{"id":60015646,"date":"2024-04-29T16:37:13","date_gmt":"2024-04-29T15:37:13","guid":{"rendered":"https:\/\/dialogue.earth\/?p=60015646"},"modified":"2024-04-29T16:37:22","modified_gmt":"2024-04-29T15:37:22","slug":"can-ghanas-lithium-boom-avoid-the-gold-curse","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/can-ghanas-lithium-boom-avoid-the-gold-curse\/","title":{"rendered":"Can Ghana\u2019s lithium boom avoid the \u2018gold curse\u2019?"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The relatively recent discovery of lithium in commercial quantities in Ghana has generated hopes of an economic boom, especially through value-addition and foreign exchange revenue. However, some experts are worried about the prospects of a second \u201c<a href=\"https:\/\/www.aljazeera.com\/program\/africa-investigates\/2011\/11\/30\/gold-ghanas-blessing-or-curse\">gold curse<\/a>\u201d.<\/p>\n\n\n\n<p>The first has long plagued Ghana\u2019s mining economy, causing environmental damage, social injustice and economic instability. Conscious of such worries, the government last year <a href=\"https:\/\/www.graphic.com.gh\/news\/general-news\/ghana-news-cabinet-approves-lithium-policy-it-covers-other-green-minerals.html\">signed<\/a> a policy on mining for a number of minerals critical to the energy transition, including lithium. Its main goal is to strengthen Ghana\u2019s stake in what have historically been foreign-owned operations.<\/p>\n\n\n\n<p>However, an early test of the policy has delivered results that are proving divisive. The government last year <a href=\"https:\/\/www.modernghana.com\/news\/1278448\/lithium-lease-agreement-to-go-to-parliament-by.html\">signed<\/a> a lease agreement, with the subsidiary of an Australian mining compay, for Ghana\u2019s first large-scale lithium project. The terms of this deal have been heavily criticised as too generous to the company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-ghana-s-gold-curse\">Ghana\u2019s \u2018gold curse\u2019<\/h2>\n\n\n\n<p>Commercially viable lithium reserves were discovered in Ghana in 2018 amid a global lithium <a href=\"https:\/\/elements.visualcapitalist.com\/the-lithium-rush-can-we-meet-tomorrows-lithium-demand\/\">boom<\/a>. By 2021, global production had surpassed <a href=\"https:\/\/www.weforum.org\/agenda\/2023\/01\/chart-countries-produce-lithium-world\/\">100,000 tonnes<\/a> annually.&nbsp;Demand in 2040 will be 40 times what it was in 2020, according to the <a href=\"https:\/\/iea.blob.core.windows.net\/assets\/ffd2a83b-8c30-4e9d-980a-52b6d9a86fdc\/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf\">International Energy Agency<\/a>.<\/p>\n\n\n\n<p>The worldwide push for renewable energy initiatives has put a <a href=\"https:\/\/www.globenewswire.com\/news-release\/2024\/03\/12\/2844518\/0\/en\/Lithium-Silicon-Battery-Market-set-to-soar-projected-to-hit-US-22-2-billion-in-2024-and-reach-US-1150-0-billion-by-2034-Future-Market-Insights-Inc.html\">premium<\/a> on the mineral, which is a crucial element in electric vehicle batteries.<\/p>\n\n\n\n<p>Currently, the most lucrative mineral in Ghana is gold, representing about <a href=\"https:\/\/www.trade.gov\/country-commercial-guides\/ghana-mining-industry-equipment\">95%<\/a> of mineral revenues and generating <a href=\"https:\/\/www.bog.gov.gh\/wp-content\/uploads\/2024\/01\/MPC-Press-Release-March-2024.pdf\">USD 7.6 billion<\/a> in export earnings during 2023. Like many resource-rich countries, Ghana has struggled with the complex challenges brought by gold mining, including environmental degradation, social inequality and economic volatility.