Accra: The Natural Resource Governance Institute (NRGI), an international civil society organization, is urging Bavari DV, a subsidiary of Atlantic Lithium, to provide more detailed information to support its request for fiscal concessions. This demand comes in response to the company's appeal to the Ghanaian government for concessions that could impact government earnings in the agreement for Ghana's first lithium-producing mine, which is yet to be ratified.
According to Ghana News Agency, Atlantic Lithium Limited, an Australian-based mining firm, stated in a press release that the fiscal concession is essential for the successful development of the Ewoyaa Lithium Project. This request comes amidst decreasing global lithium prices. The company noted that since the Ewoyaa mining lease was granted in October 2023, there has been a significant decline in lithium prices. Consequently, Atlantic Lithium has been in discussions with key stakeholders, including government officials, to negotiate fiscal terms that align with the current price environment. These discussions are ongoing.
The company is requesting a reduction of the corporate income tax from 35 percent and the elimination of import duties on capital equipment. However, during a media briefing, Mr. Denis Gyeyir, the Country Director of NRGI, emphasized the importance of ensuring that any fiscal concession request is economically feasible. He highlighted the need for Atlantic Lithium to explain how it calculated its new post-tax internal rate of return (IRR) estimate of 13.6 percent, down from a previously projected 94 percent before debt financing, and to justify any changes made to its assumptions.
Mr. Gyeyir warned that failing to provide such justifications could undermine public trust and the company's social license to operate, potentially causing issues for the project in the future. Given the declining price of lithium, he suggested that the government consider a sliding scale royalty regime, which would adjust the royalty rate for mining concessions in line with changes in global commodity prices, to avoid granting concessions that apply even when profits are high.
According to NRGI, while the current lithium prices pose challenges for the Ewoyaa project, industry analysts do not anticipate the downturn to be prolonged. "Lithium has been more volatile than other minerals in recent years, and while prices are unlikely to return to the 2022 peak of USD 8,500 per tonne, there is consensus that they will rise again as global demand increases," the organization stated in a publication titled, "Atlantic Lithium's Request to Ghana for Ewoyaa Fiscal Concessions Requires Scrutiny."
