Safeguard attracting private capital in Lithium debate  

The Ghana Chamber of Mines has urged a cautious approach in discussions surrounding the Lithium mining lease for the Ewoyaa project especially private capital attraction.

It emphasized the importance of balanced perspectives to safeguard the mining sector’s ability to attract private capital for responsible mineral development.

The chamber which has taken keen interest in the discussions said that it is pleased with the ongoing engagements among government, civil society, media, and the larger population.

It commended the Ministry of Lands and Natural Resources and Minerals Commission for their commitment to constructive discourse, inclusive development, and transparency.

Acknowledging the valuable contributions of civil society in seeking a fair share of benefits from lithium resource development, the Chamber criticized inaccurate portrayals of the mining sector shortchanging the country in terms of mineral rent distribution which could affect attracting Private capital.

Apart from the significant value that is retained in-country through employment and purchases from local suppliers, it explained that a plethora of studies have shown that a more than proportionate share of mineral rents accrues to the government.

For instance, it said a model by the Natural Resource Governance Institute (NRGI) suggests that the government’s share of mining rents is “just over 50%” which “falls comfortably within the 40% to 60%” profit-sharing ratio recommended by the International Monetary Fund (IMF) for mining countries.

The Chamber recognized that the current arrangement where some fiscal inflows from the mining sector are commingled with other taxes in the Consolidated Fund impedes the visibility of the developmental impact of the mining sector.

Against this backdrop, the Chamber has been advocating for the sequestration of fiscal payments by mining companies in a manner that is akin to the practice in the oil and gas sector.

More so, the Chamber has been championing the plough-back of a commensurate portion of mineral revenue to host communities in a timely manner to complement the voluntary corporate social investment initiatives of its member companies to enhance socio-economic development.

The Ghana Chamber of Mines wishes to assure the country of its unalloyed commitment to continue working with stakeholders to leverage the country’s mineral endowments for inclusive and sustainable development.

The development of mineral resources should lead to outcomes that are beneficial to both the host country and investors.

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 Mining 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.

Several innovative provisions in the lithium mining Lease, includes 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.

Ghana achieved a 10% stake in the Lithium deal, whereas other associated minerals in the mining sector typically pay five percent.

To provide context, Ghana’s royalties with other Lithium-producing nations, noting that Australia levies five percent, Chile 8-26%, Mali six percent, and Zimbabwe five percent.

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, 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.

In terms of the fiscal regime, 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.

The 19% state participation in Barari DV Limited and underlined the inclusion of a clause mandating the establishment of a lithium refinery within Ghana is evidence of the government’s dedication to the project’s success.

Ghanaian participation is expected to increase to 30% through listing on the Ghana Stock Exchange, providing shares for Ghanaians and Ghanaian entities.