Lithium mining royalty rates should rise with market prices — Industry specialists

Several mining law experts are backing calls for lithium mining royalties in Ghana to be increased along with rising market prices for the commodity, saying it would help ensure the country receives a fair share of profits from its lithium resources.

In a statement on December 12, commenting on the recent controversial lithium mining lease signed between the government and Barari DV Ghana Limited, lawyers Fui Tsikata and Kofi Ansah said they "are in broad agreement with the suggestion that the royalty rate of 10% is a minimum, with sliding scale formula which captures increased profitability along the prescribed scale."

The experts proposed "that, for ease of administration, the variation should be simply based on price rather than on operating margin. That is, the royalty rate will vary with the market price of say, lithium carbonate, but never to fall below 10%."

They argued that linking royalties to prices would help address concerns that Ghana may not fully benefit from its lithium deposits if global prices rise significantly.

Independent analyst and Vice President of IMANI Africa Bright Simons had earlier recommended a similar sliding scale for royalties tied to market prices and company profits.

The legal specialists also backed proposals for the government to have an option to increase its equity stake in mining companies on favourable terms after investors recoup their initial investments.

This, they said could boost the country's long-term gains from successful lithium projects.

Their comments come amid disputes over the level of benefits promised to Ghana under the Ewoyaa lithium mine deal.

Linking royalties to prices may help ensure local communities and the state share more prosperously in the future potential rewards from the country's lithium resources, according to the experts.