<\/p>\n\n\n\n<p>This has been particularly true in the <a href=\"https:\/\/www.myjoyonline.com\/the-story-of-how-communities-situated-downstream-of-offin-pra-rivers-are-impacted-by-galamsey\/\">rural<\/a> communities where mining \u2013 both legal and illegal \u2013 is conducted. For many, the associated <a href=\"https:\/\/www.africanews.com\/2023\/05\/04\/illegal-mining-threatens-ghana-forests\/\">deforestation<\/a> and water pollution have caused huge problems. In 2017, the severity of water pollution stemming from illegal mining prompted the government to <a href=\"https:\/\/citifmonline.com\/2017\/02\/ghana-may-soon-import-water-over-galamsey-epa\/\">predict<\/a> that drinking water may soon need to be imported.<\/p>\n\n\n\n<p>Gold mining has also caused social tensions in communities that live with the industry\u2019s presence and disruption but see few benefits. A number of Ghana\u2019s oldest mining communities, such as <a href=\"https:\/\/www.ghanabusinessnews.com\/2019\/07\/10\/hopelessness-envelopes-ghanas-mining-towns-even-as-country-becomes-top-gold-producer\/\">Tarkwa<\/a> and <a href=\"https:\/\/chraj.gov.gh\/wp-content\/uploads\/2018\/04\/Impact-of-Mining-on-Human-Rights-Experiences-from-Ghana.pdf\">Obuasi<\/a>, remain poor. Some have seen <a href=\"https:\/\/www.theafricareport.com\/295423\/ghana-violent-attacks-on-mining-companies-could-hamper-sector-growth\/\">violence<\/a> break out between companies and small-scale miners.<\/p>\n\n\n\n<p>With lithium, also known as \u201cwhite gold\u201d due to its colour, the government has <a href=\"https:\/\/www.graphic.com.gh\/news\/general-news\/ghana-news-cabinet-approves-lithium-policy-it-covers-other-green-minerals.html\">pledged<\/a> not to repeat the mistakes of gold deals past, particularly with regards to Ghanaian involvement in the value chain and royalties.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-a-new-act\">A new act<\/h2>\n\n\n\n<p>Ghana\u2019s lithium strategy is detailed in its green minerals policy. This policy, which was <a href=\"https:\/\/www.graphic.com.gh\/news\/general-news\/ghana-news-cabinet-approves-lithium-policy-it-covers-other-green-minerals.html\">approved<\/a> by the cabinet in July 2023, is expected to lead to amendments to the <a href=\"https:\/\/resourcegovernance.org\/sites\/default\/files\/Minerals%20and%20Mining%20Act%20703%20Ghana.pdf\">existing<\/a> Minerals and Mining Act of 2006.<\/p>\n\n\n\n<p>The lithium deal awarded by the government in October 2023 is a 15-year lease to Barari DV Ghana Limited, a subsidiary of Australia-based Atlantic Lithium Limited. The company will develop a mine in Ewoyaa, Mfantseman municipality, 120 km west of Ghana\u2019s capital Accra.<\/p>\n\n\n\n<p>Samuel Jinapor, the lands and natural resources minister, says the deal <a href=\"https:\/\/www.graphic.com.gh\/news\/general-news\/ghana-news-lithium-deal-best-unprecedented-10-royalties-19-state-participation-lands-minister-assures.html\">requires<\/a> Barari to be listed on the Ghana Stock Exchange, with at least 30% of its shares made available for Ghanaians to purchase.<\/p>\n\n\n\n<p>The government has also moved to ban the export of raw minerals, including <a href=\"https:\/\/www.fdiintelligence.com\/content\/feature\/ghanas-lithium-strategy-points-to-more-african-incountry-metal-refining-83395\">lithium<\/a> and <a href=\"https:\/\/www.alcircle.com\/news\/ghana-s-move-to-ban-raw-bauxite-exports-aligns-with-its-value-creation-strategy-109041\">bauxite<\/a>. This move, designed to spur domestic industrialisation, echoes similar ones made by other resource-rich African countries such as Zimbabwe and Namibia.<\/p>\n\n\n\n<p>Only selected details of the green minerals policy had been shared with the media at the time of publishing, however. The Minerals Commission acknowledged Dialogue Earth\u2019s requests for a copy of the full policy, but this had not arrived.