The Minister of Lands and Natural Resources, Samuel Abu Jinapor, has justified the granting of a 15-year mining lease to Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited, to commence the construction and mining of lithium at Ewoyaa in the Mfantseman Municipality of the Central Region.
He stated that for the first time in the history of Ghana, a mineral lease contains provision for the establishment of a refinery and that is value addition and appreciation.
The lease incorporates new and enhanced terms intended to ensure that the country benefits, optimally, from this mineral.
This includes an increase in royalty rate, state and Ghanaian participation, as well as value addition to the mineral mined.
The granting of the mining lease followed the completion of prospecting and feasibility studies by the company, as well as series of negotiations between the Government and the Company.
The lease covered an area of approximately 42.63 square kilometres, and grants the company the exclusive right to work and produce lithium and associated minerals in the area, in accordance with the mining laws of the country.
But the government received flak for how this deal was designed. For instance, Former Chief Justice Sophia Akuffo stated that leases are not necessarily the best method to apply.
She mentioned joint ventures and service contracts as some of the methods that are much better than a lease. Madam Akuffo insisted that the Lithium agreement is not the best for the nation.
In her view, the only way some people will say it is good for the country is because someone is going to have undue benefit from the agreement.
“This deal is not the best,” she told TV3’s Alfred Ocansey on the Ghana Tonight show on Tuesday, December 5.
She added “People’s undue benefits must be floating around somewhere that is why somebody will find this a perfect, wonderful lease agreement. There are all forms of extraction methods which are much more better, a lease is not necessarily the best methodology, there are so many other best methodologies. There is a joint venture, there is a service contract, and even the service contract of many different permutations.
“This deal is not the best for Ghana. It is like percentages, what is the base figure? If you are from some super miserable formulation to this then we will say that is the best Ghana has had. Yes, maybe it is but it is not the best Ghana could have had.”
Madam Sophia Akuffo said “The Minister of Lands and Natural Resources and the CEO of Minerals Commission have touted as favorable to Ghana, surpassing all those other Lithium leases around the world.
“It is not different in principle in the substance from any of Ghana’s previous colonial times types of agreements, some call it the Guggisberg model, whatever description, all those agreements are colonial type of agreements, which over the years have yielded very little good to the overall benefit of the average Ghanaian.
“In modern best practices the exploitation or extraction of mineral resources discovered by either a joint venture agreement whereby the host country takes an agreed ownership in the mining company or a service contract whereby the host country is the owner, contracts the mining company and the mining company can be selected through transparent competitive bidding process to mine the mineral and to reinvest for its cost of reduction plus profit margin so that the mining company is in contract to the owner. The ownership of the mining remains completely in the hands of the state.”
Also, the Director of Research at the Institute of Economic Affairs, (IEA) Dr John Kwakye said that Ghana no longer needed concession contracts.
Commenting on the Lithium agreement that has been signed by the government of Ghana, Dr Kwakye wrote on his X platform, formerly Tweeter “We want the Minerals Commission to understand that we don’t want any more concession contracts. We want to own our mineral and contract a mining company to mine it for us and paid its full costs plus a profit margin. Otherwise, let’s keep it underground.”
But addressing a press conference in Accra on Thursday, December 7, the Minister, Samuel Abu Jinapor said “Suffice for me to point out that it is the first time in the history of our country that we have successfully negotiated for 10 percent royalties for any mineral which is one of the highest for the exploration of any mineral across the world.”
He added “We have already secured 19 percent state participation in this mining company with the requirement to scale it up to a minimum of Ghanaian participation through listing on the Ghana Stock Exchange for shares to be made available to Ghanaians and Ghanaian entities.
“What this simply means is that when it is all over, Barari DV Limited, the holder of this mineral right of lithium, Ghanaian and state participation will be 30 percent and foreign participation will be a maximum of 70 percent and this has never happened in the history of our country in respect of any mineral.
“And for the first time in the history of our country, a mineral lease contains provision for the establishment of a refinery and that is value addition and appreciation and this is the first time.”