The Africa Policy Lens (APL) has cautioned that Ghana stands to lose between US$210 million and US$630 million if the government proceeds with its proposed reduction of the royalty rate for the Barari DV Ghana Limited lithium agreement from 10% to 5%.
The erstwhile Akufo-Addo government, after securing Cabinet approval to review royalties for lithium and associated minerals, negotiated an upward revision to 10%, giving Ghana an additional 5% royalty above the standard rate in the mining sector.
However, the new Mahama administration, despite having criticised the earlier arrangement as inadequate, has now proposed halving the agreed 10% rate, sparking widespread backlash from policy analysts and civil society groups.
In a statement analysing the controversy, APL said it was “surprised” that the government appeared prepared to forgo a mutually agreed position that significantly benefits Ghana.
Market fluctuations not valid basis
The organisation dismissed government’s justification that sliding lithium prices necessitated a downward review of royalties.
According to APL, global best practice shows that royalty frameworks are typically designed to withstand commodity price volatility.
APL cited the Ewoyaa Lithium Project’s definitive feasibility study, which places all-in sustaining costs at US$610 per tonne against a benchmark price of US$1,587 per tonne, yielding margins of about 62% per tonne before royalties.
Even at current prices between US$1,000 and US$1,195, APL said the project remains profitable with margins above 40%.
The group also referenced Zimbabwe’s 2024 decision to introduce an additional 2% levy on gross lithium revenues, on top of its existing 5% royalty, despite falling global prices. This, APL said, underscores that temporary market dips do not justify royalty reductions.
Projected multi-million-dollar revenue loss
APL’s financial modelling indicates that reducing the rate from 10% to 5%, based on annual production of 350,000 tonnes over a 12-year mine life, would deprive Ghana of hundreds of millions in revenue.
“Ghana would forfeit between US$210 million and US$630 million if royalties were reduced from 10% to 5%. Such losses represent revenue effectively ceded to the company, with no mechanism for recovery,” the statement said.
The think tank further argued that even under prevailing market conditions, a royalty rate as high as 30% would not make the Ewoyaa project unviable.
“It follows, therefore, that the current 10% royalty rate must be maintained as both economically rational and strategically necessary,” APL concluded.
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