The government has signed an agreement with Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited. This deal encompasses a 10 percent royalty rate and a 13 percent free carried interest.
The agreement grants Barari DV the initial mining lease for extracting lithium from the Ewoyaa area in the Mfantsiman municipality of the Central Region.
This lease spans 15 years and introduces updated terms designed to maximize the country’s benefits from this mineral resource.
These terms include an increased royalty rate, participation of the state and local entities, and value addition to the mined mineral.
The agreement follows the completion of prospecting and feasibility studies by the company, as well as a series of negotiations between the government and Barari DV.
The lease covers an area of approximately 42.63 square kilometers and provides the company with exclusive rights to mine and produce lithium and related minerals in compliance with the country’s mining laws.
Lithium, a vital component in the production of lithium-ion batteries, holds strategic importance in the country’s transition toward green energy.
According to Samuel Jinapor, the Minister for Lands and Natural Resources, the government deliberately adopted a unique approach to the exploitation and management of lithium, distinct from other minerals. This necessitated the establishment of a special policy for this mineral before granting any mining lease.
After extensive consultations, Cabinet approved a policy for the exploitation and management of green minerals, including lithium.
The mining lease granted to the company aligns with the policy endorsed by parliament.
This recent authorization to the company, which had been exploring the commercial viability of the mineral deposits, adheres to the country’s mining regulations and grants the company the first right of refusal.
“By the mining laws of our country, when a company undertakes exploration and discovers minerals in commercial quantities, the company is entitled to the first right of refusal. That is to say if the company wants to go into the mining, the company is entitled to be given a mining lease to mine,” Mr. Jinapor added.
The minister made these announcements during a ceremony in Accra to formalize the agreement. He highlighted that the terms of the agreement provide better value to the state. Notably, the royalty rate has been increased from the standard 5 percent to 10 percent, and the state’s free carried interest in the mining operation has risen from 10 percent to 13 percent.
Furthermore, the government, through the Minerals Income Investment Fund (MIIF), will acquire an additional 6 percent stake in the mining operation and a 3.06 percent stake in the company’s parent entity, which is listed on the Australian and London Stock Exchanges.
The company will also be required to list on the Ghana Stock Exchange (GSE) to allow Ghanaian entities like pension funds and individuals to participate in this venture.
Additionally, the company will allocate one percent of its revenue to a Community Development Fund, which will be utilized for the development of communities affected by its operations. The company will also endeavor to establish a chemical plant for processing the lithium. In the event the company cannot establish a chemical plant, it will supply its lithium to any third-party chemical plant established in the country, fostering job creation and development in mining communities and across the nation.
The government recognizes the impact of mining on host communities and is dedicated to ensuring that these communities, as well as the people of Ghana (who are the legal owners of these minerals), reap the benefits.
Mr. Jinapor, therefore, urged the company to strictly adhere to the country’s mining laws and the agreement with the government, emphasizing the importance of responsible, sustainable, and environmentally-friendly mining practices.
Niel Herbert, the Executive Chairman of Atlantic Lithium Limited, expressed the significance of the Ewoyaa project for the company and assured their commitment to collaborating with the government to ensure the effective exploitation of the mineral for the benefit of all stakeholders. He also pledged the company’s dedication to complying with the country’s laws and ensuring a safe mining environment.