The attention of the Ministry of Lands and Natural Resources has been drawn to a statement issued by the Minority in Parliament and some concerns raised by a section of the public in respect of the mining lease granted to Barari DV Ltd. (hereinafter referred to as the “Company”) for the exploitation of lithium at the Ewoyaa concession.
The Ministry welcomes the public interest and intense scrutiny of transactions for the exploitation and management of the natural resources of our country, as this is the best way of ensuring that these minerals inure to the benefit of the Ghanaian people.
The Ministry, therefore, wishes to reiterate and re-emphasise the circumstances and processes leading to the grant of the mining lease and how the state stands to benefit from this transaction.
It is, however, important to clarify from the outset that neither the Ministry nor the Minister have ever indicated that the company will commence operations in the first quarter of 2024.
In his remarks at the ceremony marking the signing of the mining lease, the Minister expressly indicated that the relevant provisions of our national constitution, as well as all laws and regulatory permits regarding the exploitation of this critical mineral, would be strictly adhered to.
The unimpeachable facts regarding the grant of the mining lease to the company are as follows:
Even though geological investigations had found some occurrences of lithium in Ghana, over the years, due to the massive capital required, no extensive exploration had been carried out to assess the commercial viability of this green mineral.
The company was granted a reconnaissance licence in 2012 for the purposes of exploration in the Ewoyaa concession. After years of exploration, the company discovered high-grade lithium in commercial quantities in Ewoyaa, in the Mfantseman Municipality of the Central Region.
By section 39(2) of the Minerals and Mining Act, 2006 (Act 703), and in accordance with international practice, where a company undertakes exploration and makes commercial finds for minerals, the company is entitled to the grant of a mining lease, subject to regulatory compliance.
The company, therefore, applied for a mining lease, pursuant to Act 703, to enable it to commence the processes for the mining of lithium.
Where a mining lease is granted for the exploitation of any mineral, by Section 43 of Act 703, the government is entitled to a ten percent (10%) free-carried interest in the mining operation; that is, the government acquires ten percent (10%) shares in the mining company, which the government does not pay for.
Currently, and significantly, for all the existing large-scale mining companies in Ghana, the state’s free-carried interest is ten percent (10%) and nothing more.
Again, by section 25 of Act 703, as amended by the Minerals and Mining (Amendment) Act, 2015 (Act 900), mining companies are required to pay royalties of five percent (5%) to the state, in addition to other taxes and levies. Therefore, no mining company currently pays royalties of more than five percent (5%) in Ghana, as is consistent with international practice.
In respect of lithium, because of the difference between the emerging green minerals and other minerals, the government fundamentally took the decision to treat these minerals differently and to chart a new path that ensures that the benefits derived from the exploitation of these minerals are enhanced.
Accordingly, in May 2023, I, as the Minister responsible for Lands and Natural Resources, submitted to Cabinet a memorandum requesting policy approval for the exploitation, management, and utilisation of the green minerals of our country.
Among others, the policy included proposals for
a. increase in the royalties rate for green minerals;
b. increase in State and Ghanaian participation in all green mineral operations to a minimum of thirty percent (30%);
c. enhanced local content and local participation, including listing on the Ghana Stock Exchange; and
d. value addition and beneficiation.
On July 27, 2023, the Cabinet, after extensive deliberations and some significant inputs and amendments, approved a far-reaching, comprehensive policy for the exploitation, management, and utilisation of our green minerals.
Following the policy approval, the government entered into negotiations with the company, leading to an agreement to provide benefits to the state in addition to those already prescribed by law.
Based on this agreement and following executive approval, the government granted the company a Minnig Lease, which incorporates the agreed terms and, therefore, differs from the Standard Mining Lease previously granted for the mining of other mineral resources, which already conforms to international practice.
