The Minister of Lands and Natural Resources, Samuel Abu Jinapor, has pointed out that the successful negotiation of a groundbreaking 10% royalties for lithium exploitation is the first time in the history of Ghana, making it one of the highest for exploitation of any mineral across the globe.
Addressing journalists at the Ministry of Information in Accra yesterday on the recent Lithium deal between the government of Ghana and Barari DV Ghana Limited, the Minister emphasised that Ghana’s negotiated rate surpasses those of prominent mineral-rich nations.
He mentioned that Australia, a key player in the mining industry, maintains a 5% royalty rate, while Chile operates within the range of 8 to 26%. He added that even countries with larger lithium deposits, such as Mali (6%) and Zimbabwe (5%), fall behind Ghana in securing favourable terms for mineral exploitation.
He noted that this achievement underscores government’s commitment to ensuring fair and beneficial agreements in the extraction of its valuable mineral resources, setting a precedent for responsible and advantageous negotiations on the global stage.
The Minister disclosed that Ghana had already secured a 19% State participation in the mining company, with the requirement to scale it up to a minimum of 30% Ghanaian participation through listing on the Ghana Stock Exchange for shares to be made available to Ghanaians and Ghanaian entities.
He stressed that for the first time in the history of Ghana, a mining lease contains provisions for the establishment of a refinery.
Ratification
On the issue of ratification of the mining lease, the Lands Minister stated that it had never been lost on the Ministry.
He indicated that it is expressly provided for in the Mining Lease granted to Barari DV Ltd.
He mentioned that, specifically, Clause 1(e) of the Lease states that “this Mining Lease is subject to ratification by Parliament in accordance with Article 268(1) of the Constitution and section 5(4) of Act 703”.
Upon execution of this Mining Lease, the Minister said, he would cause it to be laid in Parliament for ratification.
“By the very terms of the Lease, therefore, ratification by Parliament is a condition precedent. As the Supreme Court explained in Republic v High Court, (General Jurisdiction 6), Accra; ex parte Attorney-General (Exton Cubic – Interested Party) (Unreported, Civil Motion No. J5/40/2018, dated 31st July, 2019), an unratified mining lease confers no enforceable rights, and Government has always been mindful of this decision,” he said.
He, however, said that before such agreements can be laid before Parliament, it must go through a number of processes, including securing Cabinet’s approval.
“The processes are ongoing, and once completed, the Agreement would be laid before Parliament for consideration and ratification. There have also been calls to grant mining leases through a tender process.
“As we explained in our earlier press release, international best practice requires that where a company undertakes exploration and makes commercial find for minerals, the company is entitled to a right of first refusal to the grant of a mining lease, subject to regulatory compliance,” he added.
This international best practice, he said, is given legal backing by section 39(2) of the Minerals and Mining Act, 2006 (Act 703).
Tender process
The Minister pointed out that the use of the tender process is only feasible where there already exists geological data, and the State is looking for partners to go straight into mining.
He also explained that Regulation 258(1) of the Minerals and Mining (Licensing) Regulations, 2012 (L.I. 2176), which deals with the grant of mineral rights by tender, gives three instances under which such process may be used.
First, he said, it includes where the Minerals Commission determines that there exists sufficient mineral information in respect of the area concerned.
Second, he mentioned, is where the Republic had carried out prior mineral exploration in respect of the area concerned.
The third is where an area becomes available through surrender, revocation or termination and two or more applications are recorded in the Priority Register within the seven days of the area becoming vacant.
In all these circumstances, the Minister emphasised, the State would have enough geological data generated through its own exploration, or where a holder of a mineral right surrenders his interest, or the right is otherwise revoked or terminated.
“But where this data is generated by a private company that has carried out exploration, at great cost, then that entity is by virtue of section 39(2) of Act 703 entitled to the grant of a mineral right subject to regulatory compliance, in which case the tender system cannot be legally turnable,” he said.
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