Atlantic Lithium mining lease terms best for Ghana - Jinapor

The Minister of Lands and Natural Resources, Samuel Abu Jinapor, has assured Ghanaians that the mining lease granted to Barari DV Ltd, a subsidiary of Atlantic Lithium, for the exploitation of lithium at the Ewoyaa concessions in the Central Region has the best terms for the country and will be strictly enforced.

Mr Jinapor, however, stressed that the mining lease would be taken through the required parliamentary ratification and other regulatory requirements before the company began operations.

Consequently, he described as "palpably false" suggestions that the company would commence mining operations in the first quarter of next year without parliamentary ratification. 

The minister, who is leading a Ghanaian delegation to the ongoing China Mining Conference and Exhibition at Tianjin, China, told the Daily Graphic yesterday that the company would not commence operations until the mining lease granted it was ratified by Parliament in accordance with the provisions of Article 268 (1) of the 1992 Constitution and section 5(4) of the Minerals and Mining Act, 2006 (Act 703). 

Reaction

He was responding  to a press statement by the Minority in Parliament and concerns raised by a section of the public that Barari DV Ltd was set to commence work without ratification of their mining lease.

In particular, the Minority in Parliament had, in a statement dated October 24, called on the government to submit the mining lease to Parliament for ratification. 

Due diligence

Mr Abu Jinapor explained that after acquiring the mining lease, the company needed to go through other processes to obtain the required rights and permits before mining operations could commence. 

"These include ratification of the mining lease by Parliament, the acquisition of environmental permit from the Environmental Protection Agency (EPA), and the acquisition of an operating permit from the Minerals Commission," he said.

While commending members of the public for showing interest in the transactions for the exploitation and management of the country’s natural resources, the minister stressed that the processes leading to the granting of the lithium mining lease were thorough and would not compromise on any constitutional requirements. 

"The government at all material times, has been mindful of this constitutional provision as interpreted by the Supreme Court, which is why, as aforesaid, such condition precedent is expressly captured in the lease under reference, and is already committed to its full and strict compliance," he said. 

Best deal

It would be recalled that at the ceremony held to present the mining lease to Barari DV Ltd, the minister indicated that there had been an increased royalty rate from the standard five per cent to 10 per cent. 

He also said there had been an increase in state free carried interest from 10 per cent to 13 per cent. 

Among other things, he had announced additional government participation through the acquisition of six per cent shares in the company and 3.06 per cent shares in its holding company which was listed on the Australian and London stock exchanges by the Minerals Income Investment Fund (MIIF). 

Other significant aspects of the terms in the lease are one per cent growth and stability levy on revenue, one per cent community development fund and strict compliance to prevailing and future local content laws and participation across the entire value chain of the lithium industry. 

"These terms are by far better than the terms of mining leases granted for exploitation of green minerals in other jurisdictions, including those with large deposits for these minerals. For instance, Australia, Mali, Democratic Republic of Congo, and Zimbabwe, which have bigger deposits than Ghana, have royalties rates of not more than six per cent whereas Ghana has 10 per cent," he said. 

Background

Per the existing regime, when a mining lease is granted for the exploitation of any mineral, by Section 43 of Act 703, the government is entitled to 10 per cent free carried interest in the mining operations. 

By Section 25 of Act 703, as amended by the Minerals and Mining (Amendment) Act, 2015 (Act 900), mining companies are required to pay royalty of five per cent to the state in addition to other taxes and levies. 

It was in a bid to improve these terms that the government approved a policy for the exploitation, management and utilisation of green minerals in the country.

On July 27, this year, Cabinet approved the policy which contained proposals for increased state and Ghanaian participation in all green minerals operations to a minimum of 30 per cent; enhanced local content and local participation, including listing on the Ghana Stock Exchange; and value addition.