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Government’s Lithium Deal with Australian Firm Faces Tough Opposition From CSOs, Religious Leaders

Civil Society Groups and religious leaders are sternly opposing the government’s lithium mining lease with Barari DV Ghana Ltd, a subsidiary of Australian firm Atlantic Lithium, indicating the agreement is not the best for Ghana.

Former Chief Justice Sophia Akufo who has recently been vocal about issues in the country has voiced concerns about the lack of transparency in the deal, stating in interviews and pressers that it perpetuates a pattern of colonial concessionary agreements the country has entered into with foreign companies over the years.

In modern best practices, the exploitation of mineral resources is 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,” Madam Akufo said at a roundtable discussion by the Institute of Economic Affairs (IEA).

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“The constitution says that the mineral resources are for us, why should someone pay us royalties? The 10 per cent royalties to be paid to the state under this lithium lease is an extension of the colonial mentality,” said lawyer, and Council of State member, Sam Okudzeto.

At a meeting convened by the Institute of Economic Affairs (IEA) on Tuesday, Christian and Muslim leaders added their voices to the same calls, asking the government to suspend the deal entirely.

The agreement signed between the government of Ghana and Barari DV in October grants the company a 15-year mining lease to mine lithium at Ewoyaa in the Mfantseman Municipality of the Central Region – an area of approximately 42.63 square km.

Under the deal, Ghana gets a 10 per cent royalty rate, and a 13 per cent carried interest rate. The Minerals Income Investment Fund (MIIF), would also acquire an additional six per cent in the mining operation, as well as a 3.06 per cent in Atlantic Lithium, which was listed on the Australian and London Stocks Exchange.

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Barari DV would also construct a chemical refinery – a requirement under the government’s Green Minerals Policy. But in the event

Further in the future, Barari DV, would have to enlist on the Ghana Stock Exchange and pay one per cent (1%) of its revenue into a Community Development Fund to be utilized by communities its operations would be impacted.

The parts of the deal that have become a matter of contention pertain to the 10 per cent royalty rate; that the agreement should have been a joint venture or service contract instead of a lease, and what the CSOs described as the government ignoring an alternative to nationalise the lithium resource.

However, fighting back at critics, the Lands Minister and the Minerals Commission boss maintain that the deal is a historic best from all the other natural resource contracts the country has signed.

“When it is all over, Barari DV Limited, the holder of this mineral right of lithium, Ghanaian and state participation will be 30 per cent, and foreign participation will be a maximum of 70 per cent and this has never happened in the history of our country in respect of any mineral,” the Minister, Samuel Jinapo said at a presser.

But another staunch critic, Bright Simons, Vice-President in charge of research at Imani Africa says the government has not been forthright about the overall fiscal effects of the deal. Mr Simmons asserts that if authorities for instance did not make public a 10-year tax holiday the mining firm would be enjoying the Ghana Free Zones regime, despite a practice of excluding mining firms from such benefits.

Writing on his blog, Mr. Simmons said there were also discrepancies in the actual equity value the Minister had claimed the state would get.

The claim that the country is poised to secure 30% of the ownership of its lithium is wholly incompetent. It mixes up the freed carried interest, the paid interest in the Ewoyaa project alone, the ongoing discussions about extending the ownership in Ewoyaa to cover the consolidated holding structure in Ghana,” he wrote.

In all this chaos, the deal would be presented to Parliament in March 2024 for ratification. But the CSOs are urging MPs not to approve the deal.

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