BTA2023 Ghana’s lithium agreement with Barari DV Ghana Limited, a subsidiary of Atlantic Lithium, has come under renewed scrutiny following the change in government. A natural resource governance expert has warned that any attempt to renegotiate the deal or replace the current investor could undermine investor confidence and deter future investments in the country.
Unratified Agreement and Government Uncertainty
More than two years after Ghana signed its first lithium deal with Barari DV Ghana Limited, the agreement remains unratified by Parliament. With a new administration in place, concerns have surfaced over whether the government will revise the terms, renegotiate with the current investor, or seek a new one altogether.
Denis Gyeyir, Africa Senior Programme Officer of the Natural Resource Governance Institute, believes that such uncertainty could impact Ghana’s investment climate. He outlined three potential paths available to the new Minister of Lands and Natural Resources:
- Presenting the agreement to Parliament for ratification as it stands.
- Renegotiating with the company to align the terms with government policies.
- Scrapping the deal and seeking a new investor.
“As it stands, the contract is not ratified, meaning it does not take legal effect in Ghana,” Mr. Gyeyir explained in an interview with B&FT. “This gives the minister the discretion to proceed with or discard the agreement.”
Implications of Each Option
Each of these options carries significant implications.
- Submitting the deal in its current form may not face strong opposition, as it already contains several progressive provisions.
- Renegotiating could delay implementation, affecting project timelines and impacting local communities awaiting mining operations.
- The most significant risk lies in abandoning the agreement entirely. “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 the government either proceed with ratification or initiate swift stakeholder engagement to discuss possible modifications to the terms.
A Shift in Mining Policy
The newly appointed Lands and Natural Resources Minister, Emmanuel Armah-Kofi Buah, has emphasized the need to prioritize value addition in future mineral agreements. During his vetting by Parliament’s Appointments Committee, Mr. Buah stressed that Ghana must ensure greater economic benefits from its abundant mineral resources by integrating local processing and value-chain development into mining contracts.
“When it comes to new minerals, my strong view is that Ghana must really win in new negotiations for our new minerals,” he stated. “There must be a paradigm shift in some of these agreements to ensure that the country benefits more than it has before.”
This statement followed concerns from an Appointments Committee member about whether the government could guarantee investor confidence amid changing political administrations.
The Lithium Agreement
Ghana signed its maiden lithium agreement in October 2023 with Barari DV Ghana Limited to mine lithium at Ewoyaa in the Mfantsiman Municipality of the Central Region. The agreement included a 10% royalty rate and a 13% free carried interest for the state, aimed at maximizing national benefits. Spanning a 15-year lease and covering approximately 42.63 square kilometers, the deal granted Barari DV exclusive rights to extract lithium and associated minerals.
The agreement was reached after extensive feasibility studies, prospecting, and negotiations, incorporating provisions for increased state participation, local involvement, and value addition. However, it sparked prolonged public debate, with policy think-tanks like the Institute of Economic Affairs (IEA) arguing that the deal failed to correct historical shortcomings in Ghana’s mineral agreements. The IEA called for a model that prioritizes national control, economic benefits, and strict adherence to constitutional procedures.
Despite assurances from the Ministry of Lands and Natural Resources and the Minerals Commission, the 8th Parliament could not ratify the agreement before its dissolution.
The Road Ahead
The fate of Ghana’s lithium deal now rests with the new administration. While prioritizing national interest is essential, ensuring a stable investment climate is equally crucial. How the government navigates this decision will set a precedent for future mining agreements and investor relations in the country.
Should Ghana push for better terms, or should it ratify the deal to maintain investor confidence? The answer will shape the nation’s mining landscape for years to come.
