Sir Sam Esson Jonah, a distinguished statesman and experienced business executive, has lauded the Ghanaian government’s achievement in securing more favourable fiscal terms for the nation’s first lithium mine. This accomplishment transcends existing mining contracts and marks a significant step towards increased Ghanaian ownership in the mining sector.
Drawing from his wealth of experience as a former President of AngloGold Ashanti, Sir Sam has been a vocal proponent of enhancing Ghanaian ownership in the mining industry. He emphasizes the need for a strategic approach to realize the benefits of the emerging electrification boom. In a recent interview, he expressed his satisfaction with the terms of the lithium deal, which he views as a credible step towards achieving this long-standing goal.
The big picture
In a groundbreaking move, Ghana has entered into a pivotal agreement with Atlantic Lithium to mine lithium at Ewoyaa, located in the Central Region. This partnership includes a 10 percent royalty and a 13 percent free carried interest by the state, which outshines the existing terms in other mining agreements. Atlantic Lithium is also committed to contributing one percent of its revenue to a community development fund aimed at improving the mining area.
Through an investment by the Minerals Income Investment Fund (MIIF) in Atlantic Lithium, the government has secured an additional six percent interest in the Ewoyaa Project, increasing its total holding to 19 percent. This strategic move not only opens the door for Ghana to establish a robust lithium industry but also signals an invitation for further foreign investment in the country’s mining sector.
Why it matters
The battery metals market has become highly competitive, with countries worldwide striving to secure investments for developing their lithium resources. Sir Sam believes that the terms negotiated for the Ewoyaa mining lease outshine those of many other nations. However, he urges caution, emphasising the need to maintain Ghana’s attractiveness as an investment destination.
While commending the government’s pragmatic approach to the Ewoyaa lithium deal, Sir Sam underscores the urgency of taking strategic steps, as other countries, such as Zimbabwe and Namibia, offer competitive fiscal terms for lithium production. Ghana has a unique opportunity to position itself at the forefront of African lithium production and should support the project’s development to capitalise on current favourable lithium prices.
Go Deeper
Sir Sam points out that as new prospects from various countries prepare to enter the lithium market, fears of a potential lithium glut are real. This situation could drive lithium prices down, affecting the export revenue and economic prospects of Ghana. He highlights the substantial lithium resources in the Democratic Republic of Congo and Mali, which could overshadow Ghana’s position in the market if it delays bringing its first mine online.
Sir Sam stresses the importance of maximising gains by encouraging domestic processing of lithium. While Ghana currently has one project nearing production, the country must invest in exploration to develop more reserves and support the potential establishment of a conversion plant in the future.
Ghana’s abundant skilled professionals and excellent geology and mine engineering universities provide unique strengths, while the country’s coastal location and proximity to key markets can drive down capital costs and establish favourable supply channels to customers. Ghana remains an attractive destination for lithium mining and can play a pivotal role in the global lithium market’s growth.