IMANI Flags Flaws in Ghana’s Atlantic Lithium Deal: “Giving Away More for Less”

In our earlier Critical Analysis of Governance Issues (CAGI) titled “The Atlantic Lithium (Ewoyaa Project) Deal: Why Ghana’s Parliament Should Not Ratify a Flawed Agreement,” we cautioned that rushing to ratify a structurally weak contract without robust profitability modelling would expose Ghana to significant fiscal and strategic risks. That warning has now proven prescient.

As one expert recently observed,

“There is the need to come out with a new model that recognizes the investment needed and provides a fair return on investment but beyond the fair return, positions Ghana to benefit from any upsurge in price beyond just royalties. Can IMANI and other policy think tanks develop such a framework for rare minerals?”

Another contributor added,

“References have been made to the absence of a national profitability analysis. What is needed is a revised Definitive Feasibility Study that this time is developed on a multi-stakeholder basis. Yes, IMANI can contribute to such a model if indeed the government is truly interested in a genuine public-interest approach to addressing this.”

The contributor further noted that,

“Given IMANI’s spirited comments on this whole affair in the previous government, it is a slap in the face that the Minister didn’t bother to consult widely in civil society before taking the document to Parliament. Such conduct repeats the mistakes the previous administration made that over time lost them vast sections of the public.”

Bright Simons Breaks Down the Numbers

IMANI Vice-President Bright Simons reveals why the government’s case for halving Ghana’s lithium royalties does not withstand basic scrutiny.

1. Ghana’s Mines Minister says lithium prices have fallen from >$3000 since the country’s first lithium mine agreement was signed with Sydney-based miner, Atlantic, to just $630.

2. Because of that, the 10% royalty stake many Ghanaians were unhappy with would now be slashed to 5% because Atlantic says otherwise the mine won’t be profitable.

3. He has sent the revised mining agreement to Parliament for ratification of the above terms.

4. He didn’t add any profitability analysis based on a revised “definitive feasibility study.” But that’s not even the big issue.
5. The big issue is that his numbers are of his own peculiar design.

6. When the original agreement was signed in October, the price-benchmark for the lithium to be produced in the mine (spodumene 6% Li2O, CIF China) was ~$2200.

7. Profitability of the original project was insanely high due to high prices & soft terms.

   Breakeven/payback = 19 months (~1.6 years).

   Gross Margin per ton on project cash cost basis = 76%

   On industry-standard all-in (AISC) basis, gross margin = 62%.

   Net margin (Net Profit After Tax/ Revenue over Life-of-Mine basis) = 35%

   Basically, per the original numbers, the investors would have recovered all their investment in less than 2 years. Yep.

   

8. What Atlantic is now saying is that waiting for 4.5 to 5 years to recoup their investment is too long. Remember that the mine’s all-in cost per ton is about $610. So, even at current prices, they make a profit of about 30% per ton. Paying Ghana ~$98 per ton (at the original 10% royalty rate) should reduce their gross profit to about $260 a ton. Atlantic says that would be terrible! Bear in mind that corporate taxes are on operating income and not gross margin.

9. When the Ewoyaa area chiefs, clearly mobilised by Atlantic, demanded that Parliament proceed to ratify the agreement in January 2025, lithium prices were ~$800.

10. When the Agreement went to Parliament in August 2024 and Atlantic mounted a strong push for its ratification (approval) then, the price of lithium was ~$780.
    

    

11. Then the government changed.

12. Suddenly, Atlantic changes its mind and starts to insist that unless the 10% royalty rate that many Ghanaians protested against for being too low was slashed to 5%, they won’t be able to mine.

13. Today, as the Minister was speaking about the matter, the price of lithium was around $990. That is to say, since Atlantic demanded approval of the OLD agreement in late 2024, the price of lithium has increased by over 25%!

14. How then can lithium prices be the reason for slashing the royalty rate, other than reasons best known to Mr. Minister?

15. Actually, the reason Mr. Minister can produce such numbers of his own design and use them to justify such a massive giveaway is because he has gauged the national mood. He knows the people who understand these things will stay mute.

16. So, why bother with a serious explanation? And the Parliament? Ah, well, feel free to trust its members to hold the line.