Ghana Lithium Agreement: CSOs call for review of mining Act
After critically studying the Ghana Lithium Agreement, Civil Society Organisations (CSOs) have concluded that the deal was superior but required a review of the Minerals and Mining Act, 2006 (Act 703) to reflect the current lease.
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They observed that the negotiated fiscal terms in the lithium agreement differ from those outlined presently in Ghana's law.
Consequently, they noted that to avoid any potential litigation and ensure consistency, there is the need for an amendment of the existing law to align with the newly negotiated terms.
Under the terms of the Mining Lease, the Government of Ghana (GoG) will be entitled to a 13 per cent free carried interest in the project, representing a three per cent increase from the 10 per cent free carried interest incorporated in the Definitive Feasibility Study (DFS).
The GoG will also be entitled to a 10 per cent royalty rate, increased from the five per cent royalty rate incorporated in the DFS.
A Co-chair of the Ghana Extractive Industry Transparency Initiative (GHEITI), Dr Steve Manteaw, said “most of the fiscal terms negotiated in the lithium agreement depart from the provisions in our law but they are superior to what has been provided in the law. I want to appeal to your office and the minerals commission to amend the law so that what has been negotiated will be consistent with the law, to avoid any future litigation.”
I know the mineral commission has been working on the review of the Minerals and Mining Acts 703, 2006 so let’s ensure that what we have negotiated for is in tandem with what is in the law to set a new benchmark for future negotiations.”
He was speaking at a stakeholder engagement on the lithium agreement organised by the Natural Resource Governance Institute (NRGI) last Friday in Accra.
“Whoever says this is Ghana’s best deal so far is right unless we can show a deal with superior fiscal provisions. I am even surprised we appear cool with mining giants like Newmont, AngloGold and Goldfields that pay three per cent royalty and are rejecting 10 per cent royalty for lithium when gold fetches more on the market than lithium.
This deal compares favourably with others in the world. Parliament should pass it but must take on board suggestions for tightening some of the contractual commitments,” Dr Manteaw stated.
Stakeholder engagement
In October 2023, Ghana signed a 15-year lease Agreement with Barari BV Ghana Limited, a subsidiary of Atlantic Lithium Limited, for the mining of lithium in Eyowaa in the Central Region.
While the government has hailed the terms of the agreement as historic, some civil society actors and individuals have raised concerns.
The forum brought together CSOs and government agencies in the mining space to understand the content of the agreement and make inputs and recommendations to guide parliamentary debate on the proposed lithium agreement.
For his part, the Minister of Lands and Natural Resources, Samuel Abu Jinapor, said Ghana’s lithium deal with Atlantic Lithium of Australia remained the best mining lease for the country. However, the government is open to deeper engagement with stakeholders to accommodate any "superior alternative" to the current negotiated terms of the lease.
"If any superior arguments and alternatives come up, requiring a review of the terms of the lithium mining lease with Barari DV Ltd, it will be considered.
I am happy to listen to superior arguments on this issue. We will examine the arguments from experts and citizens because we believe that this approach helps to shape policy," he said.
The Africa Director of NRGI, Nafi Chinery, said the extraction of the resource presented both opportunities and challenges which required that things were done right.
“What we need to do as stakeholders is to be constructive in our engagement on this matter, as that will ensure that we collectively work towards a framework that gives us an agreement that protects the environment, respects local communities and promotes national interest,” she said.
The Executive Director of the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, said the failure of the mandated state agencies to promptly engage other stakeholders on the lithium mining deals accounted for the current impasse.
Background
Ghana has unexploited deposits of lithium, iron ore, copper, chrome, nickel, limestone, silica sand/quartz and mica in addition to its traditional minerals.
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A report by the Ghana EITI details the critical mineral potential of Ghana; second-largest reserves of bauxite deposits in Africa, significant deposits of iron ore, good quality silica and high-purity, low contaminant lithium scattered across the country.
These opportunities provide positive signals but portend an even higher degree of fiscal, social, governance and environmental risks that could crowd out any benefits and steer the country on the old path of its traditional minerals.
Mining has been an integral part of Ghana’s economy for at least a century, with gold, diamond, bauxite and manganese being the commercially producible minerals.
On average, the mining sector has contributed 7.7 per cent to the total Gross Domestic Product (at basic prices) between 2013 and 2021.
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It also contributed, on average, 38.23 per cent of total merchandise exports and 16.47 per cent to domestic revenues between 2013 and 2021.
According to data from the Minerals Commission, investment inflows into the mining sector have averaged some US$980 million annually over the past decade.