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Ghana’s Game-Changing Lithium Project: Bigger Royalties, More State Shares

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The government of Ghana has approved a 15-year mining lease for Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited, to initiate construction and mining activities focused on lithium in the Ewoyaa region of the Central Region of Ghana.

The lease contains updated and improved terms aimed at maximizing the country’s benefits from this valuable mineral resource.

These enhancements encompass an escalated royalty rate, increased state and Ghanaian participation, and the promotion of value addition to the mined mineral.

The issuance of the mining lease comes after extensive prospecting and feasibility studies conducted by the company, along with a series of negotiations between the government and the company. The lease encompasses an area spanning approximately 42.63 square kilometres, granting the company exclusive rights to extract and produce lithium and associated minerals, following the mining regulations of the country.

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Lithium plays a crucial role in the production of lithium-ion batteries, a vital alternative to fossil fuels as the world grapples with climate change. Emissions from internal combustion engines burning fossil fuels have been identified as major contributors to the climate crisis. To combat this, global leaders are advocating for a green energy transition aimed at reducing and ultimately eliminating carbon emissions.

Several countries have already enacted legislation to phase out fossil fuel-powered vehicles, resulting in a burgeoning market for the battery industry and the essential minerals required for battery production, often referred to as green or critical minerals.

Currently, African countries that mine lithium primarily export the mineral in its raw form.

Barari Ltd. initiated lithium exploration in the country in 2017 and discovered substantial high-grade lithium deposits in Ewoyaa. Geological surveys have also identified deposits in various parts of the country, from the south to the north, particularly around Cape Coast, Kumasi, Sunyani, Bole, and Wa. However, the country has yet to commence large-scale lithium mining.

During a brief ceremony to sign the mining lease for Barari DV Ltd., Samuel A. Jinapor, the Minister for Lands and Natural Resources, emphasized that the government has chosen to treat this mineral differently from others. Consequently, a specialized policy for the exploitation and management of this mineral was developed and approved by Parliament before granting the mining lease.

Mr. Jinapor noted that the lease differs from the standard mining lease and includes the terms agreed upon with the company based on the Cabinet-approved policy. The minister emphasized how much more the Ghanaian government and its citizens stand to gain from these agreed-upon terms. The state’s free-carried interest in the mining operation increased from 10% to 13%, and the royalty rate was raised from 5% to 10% as well. These changes are significant parts of the lease.

Additionally, the government, through the Minerals Income Investment Fund (MIIF), will acquire an additional 6% stake in the mining operation and a 3.06% interest in the company’s parent entity, listed on the Australian and London Stock Exchanges. The company will also be required to list on the Ghana Stock Exchange to enable participation by Ghanaian entities such as pension funds and individuals interested in investing in this sector.

Mr. Jinapor further revealed that the company will contribute 1% of its revenue to a Community Development Fund dedicated to the development of communities affected by their operations. The company is also committed to establishing a chemical plant for lithium processing. If the company cannot establish a chemical plant, it will supply its lithium to third-party chemical plants in the country. This initiative aims to create more jobs and foster further development in mining communities across the nation.

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The state acknowledges the impact of mining on affected communities and is dedicated to ensuring that these communities, as well as Ghanaian citizens who are legally mineral owners, reap the benefits. The Minister called upon the company to adhere to the country’s mining laws and the agreements reached with the government, promoting responsible, sustainable, and environmentally sound mining practices.

Mr. Niel Herbert, the Executive Chairman of Atlantic Lithium Limited, expressed gratitude to the Minister and the Government for their collaboration in achieving this significant milestone. He emphasized the importance of the Ewoyaa project to the company and its commitment to working with the government to ensure the effective utilization of this mineral for the benefit of Ghanaians. He pledged the company’s dedication to complying with Ghana’s laws and ensuring a safe mining environment.

GHPARROT

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