Govt’s US$32.9m Investment In Atlantic Lithium Commendable, But Must Be Cautious – Mining Expert
GOVERNMENT’s US$32.9 MILLION INVESTMENT DECISION IN ATLANTIC LITHIUM COMMENDABLE, BUT MUST BE CAUTIOUS – MINING EXPERT
I woke up to the news of Ghana’s Minerals Income Investment Fund (MIIF)’s decision to invest US$32.9 million in Atlantic Lithium and its Cape Coast Lithium Portfolio subsidiaries in Ghana to support the development of the company’s Ewoyaa Lithium Project.
This comes a little over a year when MIIF acquired 14.4 million ordinary shares valued at US$ 20 million in a historic investment deal in Asante Gold Corporation, a Mining Exploration and Development Company listed on the Toronto and Frankfurt Stock Exchanges. Asante Gold has acquired and operates the Bibiani and Chirano Mines in Ghana.
In my recent thesis, titled “The Relationship between Minerals Revenue and Economic Growth: 1990 – 2019”, I, among others, concluded that, for Ghana and Ghanaians to realize the full potential of her mineral endowment, the State should not just be a regulator, sitting down and taking paltry token, but should take an active part by investing beyond its free-carried interest in the sector, as a developing country.
The Minerals Income Investment Fund (MIIF) Act, 2018 (Act 978) as a fund established to manage the equity interest of the Republic in mining companies, to receive mineral royalties and other related income due the Republic from mining operations while managing and investing them appropriately, in my opinion, are on track and also needed to be guided by all relevant stakeholders.
MIIF is doing very well in managing and investing our mineral wealth in mining portfolios, which, though quite risky, are credible and sustainable means of investment with moderate to a high probability of an assured rate of return, for all things being equal, once the particular project economics is deemed viable subject to adjusted unforeseen circumstances.
The rentier oil countries such as Saudi Arabia and Qatar are now investing their wealth into Mining portfolios abroad as a means of sustainable investment as the reign of hydrocarbons may dwindle in the future, affecting their revenue.
With the advent of energy transition, the world is shifting towards exploiting and beneficiating critical minerals. A February 2023 report published by S&P Global Mobility forecasts that Electric Vehicles (EVs) sales will surpass 50% by 2030, which the US is aggressively pursuing through their EV Acceleration Challenge with the Biden Administration committed to supporting the US Public and Private Industries in achieving this aim.
Lithium, therefore, is a known critical mineral well positioned to play a vital role as the world moves towards clean energy amidst the energy transition wars. According to Grand View Research, the lithium industry was valued at US$7.49 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 12.3% from 2023 – 2030. The downstream lithium is estimated to be worth trillions of dollars in the following decades.
The above statistics make me happy that, for the first time in recent years, the government is acquiring a stake in what will become Ghana’s First Lithium Mine when granted the necessary licenses and permits. The country stands to gain more if all is done right.
I must indicate that MIIF, working hand-in-glove with the Minerals Commission and Ministry of Lands and Natural Resources, should leverage their stake to:
- Ensure effective local content in all contracts now, during exploitation;
- Set up a due diligence team to work closely with the technical setup of all their investment destinations to avoid any form of short-changing government in the areas of unrealistic quotation of All-In-Sustaining Costs by firms to chop off almost all revenue inflows which may render government’s dividends useless;
- Ensure necessary legal arrangements are prepared and reviewed by the Country’s Attorney General to ensure that the continuity of such agreements withstand any change of government in the future.
In conclusion, I will recommend to MIIF:
- to Compile a list of prospective indigenous Ghanaians, regardless of tribe or affiliation, with interest in investing a significant amount or capable of raising funds for the exploitation and beneficiation of the country’s resources;
- To further work hand-in-hand with the Minerals Commission and Ghana Geological Survey Authority to be up-to-date with baseline data on critical minerals and share with the indigenous investment community as a first point of refusal before other interest groups are considered;
- To explore the possibility of aiding the setup of common-user beneficiation facilities to process lithium in-country, which will enable the country to export value-added products, setting up downstream industries such as battery manufacturing stations, which will give the government the necessary premium on her minerals;
- To position itself to enter into two or three significant mineral exploitation joint ventures (JV) on behalf of our country. This will increase the grip of ownership of our minerals and their related benefits.
I commend the Chief Executive Officer of MIIF, Mr. Edward Nana Yaw Koranteng and the Board for charting a path which, if continued and managed well in the future, will become the most successful mineral sovereign wealth on the African Continent and ultimately help balance the country’s exchequer and wean it off the perennial dependence on Bretton-Wood’s loans.
Special thanks to H. E. Nana Addo Dankwa Akufo-Addo for such a great vision and Hon. George Mireku Duker, MP, who served as the foundation Board Chairperson that set forth rolling this vision.
Building local champions is possible.
Wisdom Edem Gomashie
Special Assistant to Honorable Deputy Minister of Lands and Natural Resources