After the government laid a new lithium agreement before parliament, policy think tank IMANI Africa has welcomed parts of the amended lithium agreement, but is still unhappy with certain aspects of the supposed “enhanced deal.”
The think tank believes that while parts of the new deal are welcoming, some aspects have still fallen short of protecting Ghana’s full economic interest.
Reacting to the new deal, IMANI’s Founder and President, Franklin Cudjoe, acknowledged the Lands and Natural Resources Minister’s decision to adopt a sliding-scale royalty system, with a maximum rate of 12 percent, describing it as a partial victory for sustained civil society pressure.
IMANI is noted for months of advocacy, which pushed the government to move away from fixed royalties to a system that allows Ghana to benefit more when global lithium prices rise.
However, the think tank expressed strong disappointment with the 5percent starting royalty rate in the revised agreement.
IMANI argues that the starting point does not reflect current market realities. Lithium prices are currently around $1,200 per tonne, while the investor’s reported production cost remains about $610 per tonne.
This, IMANI says, gives the company a profit margin of close to 45 percent even before taxes.
According to Franklin Cudjoe, if a company was comfortable paying higher royalties when profits were lower, why should Ghana now accept a lower starting royalty when profits are significantly higher?
“We see the Lands and Minerals Minister has laid an amended lithium agreement before Parliament on the last day Parliament rose for the holidays. First off, we acknowledge the Minister’s decision now to adopt the sliding scale for royalty with the 12% maximal bound as a starting victory for CSOs’ activism. We thank the Minister,” he acknowledged.
He, however, continued, “Sadly, though he went for a 5% royalty starting rate when the price of lithium is higher today, ($1200 per tonne) with the investor’s production per tonne being $610, translating into a near 45% profit margin. In 2024, the same investor was prepared to sign the agreement when its profit margin was less than 20% based on an outreach price of $800 per tonne with a production cost of still $610 per tonne and a royalty rate of 10%.”
The think tank, which has been at the forefront of advocating for fair deal fears that setting the bar at 5percent weakens Ghana’s bargaining position and delays meaningful gains for the state, even with the promise of higher royalties later under the sliding scale.
While acknowledging the progress made, IMANI insists that an “improved” deal should not simply be better than the past but should reflect present realities and future value.
In its view, Ghana should not settle for modest gains today when the numbers clearly suggest stronger returns are possible.
