IES, ACEP reveal Ghana’s lithium agreement negotiated from a disadvantaged position

The Institute for Energy Security (IES) and the Africa Centre for Energy Policy (ACEP) in a recent study have raised critical concerns about the Government’s negotiations with Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited regarding the extraction of the country’s lithium resources.

The study, which focuses on Ghana’s burgeoning lithium sector, highlights several significant issues that could impact the country’s ability to secure optimal terms and benefits from its lithium resources.

The study suggests that the government entered into the lithium agreement from a disadvantaged position due to its lack of advanced data on the lithium deposit. This has left the state incapable of effectively challenging geological data provided by the exploration company.

A major concern raised by the two Think Tanks is the heavy reliance on data provided by the exploration company for key information about the lithium find. This poses challenges in negotiating favorable terms for the country.

The study questions Ghana’s historical approach to mineral rights allocation, which relies on open-door, direct negotiations rather than competitive bidding processes. This approach has been in use for over a century in the mining sector.

Unlike gold and other minerals, the report notes that there is currently no infrastructure in place to facilitate value addition to lithium, leading to concerns about exporting the resource as a raw material.

The study further raises questions about the ownership structure of companies involved in the lithium sector. Specifically, it highlights concerns about Green Metals Resources Limited, a Ghanaian-registered company wholly owned by an Australian mining company, IronRidge Resources Limited.

Meanwhile, the study offers several recommendations to address concerns raised about the agreement between Government and Barari DV Ghana Limited.

The study suggests that mining licenses should be awarded through open and competitive bidding processes, moving away from the first-come-first-served approach.

Also, state actors responsible for awarding mining rights are urged to invest in geological data collection and mapping of mineral-rich areas to reduce reliance on applicant-provided data.

Additionally, the study proposes the creation of a dedicated state institution to manage lithium and other industrial minerals, emphasizing the potential of lithium to significantly boost the country’s economy.

The study by the IES and ACEP underscores the importance of transparency, competitive bidding, and value addition in the management of Ghana’s mineral resources. It calls for a reevaluation of the country’s approach to mineral exploitation to ensure that it maximizes the benefits of its growing lithium sector.