Ghana awards Mining Lease for lithium

“Hon. Samuel A. Jinapor and Hon. George Duker alongside Atlantic Lithium’s Neil Herbert”
Samuel A. Jinapor and George Duker alongside Atlantic Lithium’s Neil Herbert

The Ministry of Lands and Natural Resources Thursday signed the first-ever Lithium Lease Agreement with Lithium Atlantic, an Australian mining firm, for mining of the mineral at Ewoyaa in the Central Region.

The company is investing $250 million into the project in Ghana and expecting its first production in 2025.

Mr Samuel Abu Jinapor, the Sector Minister, signed on behalf of the Government while Mr Neil Herbert, Chairman of Lithium Atlantic, signed for his company, at a brief ceremony in Accra.

Based on the newly approved policy statement on mining of green minerals in Ghana, the Government had increased the state’s free carried interest in the company from 10 per cent to 13 percent.

This implies that the Government would hold 13 per cent shares in Lithium Atlantic.
Also it would acquire an additional six per cent shares in the company and 3.06 per cent in the holding company, which is listed in the Australian and London Stock Exchange.
This will bring the total government interest to 19 per cent in the local company and 3.06 per cent in the foreign holding company.

The royalty to the host communities had also increased from the standard five per cent to 10 percent.

The company must also process the mined mineral locally by adding value to it, in order to create employment within the value chain.

Lithium Atlantic is also supposed to construct a Chemical Plant at its operation site four months after signing the lease agreement with the Government of Ghana.
At the signing ceremony, Mr Jinapor said in 2017, Atlantic Lithium Limited started exploration for lithium at Ewoyaa and discovered high grade of the mineral in commercial quantities.

By the mining laws of the country, however, where a company undertakes exploration and discovers minerals in commercial quantities, it is entitled to the first right of refusal if it wants to go into mining of the mineral and it is entitled to be given a mining lease to that effect.

The Minister said the Akufo-Addo-led Government had a vision of treating the mining of the new green minerals differently from previous ones, hence the formulation of a policy to ensure that the mineral inure to the benefit of the people.
It was also to make sure the mining firms respected the sanctity of the contracts, and without breaching the country’s mining laws.

Accordingly, on July 13, 2022, on behalf of the President, the Minister presented a policy statement on the development and management of the green minerals to Parliament, which was anchored on guaranteeing their exploitation inured to the benefit of Ghanaians, the true owners of the mineral.

Subsequently, he said, the policy was submitted to Cabinet, which after considerable debate and critique, approved on July 27, 2023.

Some of the key features in the policy includes an increase in royalty rate, increase in Ghanaian participation in all green mineral operations to a minimum of 30 per cent, enhanced local content and local participation, including listing on the Ghana Stock Exchange; and value addition and beneficiation.

Based on those policies, the Minister said the Government entered negotiations with Atlantic Lithium, which at certain times, President Akufo-Addo himself, as a distinguished lawyer, made several inputs to ensure that the country got the best deal.
“So following series of negotiations, we concluded an agreement with Atlantic Lithium for the exploitation of lithium in Ewoyaa in the Central Region,” Mr Jinapor said.
“And today, we are granting to the company a mining lease to commence construction for the mining of lithium.”

“For the avoidance of doubt, this is the first lease granted for the mining of lithium in the country. And the Lease we are signing today differs from our standard Mining Lease, in that, it incorporates the agreed terms we have concluded with the company, based on the Policy approved by Cabinet.”

To ensure that other interested Ghanaians benefit from the mining operation, the company will list on the Ghana Stock Exchange, and their shares would be made available to Ghanaian entities and individuals, including SSNIT, pension funds and other high income individuals.

In addition to all taxes, royalties, and levies, including one per cent Growth and Sustainability Levy, the Company would pay one per cent of its revenue into a Community Development Fund, to be utilised for the development of communities impacted by their operations.

In terms of value addition, the company has committed to completing a feasibility study for the establishment of a chemical plant within four months of the signing of the lease.
Moreso, all by-products from the operation such as feldspar and kaolin would have to be sold locally to feed the ceramic and other industries.

The minister explained that all those measures had been put in place to ensure that the state derived optimal benefit from the minerals.
“Maintaining the full value chain of lithium is a huge task and very capital intensive. Currently, only China, has an end-to-end lithium – battery industry, from mining to battery production. But we are committed to ensuring that what can be done here, remains here.”

Mr Jinapor urged the company to continue to abide by the mining laws of the country, and ensure that its operations were responsible, sustainable and environmentally-sound.
Mr Neil Herbert, the Chairperson, Lithium Atlantic, on behalf of his company, pledged to respect the mining laws of Ghana and ensure its operations were environmentally sustainable.

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