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-terms-of-the-deal\">The terms of the deal<\/h2>\n\n\n\n<p>Government officials have <a href=\"https:\/\/www.ghanaweb.com\/GhanaHomePage\/NewsArchive\/If-you-want-more-profit-in-the-Lithium-deal-bring-out-reasons-Sly-Tetteh-tells-critics-1897166\">insisted<\/a> that the Atlantic deal they secured is \u201cthe best in the world\u201d and on par with global best practices. Meanwhile, a large number of civil society and political figures have taken aim at its available details, saying the project will leave Ghana worse off.<\/p>\n\n\n\n<p>The Atlantic deal includes a royalty rate of 10% and a free carried interest (the government\u2019s stake in Barari) of 13%. At the deal\u2019s signing, Jinapor <a href=\"https:\/\/mlnr.gov.gh\/wp-content\/uploads\/2023\/10\/Speaking_Notes_Signing_of_Lithium_Lease.pdf\">said<\/a> that in Ghana\u2019s prior mineral mining lease agreements, these figures were 5% and 10% respectively.<\/p>\n\n\n\n<p>In December, the opposition National Democratic Congress party <a href=\"https:\/\/citinewsroom.com\/2023\/12\/lithium-lease-review-laws-on-mining-green-minerals-in-ghana-ndc-to-govt\/\">slammed<\/a> the deal: \u201cThe 10% royalty rate secured by government could have been the baseline rate, subject to upward adjustment in cases of windfall revenue or profit by the company, if government had negotiated properly.\u201d<\/p>\n\n\n\n<p>The former chief justice, Sophia Akuffo, <a href=\"https:\/\/www.ghanaweb.com\/GhanaHomePage\/business\/Ghana-s-Lithium-lease-not-different-from-agreements-made-during-colonial-times-Sophia-Akuffo-1889378\">said<\/a> the deal lacked a \u201ctransparent competitive bidding process\u201d and harked back to \u201ccolonial\u201d agreements, informed by extractive logic, with little benefit to Ghanaians.<\/p>\n\n\n\n<p>NGOs have expressed concern over the environmental and social implications. In a <a href=\"https:\/\/ghana.budgit.org\/2023\/12\/19\/budgit-ghana-calls-for-sustainable-lithium-mining-in-ghana\/\">press release<\/a>, the citizen advocacy organisation BudgIT Ghana said: \u201cGhana might not obtain adequate revenue from the lease agreement and would be better off maintaining its lithium reserves and establishing its own lithium mining sector.\u201d Additionally, BudgIT said the arrangement \u201cmay not provide adequate protection for local communities and workers, which could lead to exploitation or abuse.\u201d<\/p>\n\n\n\n<p>The deal has also been mired in accusations of secret agreements between the government and Atlantic Lithium. In a February 2023 presentation to investors, Atlantic <a href=\"https:\/\/www.listcorp.com\/asx\/a11\/atlantic-lithium-limited\/news\/mining-indaba-2023-investor-presentation-2831965.html\">highlighted<\/a> its receipt of a 10-year tax holiday. This suggests its subsidary company Barari has been registered in Ghana as a \u201c<a href=\"https:\/\/taxsummaries.pwc.com\/ghana\/corporate\/tax-credits-and-incentives\">free zone<\/a>\u201d entity, a designation not typically <a href=\"https:\/\/www.cqlegal.net\/qa-foreign-direct-investment-in-ghana\/\">granted<\/a> to mining companies. In December, a government spokesperson <a href=\"https:\/\/citinewsroom.com\/2023\/12\/weve-not-given-barari-dv-10-year-tax-holiday-minerals-commission-ceo\/\">dismissed<\/a> this suggestion. Bright Simons, vice-president of Accra-based thinktank Imani, has <a href=\"https:\/\/www.theafricareport.com\/331005\/ghanas-lithium-deal-separating-fact-from-fiction\/\">argued<\/a> that the discrepancy exacerbates \u201ccredibility risks to the whole arrangement\u201d.