Contracts that are designed to prioritize the interest of foreign companies against the interest of Ghana should be stopped, former Chief Justice Sophia Akuffo has said.
She wants the country to move away from such contracts if it is to witness the full benefits of mining.
She said these when commenting on the current Lithium agreement that Ghana has signed which is said to be favorable to the country.
She however said this particular contract is not different from the previous ‘Guggisberg-type’ agreements.
Speaking as a Distinguished Scholar of the Institute of Economic Affairs (IEA) in Accra on Tuesday, November 28, 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 time’s types of agreements, some call it the Guggisberg model, whatever description, all those agreements are the 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 a 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.”
Ghana has granted 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.
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 a series of negotiations between the Government and the Company.
The lease covered an area of approximately 42.63 square kilometers 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.
Lithium is one of the main minerals used in the production of lithium-ion batteries, which is being promoted as a substitute for fossil fuels, as the world continues to battle with climate change.
Emissions from the burning of fossil fuels by internal combustion engines have been identified as one of the major contributors to the climate crisis.
To deal with this, global leaders are promoting a green energy transition, to progressively limit, and ultimately, eliminate carbon emissions.
Already, some countries have passed laws to phase out vehicles that use fossil fuels. This has created an emerging market for the battery industry, and minerals required for the production of batteries referred to as green minerals or critical minerals.
Currently, African countries that are mining lithium export the mineral in its raw state.
Barari Ltd commenced exploration for lithium in the country in 2017 and discovered high-grade lithium in commercial quantities in Ewoyaa.
Geological investigations, also, show deposits in various parts of the country, from the south to the north, predominantly around Cape Coast, Kumasi, Sunyani, Bole, and Wa. However, the country has yet to commence the mining of this mineral.
Speaking at a short ceremony to sign a mining lease for Barari DV Ltd., the Minister for Lands and Natural Resources, Samuel Abu Jinapor, said the government took a decision not to treat this mineral the same way the other minerals have been treated.
It was, therefore, necessary to put in place a special policy for the exploitation and management of this mineral before granting any mining lease.
He said after a series of consultations, the Cabinet approved a policy for the exploitation and management of green minerals including lithium, and the mining lease granted to the company, incorporates the policy approved by Parliament.
“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,” the Minister explained.
Mr. Jinapor said the agreed terms give the Government and the people of Ghana greater value in the mining of this mineral.
Giving some highlights on the lease, he said the royalty rate has been increased to 10 percent from the standard 5 percent, and the State’s free carried interest in the mining operation has been increased from 10 percent to 13 percent.
In addition to the free carried interest, the government, through the Minerals Income Investment Fund (MIIF), will acquire an additional 6 percent in the mining operation, as well as a 3.06% in the Company’s parent entity, which is listed on the Australian and London Stocks Exchange.
The Minister said the Company would, also, be required to list on the Ghana Stock Exchange to ensure that Ghanaian entities, like pension funds, and individuals who want to invest in this business can participate in it.
According to Mr. Jinapor, the Company will, also, pay 1 percent of its revenue into a Community Development Fund, to be utilised for the development of communities impacted by their operations, and will work to establish a chemical plant for the processing of lithium.
In the event that the Company is unable to establish a chemical plant, the Company will provide its lithium to any chemical plant established by third parties in the country.
This will create more jobs and bring more development into the mining communities and the country at large.
He said Government recognises the impact of mining on mining communities and is committed to ensuring that these communities, as well as Ghanaians who are, by law, the owners of these minerals, benefit from them.
He called on the company to adhere strictly to the mining laws of the country and the agreement reached with the Government and to ensure that they engage in responsible, sustainable, and environmentally sound mining practices.
The Executive Chairman of Atlantic Lithium Limited, Niel Herbert, thanked the Minister and Government for their cooperation in reaching this milestone.
He said the Ewoyaa project is very important to the company, and the company is willing to work with the Government to ensure the effective exploitation of this mineral for the benefit of Ghanaians.
He pledged the commitment of the company to abide by the laws of Ghana and ensure a safe mining environment.
