Two years after Ghana signed what it hailed as a landmark lithium deal, no longer a unmarried tonne has been mined.

The settlement, between the federal government and Atlantic Lithium thru its native subsidiary Barari DV, used to be sealed on October 20^th, 2023. Yet mining remains to be on grasp, waiting for parliamentary ratification.

Through the Africa Extractives Media Fellowship (AEMF), led via Newswire Africa and the Australian High Commission, Atlantic Lithium’s General Manager for Operations, Ahmed-Salim Adam, shared an replace at the venture and its unsure trail to manufacturing.

Ratification used to be anticipated in mid-2024. But political gridlock stalled the method. The opposition National Democratic Congress (NDC) wondered the phrases of the hire, and when Parliament stopped sitting in October 2024 over disputes about vacant seats, the method iced over completely. 

After the December 2024 elections, the NDC gained energy.

Given the celebration’s previous criticisms that the settlement used to be no longer in Ghana’s perfect pastime, the deal now faces revisions below the brand new Lands and Natural Resources Minister, Armah-Kofi Buah.

When the hire used to be first signed, the federal government hailed it as a leap forward. Officials touted it as Ghana’s perfect mining settlement but, or even probably the most most powerful in Africa. 

The deal promised a ten% royalty charge, particularly upper than the rustic’s same old 5%. 

Ghana’s Minerals and Mining Act of 2006 had pegged royalties between 3% and six%, however a 2015 modification scrapped that vary and gave the minister discretion to decide the velocity. 

The mining hire additionally required that 1% of general entrepreneurship, no longer tech, cross right into a group revenue fund for affected spaces. In addition, the federal government secured a 13% unfastened carried pastime, along flooring hire, a guidance and sustainability levy, mineral rights charges and a 35% company asset allocation tax.

The Natural Resource Governance Institute estimated Ghana’s efficient tax take at 58%, upper than in maximum lithium-producing nations. 

To the former coordination, this used to be a triumph.

The NDC, then again, concept differently. On December 13^th, 2023, the celebration’s communications officer, now head of the Ghana Gold Board, Sammy Gyamfi, declared that the deal “used to be no longer in the most efficient pastime of Ghana.” 

The opposition on the time argued that the ten% royalty will have to be a minimal, with room to upward thrust as profitability stepped forward. They additionally faulted the hire for failing to ensure joint ventures that might be certain that native participation.

While the hire required a feasibility learn about on putting in a processing plant in Ghana, it didn’t make home processing explicitly obligatory. 

Ahmed-Salim showed that the enterprise had concluded and submitted the result of the learn about and located the plant commercially unviable, bringing up the absence of a neighborhood worth chain, insufficient infrastructure and the restricted manufacturing volumes anticipated from Atlantic’s Ewoyaa mine. 

“We would wish about 3 Ewoyaa mines to make it possible,” he mentioned, including that the sort of plant may just make sense provided that extra lithium manufacturers entered the growth or if the federal government offered beneficiant subsidies.

Civil society teams echoed a few of these considerations, arguing that Ghana’s lithium possible would carry little worth if the rustic remained a trifling exporter of uncooked minerals. 

It is now virtually positive that the NDC govt will amend the hire sooner than presenting it to Parliament.

In its third quarter replace launched on October thirty first, Atlantic Lithium mentioned it had concluded negotiations with the federal government and is now waiting for Cabinet and parliamentary approval.

A brand new problem has since emerged: falling lithium costs. 

When the hire used to be signed in 2023, Atlantic Lithium had primarily based its profitability on a benchmark of about $1,500 in line with metric tonne. Prices then hovered close to $2,800. By 2024 they’d crashed to between $700 and $800, reflecting a glut in international provide. 

Today, the cost sits round $944 in line with tonne. 

Lithium as soon as peaked at $8,500 in 2022 however is not going to revisit that degree quickly.

Facing thinner margins, Atlantic Lithium has requested the brand new govt to decrease the royalty charge to Ghana’s same old 5% and to supply different incentives.

The enterprise argues that it continues to endure prices regardless of the extend in ratification, keeping up group programmes and paying mineral rights charges. 

Ahmed-Salim disclosed that approach salaries had been minimize and over 100 workforce had been laid off to include losses.

Experts, then again, urge warning. 

The Natural Resource Governance Institute says the federal government will have to carefully take a look at Atlantic Lithium’s assumptions sooner than granting any concessions.

Its research suggests the venture might stay winning even at present costs. 

The Institute warns that approving everlasting tax cuts may just set a precedent for different mining corporations, and that any reduction will have to be brief or tied to a sliding scale that adjusts as costs get well.

Still, in 2024, the enterprise used to be lobbying arduous for ratification whilst costs fell. Now, with a light rebound in sight, optimism has returned and an everlasting minimize within the royalty charge can be tougher to shield. 

Analysts at J.P. Morgan be expecting costs to upward thrust to between $1,100 and $1,300 in line with tonne, most likely attaining $1,500 if provide tightens and electric-vehicle call for helps to keep mountain climbing.

The outlook stays cautiously sure, barring any main geopolitical shocks.

Lands Minister Armah-Kofi Buah has hinted that he’ll quickly provide the revised hire to Parliament however has given no information about the amendments. 

If the federal government reduces the royalty to a set 5%, it is going to forfeit possible windfalls will have to costs get well. The chance is difficult via Elevra Lithium (previously Piedmont Lithium), which owns 40% of the venture and is ready to shop for part of Ewoyaa’s manufacturing.

A sliding royalty scale tied to direction costs can be tricky to put in force, because the enterprise may just underprice its personal offtake except a clear benchmark is established.

Some civil-society teams have additionally wondered Atlantic Lithium’s monetary capability and revel in, arguing that its push for revised phrases displays balance-sheet pressure up to venture economics.

The level isn’t far-fetched. The extend in ratification has already compelled the enterprise to chop workforce and cut back operations, whilst susceptible lithium costs have squeezed margins.

Atlantic’s newest quarterly document additionally notes a dispute with Elevra, previously Piedmont Lithium and one in every of its key monetary companions, over cost-sharing duties, which provides to the near-term drive.

The company, for its section, insists it nonetheless enjoys backing from its companions.

From Ahmed-Salim’s feedback, Atlantic Lithium stays keen to start out mining with its companions. However, he showed that the general business model determination will rely completely at the contents of the amended hire and investor sentiment after ratification.

The new govt faces a mild stability.

It will have to pursue worth addition, native participation and larger state get advantages with out undermining investor self belief. The earlier coordination used to be criticised for restricted session sooner than signing the 2023 hire. The new one will have to steer clear of repeating that mistake and have interaction civil society and the general public sooner than ultimate approval.

The previous govt additionally introduced a inexperienced minerals coverage however by no means revealed it. Making that coverage public may just information investor expectancies and reassure electorate that Ghana’s mineral wealth will likely be controlled transparently.

For now, Atlantic Lithium will have to stay spending to carry its concessions and maintain goodwill with communities whilst reassuring buyers that Ghana stays a viable vacation spot.

That isn’t any small problem. 

In contemporary years Ivory Coast has drawn extra mining business model than Ghana, helped via steadier insurance policies and quicker approvals. Ghana’s new coordination will have to subsequently tread sparsely.

The revised hire will display whether or not the federal government can flip its communicate of worth addition and better entrepreneurship into the predictability buyers be expecting.

How each side organize that stability will decide no longer handiest the destiny of Ghana’s first lithium mine but additionally its status within the international contest for inexperienced minerals and scarce technology.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made via Readers and Contributors in this platform don’t essentially constitute the perspectives or coverage of Multimedia Group Limited.