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2 Major mining pacts hang in the balance

Charles Benoni Okine Business News Nov - 12 - 2024 , 05:40

The fate of two major mining agreements hangs in the balance as the uncertainties surrounding the resumption of sittings in Ghana’s Parliament take a new twist.

The agreements are the proposed joint venture between Gold Fields’ Tarkwa Mine and AngloGold Ashanti’s Iduapriem Mine in Ghana, and the Atlantic Lithium Mining project at Ewoyaa in the Central Region.

These major agreements, should they take off as projected by the Ghana's first lithium mine, also expressed concern about the delay in the ratification of its mining lease by Parliament, saying the development was severely impacting its operational timelines and overall production goals.

The Finance Director of Atlantic Lithium, Amanda Harsas, said while the company continued to make progress with key permitting steps, the pace had slowed, fearing that the turn of events could affect the speed of getting the project into production gear.

"The delay has affected our timeline. Rather than accelerating and getting into production as quickly as we can, we've had to be more careful due to the uncertainty.

“Our exploration and other activities have slowed down and it will take us a long time to get into production. We've constantly reviewed our deadlines with the information we get,” she said.

Speaking to the media on the sidelines of the 4th West Africa Mining Security (WAMS) Conference in Accra, she expressed concerns over the delay in the approval of its mining agreement with the government.

The company’s flagship project, the Ewoyaa Lithium Project, set to be Ghana’s first lithium-producing mine, is being advanced to production under an agreement with Piedmont Lithium.

The project is proven to produce a spodumene concentrate product suitable for conversion to be used in electric vehicle (EV) batteries.

In June 2023, the company announced its Definitive Feasibility Study (“DFS”) for the Ewoyaa Project, confirming the project’s economic viability and profitability potential for the production of 3.6Mt spodumene concentrate over a 12-year Life of Mine (“LOM”).

The DFS considers the February 2023 Mineral Resource Estimate of 35.3Mt at 1.25% Li₂O (increased in July 2024 to 36.8Mt at 1.24% Li₂O), Ore Reserves of 25.6Mt at 1.22% Li₂O and long-term concentrate pricing of US$1,410/t, FOB Ghana.

In October 2023, Atlantic Lithium was granted a Mining Lease for the Project, representing a major landmark for Ghana and the company and paving the way for Ewoyaa to
become one of the next major spodumene concentrate producers.

companies, are expected to rake in hundreds of millions of dollars which could help shore up the country’s foreign exchange reserves and also contribute to the stabilisation of the weak local currency.

Parliament adjourns again

Parliament, which was recalled last week after a long standoff between the two leading parties in the House, had to be adjourned again by the Speaker because Members of Parliament (MPs) from the ruling party failed to show up to kick-start any business.

With less than a month to go to the presidential and parliamentary polls, it is not clear how the House can fast-rack such urgent bills before it rises to draw the curtains on the Eighth Parliament of the Fourth Republic.

Major concerns

The Chief Executive Officer of the Ghana Chamber of Mines, Dr Sulemanu Koney told the Graphic Business that what was happening is not healthy for the mining industry.

He pointed out that there is competition for capital in recent times and, therefore, if the country has been able to attract some investment through exploration, it’s only unfortunate that the impasse in Parliament is delaying the ratification of these agreements.

“The companies have a lease which is good, ordinarily you have a lease, it provides some comfort that you can do some investment but our recent history has taught us that a mining lease is not enough.

The lease has to be ratified by Parliament. Our recent history has taught us painfully that you need to have your leases ratified as required by the 1992 Constitution,” he stated.

He said these companies, therefore, do not have the authorisation to mine yet because their agreements have not yet been ratified.

“So, as we speak, yes, we have had some engagements with some stakeholders because what is happening is not healthy for the industry,” he added.
He said there was so much uncertainty surrounding these agreements which was not the best.

On the way forward, Dr Sulemanu said the constitution provides only one avenue and that is for Parliament to ratify these agreements.

“So if they can't have a business meeting, then it cannot be even be presented for ratification.?

So there are no options, they just have to do what they have to do,” he said.

Goldfields/Ashanti statement

Gold Fields Limited and AngloGold Ashanti, in their joint media release of March 16, 2023, announced that they had agreed on key terms for a proposed joint venture between Gold Fields Tarkwa Mine and AngloGold Ashanti’s Iduapriem Mine in Ghana.

The companies aim to create Africa’s largest gold mine. Under the agreement, Gold Fields would hold a 60% stake; AngloGold Ashanti 30%, while the Ghanaian government would keep the remaining 10%.

The joint venture at the time of the agreement was projected to produce an average of 900,000 ounces annually over the first five years and 600,000 ounces over its estimated 18-year lifespan.

The parties said they had attempted to secure the required permits before Ghana’s national elections, to be held in December.

The parties said notwithstanding constructive engagement with the Government of Ghana since the announcement of the Proposed Joint Venture on March 16, 2023, the requisite approvals by the Government of Ghana for the proposed joint venture had not yet been obtained.

“Gold Fields and AngloGold Ashanti have sought to secure the requisite approvals, which include approval of the Proposed Joint Venture by the Parliament of Ghana,
ahead of the October 2024 Parliamentary recess before the Ghana national elections to be held in December 2024,” they said in the release.

Meanwhile, the parties maintained that they believed a combination of the two neighbouring mines into a single managed entity was compelling, given that it was anticipated to extend the life of the mine, increase production and lower costs, creating value for all stakeholders.

To them, however, in the absence of the requisite approvals from the Government of Ghana and clear timelines for execution of an agreement, “Gold Fields and AngloGold Ashanti will maintain engagement in relation to a potential asset combination while separately continuing to pursue improvements to their respective assets.

Atlantic Lithium

A couple of months ago, Atlantic Lithium, the Australian mining company developing Ghana's first lithium mine, also expressed concern about the delay in the ratification of its mining lease by Parliament, saying the development was severely impacting its operational timelines and overall production goals.