Gov’t agrees 13% carried interest with Atlantic Lithium
Government has inked a deal with Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited, which includes a royalty rate of 10 percent and a free carried interest of 13 percent.
The agreement awards Barari DV the inaugural mining lease for lithium extraction at Ewoyaa in the Mfantsiman municipality of the Central Region. The lease covers a 15-year period and incorporates new and enhanced terms intended to ensure that the country benefits, optimally, from this mineral.
This includes an increase in royalty rate, state and local participation, as well as value addition to the mineral mined; and follows the completion of prospecting and feasibility studies by the company, as well as series of negotiations between the state and Barari DV.
The lease covers an area of approximately 42.63 square kilometres, and grants the company exclusive rights to work and produce lithium and associated minerals in the area, in accordance with the country’s mining laws.
Lithium, a key component in the manufacturing of lithium-ion batteries, holds strategic importance as a green mineral in the country’s ongoing energy transition journey.
According to Minister for Lands and Natural Resources, Samuel Jinapor, government took a deliberate decision not to treat this mineral the same way other minerals have been treated. This, he said, necessitated putting in place a special policy for exploitation and management of this mineral before granting any mining lease.
He said after a series of consultations, Cabinet approved a policy for the exploitation and management of green minerals including lithium; and the mining lease granted the company incorporates the policy approved by parliament.
The latest authorisation to the company, which has since been exploring the commercial basis of the mineral deposits, conforms with the country’s mining regulations to grant the company first right of refusal.
“By the mining laws of our country, when a company undertakes exploration and discovers minerals in commercial quantities, the company is entitled to the first right of refusal. That is to say if the company wants to go into the mining, the company is entitled to be given a mining lease to mine,” Mr. Jinapor added.
The minister was speaking at a ceremony in Accra to sign the agreement, and noted that terms give the state greater value in the project. For instance, he said, the royalty rate has been increased to 10 percent from the standard 5 percent, and the state’s free carried interest in the mining operation has been increased from 10 percent to 13 percent.
In addition to the free carried interest, government, through the Minerals Income Investment Fund (MIIF), will acquire an additional 6 percent in the mining operation as well as a 3.06 percent in the company’s parent entity, which is listed on the Australian and London Stock Exchanges.
The minister said the company will also be required to list on the Ghana Stock Exchange (GSE), to ensure Ghanaian entities like pension funds and individuals who want to invest in this business can participate in it.
Furthermore, it will also pay one percent of its revenue into a Community Development Fund – to be utilised for the development of communities impacted by its operations; and will work to establish a chemical plant for processing the lithium.
In the event that the company is unable to establish a chemical plant, it will provide its lithium to any chemical plant established by third parties in the country. This will create more jobs and bring more development into mining communities and the country at large.
He said government acknowledges the impact of mining on host communities, and is committed to ensuring these communities as well as Ghanaians – who are by law the owners of these minerals – benefit from them.
Mr. Jinapor therefore called on the company to adhere strictly to the country’s mining laws and the agreement reached with government, and to ensure they engage in responsible, sustainable and environmentally-sound mining practices.
The Executive Chairman of Atlantic Lithium Limited, Niel Herbert, on his part said the Ewoyaa project is important to the company – and assured to work with government on ensuring effective exploitation of the mineral for the benefit of all parties.
He also pledged the company commitment to abide by laws of the country and ensure a safe mining environment.