A natural resource governance expert has cautioned that any attempt to renegotiate Ghana’s lithium agreement or replace Barari DV Ghana Limited, a subsidiary of Atlantic Lithium, could undermine investor confidence and deter future investments.
More than two years after the country signed its first lithium deal with Barari DV Ghana Limited, the agreement remains unratified by Parliament.
But with a new government in place, concerns have emerged over whether there will be a revision or a shift to a new investor, a move that Africa Senior Programme Officer of the Natural Resource Governance Institute, Denis Gyeyir, believes could create uncertainty in the country’s investment climate.
Mr. Gyeyir outlined three possible options available to the new Minister of Lands and Natural Resources; presenting the agreement to Parliament as it stands, renegotiating with the company to align the terms with the government’s policies, or seeking an entirely new investor.
“As it stands, the contract is not ratified, meaning it does not take legal effect in Ghana,” Mr. Gyeyir told B&FT in an interview. “This gives the minister the discretion to proceed with or discard the agreement.”
Each option, he noted, carries implications. Submitting the deal in its current form, he argued, might not face major resistance since it already contains several progressive provisions.
However, renegotiating the terms before parliamentary ratification could delay timelines, affecting targets outlined in the contract and impacting local communities whose activities have been put on hold for the mining project.
The biggest risk, he warned, would come from a decision to scrap the agreement and seek a new investor. “That’s where the real problem lies. What message does that send to potential investors? Are we suggesting that every time a government changes, existing agreements can be discarded and restarted?” Mr. Gyeyir questioned.
To maintain investor confidence, he recommended that at worst, the government should either proceed with ratification or initiate swift stakeholder engagement to discuss possible adjustments to contested terms.
“For me, the priority should be to get the lithium and bauxite contracts before Parliament as soon as possible for consideration,” he stressed.
The Lands and Natural Resources Minister, Emmanuel Armah-Kofi Buah, during his vetting By Parliament’s Appointments Committee, emphasised the importance of prioritising value addition in future mineral agreements, representing a shift in the country’s mining policy.
Mr. Buah reiterated the need for the country to secure greater economic benefits from its abundant mineral resources, especially new minerals, by ensuring local processing and value-chain integration are at the forefront of negotiations for new mining deals.
He said: “When it comes to new minerals, my strong view is that Ghana must really win in new negotiations for our new minerals, and that there must be a paradigm shift in some of these agreements to ensure that the country benefits more than it has before”.
This followed a question by a member of the Appointments Committee who sought to know the readiness of the government to ensure investor confidence is not affected by a change of government. This is particularly relevant, the committee member stated, when an investor has explored minerals in compliance with all relevant mining regulations.
The basis of the question focused on the maiden lithium agreement, between the country and Barari DV Ghana Limited, a subsidiary of Atlantic Lithium, which was before the 8th Parliament but not ratified before the House was dissolved.
Ghana, Africa’s leading producer of gold and other minerals, announced the signing of its first lithium agreement in October 2023, with Barari DV to mine lithium at Ewoyaa in the Mfantsiman Municipality of the Central Region.
The agreement includes a 10 percent royalty rate and a 13 percent free carried interest for the state, designed to maximise national benefits. Spanning a 15-year lease and covering approximately 42.63 square kilometres, the deal grants Barari DV exclusive rights to extract lithium and associated minerals.
The agreement was said to have followed extensive feasibility studies, prospecting and negotiations, with enhanced terms such as increased state participation, local involvement and value addition to the extracted minerals.
However, the agreement, which was subject to parliamentary approval, aroused a prolonged public discourse, with some institutions like the Institute of Economic Affairs (IEA) – a policy think-tank, opposing it.
The IEA, among others, advocated a reconsideration of the deal and insisted that it failed to address historical mistakes in past minerals exploitation agreements.
The think-tank emphasised a model that places a premium on national control, economic gains and strict adherence to constitutional procedures – and more importantly, value addition.
However, the 8th Parliament could not ratify the agreement despite assurances from the Ministry of Lands and Natural Resources and one of its key sector agencies, the Minerals Commission.
Source: thebftonline