Lithium deal best: Unprecedented 10% royalties, 19% state participation - Lands Minister assures
The Minister of Lands and Natural Resources, Samuel Abu Jinapor, has maintained that the licence granted Barari DV Ltd, a subsidiary of Atlantic Lithium Ltd, for the mining of lithium at Ewoyaa in the Central Region is in the best interest of the country.
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Contrary to suggestions by some civil society organisations (CSOs) and groups that the first mining lease has little value for the country, the minister said the deal was "one of the best in the world."
“This lease differs from all previous mining leases in many respects. It is the first time in the history of our country that we have successfully negotiated for 10 per cent royalties for any mineral, which is one of the highest for exploitation of any mineral across the globe,” he said.
Mr Jinapor stressed that the current deal was the best for the country because the government had secured a 19 per cent state participation in the mining company, with a requirement to scale it up to a minimum of 30 per cent Ghanaian participation through listing on the Ghana Stock Exchange for shares to be made available to Ghanaians and local entities.
He stated this at the Meet-the-Press series organised by the Ministry of Information for the Land and Natural Resources Minister and Chief Executive Officers (CEOs) of related sector agencies to provide an update on the lithium deal.
Present at the press briefing were the Deputy Minister of Lands and Natural Resources in charge of Mines, George Mireku Duker; CEO of the Minerals Commission, Martin Ayisi; CEO of Minerals Income Investment Fund (MIIF), Edward Nana Yaw Koranteng, and the Technical Advisor on Mines to the Minister, Benjamin Aryee.
Context
Mr Jinapor signed the first-ever lease for the exploitation of lithium in the country on October 19, this year.
This followed Cabinet's approval of the Green Minerals Policy, which makes it mandatory for prospective holders of leases for lithium and other green minerals to establish a refinery for processing the resource.
Since the granting of the lithium mining lease, some CSOs, individuals and institutions have criticised the deal, describing it as bad for the country.
There have also been calls to grant mining leases through a tender process.
A former Chief Justice, Sophia Akuffo, has called for the establishment of a Ghana Lithium Company (GLC) to undertake lithium mining and develop the value chain of the mineral from lithium mining to battery production.
Speaking at a forum organised by the Institute of Economic Affairs (IEA) on November 29, the revered former Chief Justice stressed the need for the government to set up a local company to exploit the country’s lithium rather than allowing foreign entities to mine the resource.
GLC not feasible
Reacting to that call, the minister said although the policy statement presented to Parliament last year considered the option of establishing such an entity along the concept of the Ghana Integrated Aluminium Development Corporation (GIADEC) and the Ghana Integrated Iron and Steel Development Corporation (GIISDEC), it was found not to be feasible.
He said the current volumes of lithium in the country and the quest to ensure optimal benefit from the exploitation of the mineral made that option not feasible.
“This is why we have instituted in this transaction the retention of a significant part of the value chain which will work systematically to eventually construct the full value chain in the country,” he said.
The minister reiterated that Ghana “will not export lithium in its raw state; that is why the mining lease includes provisions for the establishment of a refinery and the provision of the by-products to local industries.”
Good deal
Mr Jinapor said the government acknowledged the criticisms of the lithium deal in good faith,as such scrutiny by the public helped to promote accountability in the utilisation of natural resources.
However, he said it was unfortunate that public commentary on the lithium deal had failed to look at the fine details of the mining lease.
He stressed that a mining lease that had improved terms such as 10 per cent royalty, almost 30 per cent Ghanaian equity, one per cent revenue for local community development and a requirement to establish a refinery could not be described as a bad one.
“And for the first time in the history of our country, a mining lease contains provisions for the establishment of a refinery,” he said.
Tender process
Touching on the concerns about the lack of tender for the mining lease, the minister explained that international best practice required that where a company undertook exploration and made commercial find for minerals, the company was entitled to a right of first refusal to the grant of a mining lease, subject to regulatory compliance.
He said that international best practice had been given legal backing by section 39(2) of the Minerals and Mining Act, 2006 (Act 703).
Mr Jinapor also said the use of the tender process was only feasible where there already existed geological data and the state was looking for partners to go straight into mining.
He added that per Regulation 258(1) of the Minerals and Mining (Licensing) Regulations, 2012 (L.I. 2176), there were three instances under which tender processes could be used for the granting of mineral leases.
The minister said one of such instances was where the Minerals Commission had determined that there existed sufficient mineral information in respect of the area concerned; where the state had carried out prior mineral exploration in respect of the area concerned; “or where an area becomes available through surrender, revocation or termination and two or more applications are recorded in the priority register within the seven days of the area becoming vacant.”
Mr Jinapor observed that as a result of the lack of resources to undertake exploration, the government had to depend on private companies to undertake exploration for most of the minerals.
He said such a situation entitled those entities to the grant of mining leases without going through any tender.
Ratification
One of the concerns raised by some critics of the lease, including the Minority in Parliament, is that the deal needed to have been presented before the house for approval.
Touching on that issue, the minister said that constitutional provision had been expressly provided for in clause 1(e) of the mining lease granted to Barari DV Ltd.
Specifically, clause 1(e) of the lease states that, “this mining lease is subject to ratification by Parliament in accordance with Article 268(1) of the Constitution and section 5(4) of Act 703.
Upon execution of this mining lease, the minister shall cause the Mining Lease to be laid in Parliament for ratification.”
Mr Jinapor added that by the terms of the lease, ratification by Parliament was a condition precedent.
However, he explained that before such agreements could be laid before Parliament, they must go through a number of processes, including securing Cabinet’s approval.
“The processes are ongoing, and once completed, the agreement would be laid before Parliament for consideration and ratification,” he added.