The majority in parliament’s claim that the 10% Royalty Rate charged in the old Lithium Agreement is illegal has come under heavy scrutiny as IMANI debunks the claim.
A new renegotiated deal has slashed the royalty rate for its flagship Ewoyaa Lithium Project from 10% to 5% on the grounds that the 10% charged by the previous government does not have any expression in law.
According to the Chairman of the Lands and Natural Resources Committee of Parliament, Collins Dauda, it will also be unjust and discriminatory for parliament to ratify the 10% for Atlantic Lithium while other mining companies pay just 5%.
But IMANI Africa, in its policy position on the subject, is arguing that the government’s claim that Parliament cannot legally approve the higher 10% rate is a political smokescreen for administrative inaction.
The think tank alleges that the push-back on the 10% by the government is just designed to hide a massive concession to the foreign investor.
IMANI explains that the current Minerals and Mining Act does not prevent Parliament from securing the higher 10% rate, making the reduction an entirely voluntary surrender of national wealth.
The government and its proponents in Parliament further argue that charging 10% is “illegal” because the Minister has not passed new regulations prescribing a rate higher than the standard 5% found in existing general statutes.
However, IMANI stresses that this argument collapses under serious legal scrutiny.
The fundamental legal flaw in the government’s reasoning, IMANI says, lies in the Ghanaian Constitution itself, which provides Parliament with the power to override general statutes for specific projects.
The analysis points directly to Article 268 of the 1992 Constitution, which mandates that any transaction involving the grant of a concession for mineral exploitation shall be subject to ratification by Parliament.
The crucial legal principle here is that once Parliament ratifies a specific Mining Lease, “the terms of that lease acquire the force of law for that specific project, even if they differ from general statutes”.
In practical terms, this means that if the Executive had negotiated and presented the original 10% royalty agreement, Parliament could have ratified it, thereby legally enforcing the higher rate for the Ewoyaa project.
“The legal argument advanced by the Majority Caucus in Parliament, effectively that a 10% royalty is “illegal” under current statutes, is a serious misinterpretation of the legislative hierarchy,” IMANI insisted.
It continued, “We demonstrate that the Minerals and Mining (Amendment) Act, 2015 (Act 900), grants the Minister discretion to prescribe royalty rates, and more importantly, that Article 268 of the 1992 Constitution empowers Parliament to ratify agreements that may differ from general statutory provisions, thereby granting them the force of law.”
The implication, according to IMANI, is a supposed “legislative barrier” does not exist. For the think tank, it is a mere political construct.
Instead of exercising its power to ensure the state captures the maximum value from the strategic lithium resource, the government is using its own lack of effort, its failure to pass the required regulations, as an excuse to accept the lowest possible rate.
“The claim of a “legislative barrier” is a political smokescreen for administrative inaction,” IMANI insisted.
The think tank argues that the government appears to be making a policy choice to favor corporate interests over securing an innovative fiscal policy that could capture windfall revenues during future commodity booms.
It further adds that the reduction in royalty from 10% to 5% is a significant fiscal blow to Ghana, as modeling based on the company’s own cost data shows that it transfers approximately $60 per tonne of lithium concentrate directly from the Ghanaian treasury to foreign shareholders. This action amounts to an estimated annual loss of $21 million to the state.
