Ghana's Lithium Mining Lease: A vision clash amid opportunity

In Ghana’s perilous efforts to chart a course out of economic crisis, the recent Lithium mining lease granted by the Ghana government to an Australian company, Atlantic Lithium has sparked a riveting clash of visions, igniting debates that echo far beyond the corridors of power.

At the forefront of this discourse stand two towering figures, their perspectives casting a spotlight on the divergent paths that lie ahead for the nation.

One of the personalities, Bright Simons is an intellectual and honorary vice president of think tank Imani Ghana, the other is Sophia Akufo, a former Chief Justice of the Republic turned Distinguished Scholar at the Institute of Economic Affairs.

At the heart of the debates is the question of what should be the role of Lithium, dubbed ‘the new gold,’ and other green minerals in the future economy of the West African state?

According to the mining company, Atlantic Lithium Ghana will become one of the top ten producers of Lithium by 2030.

Their claim is backed by a 2022 geological study by scientists of the University of Mines and Technology Tarkwa which stated that beneath the Ghanaian soil lies $150billion worth of Lithium located in the Volta, Western, and Ashanti regions.

Uses

Around the world, observers of global economic trends have established that Lithium is likely to play a pivotal role in combating global warming.

 Lithium batteries can store energy for community use and for use in electric vehicles.

China and America are in competition to dominate the global Lithium-ion value chain from mining to manufacture of Lithium batteries.

In Ghana, former Chief Justice, Akufo thrust the Lithium mining lease agreement under a searing lens, denouncing it as a neo-colonial pact that might further entrench Ghana in economic struggle.

“It is not different in principle, in the substance from any of Ghana’s previous colonial times, types of agreements.

Some call it the Guggisberg model.

 Whatever description, all those agreements are colonial type of agreements, which over the years have yielded very little good to the overall benefit of the average Ghanaian,” she said.

Her impassioned critique resonated across the nation, kindling concerns within government circles about potential public backlash against the deal.

Akufo didn't merely raise alarms; she also unfurled an alternative vision.

Her call for Ghana to establish its own wholly owned Lithium mining and manufacturing entity, challenged the status quo. 

Ghana Lithium Company Limited

“The Republic of Ghana should establish a Ghana Lithium Company.

The Ghana Lithium Company should be commissioned to develop the entire value chain, from mining raw lithium to the manufacture of batteries and other products in Ghana,” she said.

Her outspoken stance triggered a disheartening dismissal from Minister for Lands and Natural Resources, Abu Jinapor, who patronizingly lamented her critique, implying her exalted status prevented him from engaging her arguments.

Yet her arguments were challenged.

 In defense of the lease, government representatives launched an information blitz, extolling the agreement as a watershed moment in Ghana's mining history.

Minister Jinapor emphasized the unprecedented 10% royalty payment “one of the highest for exploitation of any mineral across the globe,” the minister said.

He promised 19% state participation in the mining company, 35 per cent corporate tax rate, and 13 per cent free carried interest.

“Ladies and gentlemen, let me forcefully state that, this Lease differs from all previous mining leases in many respects,” said the minister in a press statement, adding that “for the first time in the history of our country, a mining lease contains provisions for the establishment of a refinery.”

Then came Bright Simons’ game-changing presentation on national television.

Digging deep into the details of the contract and into the dealings of Atlantic Lithium, Simons was able to reveal with some measure of authority that the lease agreement represented “a failure of imagination,” by the government. 

His argument in a nutshell is that the lease agreement was a bad deal for Ghana because it favored the strategic interests of the Australian company Atlantic Lithium not the strategic interests of the nation Ghana.

Echoing the sentiments of the former Chief Justice, Simons argued that the Ghanaian authorities should first have developed a national and a West Africa regional policy on exploitation of green minerals which would have at its core the objective to establish industries for mining and manufacturing lithium in all its industrial uses.

In response minister Jinapor said the following: 

“There have, also, been calls for the establishment of a Ghana Lithium Company to undertake lithium mining and develop the value chain of the mineral from lithium mining to battery….

However, the volumes of the mineral we have, currently, and our quest to ensure optimal benefit from the exploitation of this mineral made that option not feasible for several reasons. 

Firstly, globally, only China, has an end-to-end lithium value chain, from mining to battery production.”

Resource optimisation

The applause from key figures in the mining industry, notably legal luminary Fui Tsikata and Minerals Commission founder Kofi Ansah, reinforced the government’s message, lauding the agreement as a boon for the nation, albeit with minor suggested revisions.

Their support seemingly emboldened the Minerals Commission CEO, Martin Ayisi, who expressed jubilation over their endorsement.

But beneath this fervor lies a nuanced narrative of missed opportunities and murky aspects. The haste in finalising the agreement - just one year, coupled with the glaring absence of environmental mitigation strategies, raises grave concerns.

 The potential environmental fallout, including water quality degradation and ecosystem and livelihood disruption, looms ominously, with no visible plans to repair the inevitable damage that open pit mining processes will cause.

Moreover, the stark contrast in share prices offered to the local entity, the Ghana Mineral Income Investment Fund compared to what has been granted to the foreign strategic investor, the US owned Piedmont Lithium, underscore potential imbalances, and raise questions about fairness and national interest.

Beyond the specifics of the deal, a broader apprehension emerges—an apprehension that Ghana, once more, might become a mere resource conduit for another nation's economic growth.

Akufo's depiction of Ghana as a locus of resource extraction, feeding into an intricate global economic plan helmed by the United States, casts a shadow over the nation's sovereignty and long-term prosperity.

A head of the government’s plan to obtain Parliamentary approval for the lease in March this year, Both Akufo and Simons, is urging Ghana's Parliament to reject the lease agreement and instead consider a unified regional plan by West African nations to harness green minerals for industrial development.

This will be a plan that transcends national boundaries and envisions a collective industrial future for West Africa.

Regional strategy
In an ironic twist, the figure best positioned to drive such a regional consensus is President Nana Addo Dankwa Akufo-Addo himself. He is the French speaking leader of an anglophone state who commands the greatest respect among his peers in the region. He could leverage his diplomatic prowess to orchestrate a collaborative vision for the region's green mineral industrialisation.
The unfolding saga underscores a poignant reality: Ghana's solitary capacity might not suffice to craft the optimal outcome for its green industrialisation ambitions. Collaboration, foresight, and a holistic regional strategy seem imperative for Ghana to truly leverage its green mineral wealth towards a sustainable and prosperous future.