Fui Tsikata
Two legal and mining experts, Fui Tsikata and Kofi Ansah, have waded into the discussions surrounding the first mining lease for the exploitation of lithium in the country.
In a paper jointly published on Monday, 11th December, 2023, the legal and mining experts described the analysis by the Institute Economic Affairs (IEA), Professor Ransford Gyampo of the Political Science Department of University of Ghana, and the former Chief Justice, Sophia Akuffo, as suffering from ‘the error of promoting form over substance.’
The two, while noting two areas where the government could have made improvements in the lease, said the “widely-publicised criticisms are patently wrong,” and based on a misunderstanding of the laws and practice in the mining industry.
According to them “there are fundamental flaws in the methods used by the IEA and Professor Gyampo in computing revenues and the allocation of potential direct monetary benefits from the project which undermine the conclusions they seek to draw.
The contention by the IEA and Ms. Akuffo that, “joint venture agreements or ‘service contracts’ are better than leases or concession contracts suffers from the error of promoting form over substance.”
They explained that the gross revenue from the project is US$688 million per year, and not the US$24 billion put out by the IEA and Prof. Gyampo.
They, also, explained that putting all the negotiated terms together, the government will get a minimum of 51% of the revenue accruing from the project, and not the 13% put out by the IEA and Prof. Gyampo.
They said this is the highest government earning from mining operations, as normal operations tend to give the government an average of 45% or less.
The two experts described calls by the IEA and the former Chief Justice for a joint venture as misunderstanding of the industry.
“As for the argument relating to “joint ventures” and “service contracts”, making express the implication that they are inherently better than leases makes the error clear. The proposition does not even attempt to engage in a meaningful comparison of financial terms,” they said.
They believed that the government could improve on the pricing of the main product, namely, the beneficiated lithium ore, spodumene concentrate, as well as tighten the language for the possibility of establishing a plant to process concentrate from the mine. However, they believe government has made an excellent negotiation in this deal.
This analysis corroborates similar analysis by Dr. Sam Jonah, former President of Anglogold Ashanti, and Dr. Kwabena Donkor, NDC MP for Pru East, and former Minister for Power, Dr. Kwabena Donkor, that the government did extraordinary well in securing the negotiated terms.
Responding to the concerns from Mr. Fui Tsikata and Ansah, the CEO of Minerals Commission, Martin Ayisi, said the proposals by the two experts are welcomed.
He said those discussions have, already, been considered, and there are more terms to be incorporated into associated agreements.
He clarified that the agreement with Piedmont is yet to be approved by the government.
A Business Desk Report