Among the innovative and enhanced provisions in the mining lease are:
a. an increase in the royalty rate from the standard five percent (5%) to ten percent (10%), a double of what the State would have earned under normal circumstances;
b. an increase in the State’s free-carried interest from the standard ten percent (10%) to thirteen percent (13%), which increases the dividend that would have accrued to the State from the operations of the Company under normal circumstances by three percentage points;
c. additional Government participation through the acquisition of six percent (6%) shares in the company and 3.06% shares in its holding company, which is listed on the Australian and London Stock Exchanges, by the Minerals Income Investment Fund (MIIF);
d. Government and MIIF representations on the Boards of both the Company and the holding company for purposes of protecting Ghana’s interest;
e. the requirement for the Company to list on the Ghana Stock Exchange and their shares to be made available to Ghanaian entities and private sector individuals, including Social Security and National Insurance Trust (SSNIT) and other pension funds, as well as high-income individuals;
f. one percent (1%) Growth and Sustainability Levy on revenue;
g. one percent (1%) Community Development Fund, to be utilised for the development of communities impacted by their operations;
h. the requirement for the company to conduct and complete a feasibility study for the establishment of a chemical plant within four (4) months of the signing of the lease;
i. the requirement for the Company to provide minerals it produces to any chemical plant established in the country by a third party, in the event the Company is unable to establish a chemical plant;
j. the requirement that all by-products from the Company’s operation, such as feldspar and kaolin, be sold locally to serve as off-taker opportunity for domestic ceramic and other industries; and
k. the requirement for the company to strictly adhere to the prevailing and future local content laws and participation across the entire value chain of the industry.
These enhanced benefits are additional to what the state would have gained if it had followed the terms of the standard mining lease granted to all the other large scale mining companies.
These terms are also, by far, better than the terms of mining leases granted for the exploitation of green minerals in other jurisdictions, including those with large deposits of these minerals. For instance, Australia, Mali, the Democratic Republic of Congo, and Zimbabwe, which have bigger deposits than Ghana, have royalties rates of not more than six percent (6%), whereas Ghana has negotiated for enhanced royalty rate of ten percent (10%).
Needless to say, the grant of a mining lease is the first step to undertaking a mining operation. Respectfully, it is trite learning that, after acquiring the mining lease, the company must go through other processes to obtain the requisite rights and permits before mining operations can commence.
These include ratification of the mining lease by Parliament, the acquisition of an environmental permit from the Environmental Protection Agency (EPA), and the acquisition of an operating permit from the Minerals Commission.
The suggestion that the company will commence mining operations in the first quarter of 2024 is, therefore, palpably false, as the lease has not been ratified and the company is yet to acquire any of the required permits.
Significantly, in accordance with the provisions of Article 268 of our national Constitution, the mining lease granted to Barari DV Ltd, like all mining leases granted for the exploitation of minerals in our country, states in clause 1(e) as follows:
This mining lease is subject to ratification by Parliament in accordance with Article 268(1) of the Constitution and Section 5(4) of Act 703. Upon execution of this mining lease, the minister shall cause the mining lease to be laid before Parliament for ratification.
For the avoidance of doubt, the above condition precedent is copiously captured in the lease under reference. Indeed, the Supreme Court has affirmed in the case of Republic v. High Court (General Jurisdiction 6), Accra; ex parte Attorney-General (Exton Cubic – Interested Party) (Unreported, Civil Motion No. J5/40/2018, dated 31st July, 2019) that an unratified mining lease confers no enforceable rights.
This decision has never been lost on the government and ought not be lost on any commentator on this transaction.
Therefore, the call by the Minority in Parliament for the government to submit the said lease to Parliament for ratification, as captured by the statement issued and dated October 24, 2023, by its Ranking Member on Mines and Energy, to say the least, is respectfully moot and uncalled for.
The government, at all material times, has been mindful of this constitutional provision as interpreted by the Supreme Court, which is why, as aforesaid, such condition precedent is expressly captured in the lease under reference and is already committed to its full and strict compliance.
The terms negotiated by the government in respect of this mining lease are one of the best for the exploitation of any mineral on the African continent and beyond, and it is needless to point out that the government shall, without fail, submit this lease, as it has done with all others, to Parliament in accordance with Article 268 of our national Constitution and the terms of the mining lease, for its consideration.
As always, the Ministry will avail itself to the procedures of Parliament during the ratification process and will be more than ready to justify and/or clarify all the terms agreed to, if necessary.
The Ministry of Lands and Natural Resources, under the distinguished leadership of President Akufo-Addo, continues to assure the general public of its unflinching commitment to the efficient, effective, and sustainable exploitation and management of the natural resources of our country in the spirit of transparency, anchored on integrity and utmost good faith, for the benefit of the Ghanaian people.
Source: Lands Ministry