<\/p>\n\n\n\n<p>Opposition politicians have <a href=\"https:\/\/www.modernghana.com\/news\/1278427\/minority-wont-let-you-down-we-will-scrutinise.html\">demanded<\/a> the deal be scrutinised in parliament, which the government had promised would happen in the first quarter of 2024. <a href=\"https:\/\/gna.org.gh\/2024\/03\/atlantic-lithium-limited-in-the-process-of-being-listed-on-the-stock-exchange-gse\/\">Reports<\/a> in late March that Atlantic Lithium was being registered for listing on the Ghana Stock Exchange indicates the deal could be progressing. Dialogue Earth contacted the lands and natural resources ministry for details of these proceedings, but a response had not been received at the time of publication.<\/p>\n\n\n\n<p>Atlantic\u2019s expected presence in the country has been welcomed by some. Ike Lord Ennu, chief executive of Mfantseman municipality, points to the economic benefits local communities stand to gain: \u201cThe royalties and taxes alone, which will be paid to the local assembly, is going to be huge and impact our communities positively. We\u2019ll have more people coming in here with ancillary businesses.\u201d<\/p>\n\n\n\n<p>Among public voices, Ennu\u2019s is in the minority. Ransford Gyampo is a political science professor at the University of Ghana and a Mfantseman native. Like Akuffo, he notes a lack of government transparency and consultation. In fact Gyampo accuses the government of longstanding corruption. Talking to Dialogue Earth, he pointed to the record of Ghana\u2019s post-independence leaders accepting bribes for access to natural resources. \u201cOtherwise, why were [the current ruling politicians] in a haste to disregard all civil society suggestions for renegotiation for a better deal?\u201d Gyampo provides no evidence for his suspicions; Atlantic Lithium was <a href=\"https:\/\/www.investorschronicle.co.uk\/news\/2023\/03\/09\/short-seller-alleges-corruption-by-atlantic-lithium\/\">accused<\/a> of corruption in Ghana by the investment firm Blue Orca Capital in March 2023, which it denied.<\/p>\n\n\n\n<p>Gyampo believes the current government will likely be defeated by the National Democratic Congress (NDC) in elections this <a href=\"https:\/\/ec.gov.gh\/programme-of-activities-for-2024-presidential-and-parliamentary-elections\/\">December<\/a>. The NDC has fiercely opposed the current terms of the Barari deal, Gyampo says: \u201cIt is their pledged renegotiation of the deal that, for me, would determine the future of lithium mining in Ghana.\u201d<br><br><em>Additional reporting by Ash Tan<\/em>.<\/p>\n\n\n\n<p><em>This article was produced as a result of a grant and workshop programme organised by Dialogue Earth and the Africa-China Reporting Project at the Wits Centre for Journalism, University of the Witwatersrand, Johannesburg.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New \u2018green minerals\u2019 policy claims to better share the benefits of mining, but many remain sceptical after first lithium deal struck<\/p>\n","protected":false},"author":50000547,"featured_media":60015658,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758,194],"tags":[18133,566,580],"hashtags":[],"country":[50040738],"class_list":["post-60015646","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-uncategorized-zh","tag-lithium","tag-mining","tag-policy","country-ghana"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v26.0) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Can Ghana\u2019s lithium boom avoid the \u2018gold curse\u2019? | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"New \u2018green minerals\u2019 policy claims to better share the benefits of mining, but many remain sceptical after first lithium deal struck\" \/>\n<meta name=\"robots\" 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