
Mr Jinapor announced that Ghanaian participation is expected to increase to 30% through listing on the Ghana Stock Exchange, providing shares for Ghanaians and Ghanaian entities.
He expressed disappointment in comments made by former Chief Justice Sophia Akuffo regarding Ghana’s Lithium deal.
Addressing concerns about the viability of establishing a Ghana Lithium Mining Company, Mr Jinapor pointed out that, considering Ghana’s limited lithium deposits, there is only a five percent chance of success in attracting high-risk exploration.
He mentioned that the government had explored the option of creating an entity for lithium mining and value chain development but found it unfeasible based on further studies.
Minister Jinapor emphasized that, given the volume of lithium in the country, the government’s priority has been to secure the retention of a significant part of the lithium value chain within Ghana.
This strategic approach is reflected in the agreement signed with Barari DV Ghana Limited.
Mr. Jinapor’s detailed presentation aimed to address concerns and provide transparency regarding the Lithium deal, showcasing that the negotiated terms are in line with or surpass global standards in comparable mining sectors.
The Minister emphasized the government’s commitment to securing favorable deals that benefit Ghana’s interests and promote sustainable resource management.
He highlighted the government’s commitment to maximizing the benefits of Ghana’s Lithium Project.
The Ministry he said had sought Cabinet’s approval for a new policy regarding the exploitation and management of the country’s green minerals, forming the basis of negotiations with the company.
Mr Jinapor said the signing of the mining lease is merely the initial step towards commencing mining operations.
Govt to seek Parliamentary approval
The subsequent stages include seeking ratification of the mining lease by Parliament, obtaining an environmental permit from the Environmental Protection Agency (EPA), and acquiring an Operating Permit from the Minerals Commission.
He emphasized that the Mining Lease granted to the company explicitly states that it is subject to Parliamentary approval, in accordance with the country’s Constitution and mining laws.
Source: Elvis DARKO, Accra