An economist Dr Theo Acheampong has famous that there’s a lot of ignorance in the case of mining economics.
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He noticed that folks typically confuse income with income.
“What is important is the government take, which takes into account costs,” he stated whereas contributing to a dialogue on the Lithium deal.
“We use the Average Effective Tax Rate (AETR) to compute this: AETR is the ratio of all authorities income streams to the Net Present Value (NPV) of the pre-tax internet money flows of the undertaking. From a cursory evaluation, the indicative authorities take with out company and windfall taxes is Royalty (10%) + carried curiosity (13%) + extra curiosity (6%), amounting to 29%.
“The authorities’s share of the pre-tax income might go as much as between 50%-60%, taking different taxes and financial assumptions into consideration. If we wish extra shares/fairness as a rustic, we must always spend money on PROPER knowledge acquisition and evaluation. Let’s watch out in our conversations, as context is essential.
“I’m undertaking some modelling work on the economics of Ghana‘s lithium discovery (using the Awoyaa project as a test case), whether Ghana is getting its fair share, and the economics of alternative sharing arrangements (joint venture, mining production sharing including sliding scale royalties, additional profits tax, etc). We will share the findings early next year),” he wrote on his X platform.
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There is a variety of ignorance in the case of mining economics. People typically confuse income with income. What is vital is the federal government take, which takes into consideration prices. We use the Average Effective Tax Rate (AETR) to compute this: AETR is the ratio of all authorities…
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The Minority in Parliament demanded that the federal government lays earlier than the House, the 15-year mining lease with Barari DV Ghana Limited earlier than the graduation of mining of lithium at Ewoyaa within the Mfantseman Municipality of the Central Region.
The Yapei Kusawgu lawmaker advised journalists in Parliament on Thursday, December 7 that, “Article 268 of the 1992 Constitution is express and it states that any transaction, inclduing however not restricted to the applying for a license to use pure sources requires prior parliamentary approval. On this word, I wish to make it loud and clear that the settlement between the federal government of Ghana and Barari DV must be laid earlier than Parliament with out delay.
“Let me guarantee the folks of Ghana that the Minority won’t allow you to down. We will scrutinize the settlement, we won’t enable this settlement to be rushed via. We will search the steering and the involvement of civil society, and we’ll converse to vital personalities together with former Chief Justice, Justice Sophia Akuffo who has been vocal on this Lithium settlement. The new order is lithium. Lithium is extra worthwhile than gold, lithium is extra worthwhile than diamond and the world order is transferring to this inexperienced mineral. So, the Minority will insist that Ghana advantages from these sources and that the phrases and settlement, if they don’t seem to be within the curiosity of Ghana, the Minority will kick in opposition to that.
“We demand that the Akufo-Addo government tables or lays this agreement before Parliament without delay. Let me caution Barari that any attempt to commence mining without parliamentary approval will be illegal. A future NDC government, upon assumption of office on January 7, 2025, all mining licenses that have not met the necessary parliamentary approval, we will do the proper thing and ensure that they cease until they seek the right approval from Parliament. ”
He harassed that approval by Parliament is required earlier than the contract turns into absolutely legitimate.
He stated this at a press convention in Accra on Thursday, December 7 the place he justified the settlement.
In her authorized view, this explicit transaction must have been despatched to Parliament for approval.
“My legal view is that it is a transaction that requires ratification, it is not complete. This is a document, it is signed and sealed and delivered, but it is a deal that has to be ratified by a named authority, that is the Parliament of the Republic of Ghana,” she stated whereas talking as a Distinguished Scholar of the Institute of Economic Affairs (IEA) in Accra on Tuesday, November 28.
Madam Sophia Akufo additional indicated that regardless of feedback that this explicit agreement is favorable to the nation, the contract is just not completely different from the earlier ‘Guggisberg-type’ of agreements which haven’t yielded any profit to Ghanaians.
“It is just not completely different in precept within the substance from any of Ghana’s earlier colonial instances kinds of agreements, some name it the Guggisberg mannequin, no matter description, all these agreements are colonial sort of agreements, which over time have yielded little or no good to the general advantage of the common Ghanaian.
“In modern best practices the exploitation or extraction of mineral resources discovered by either a joint venture agreement whereby the host country takes an agreed ownership in the mining company or a service contract whereby the host country is the owner, contracts the mining company and the mining company can be selected through transparent competitive bidding process to mine the mineral and to reinvest for its cost of reduction plus profit margin so that the mining company is in contract to the owner. The ownership of the mining remains completely in the hands of the state,” she stated.
But addressing the press convention, Samuel Abu Jinapor stated after hinting at searching for parliamentary approval that, “Suffice for me to point out that it is the first time in the history of our country that we have successfully negotiated for 10 percent royalties for any mineral which is one of the highest for the exploration of any mineral across the world.”
He added “We have already secured 19 p.c state participation on this mining firm with the requirement to scale it as much as a minimal of Ghanaian participation via itemizing on the Ghana Stock Exchange for shares to be made out there to Ghanaians and Ghanaian entities.
“What this merely means is that when it’s all over, Barari DV Limited, the holder of this mineral proper of lithium, Ghanaian and state participation will likely be 30 p.c and international participation will likely be a most of 70 p.c and this has by no means occurred within the historical past of our nation in respect of any mineral.
“And for the first time in the history of our country, a mineral lease contains provision for the establishment of a refinery and that is value addition and appreciation and this is the first time.”
Ghana granted a 15-year mining lease to Barari DV Ghana Limited, a subsidiary of Atlantic Lithium Limited, to begin the development and mining of lithium at Ewoyaa within the Mfantseman Municipality of the Central Region.
The lease incorporates new and enhanced phrases supposed to make sure that the nation advantages, optimally, from this mineral. This consists of a rise in royalty fee, state and Ghanaian participation, in addition to worth addition to the mineral mined.
The granting of the mining lease adopted the completion of prospecting and feasibility research by the corporate, in addition to sequence of negotiations between the Government and the Company.
The lease coated an space of roughly 42.63 sq. kilometres, and grants the corporate the unique proper to work and produce lithium and related minerals within the space, in accordance with the mining legal guidelines of the nation.
Lithium is among the predominant minerals used within the manufacturing of lithium-ion batteries, which is being promoted as an alternative choice to fossil fuels, because the world continues to battle with climate change.
Emissions from the burning of fossil fuels by the interior combustion engines have been recognized as one of many main contributors to the local weather disaster.
To cope with this, world leaders are selling a inexperienced power transition, to progressively restrict, and in the end, eradicate carbon emissions.
Already, some nations have handed legal guidelines to section out autos that use fossil fuels. This has created an rising marketplace for the battery trade, and minerals required for the manufacturing of batteries, known as inexperienced minerals or essential minerals.
Currently, African nations which are mining lithium export the mineral in its uncooked state.
Barari Ltd commenced exploration for lithium within the nation in 2017 and found excessive grade lithium in industrial portions in Ewoyaa.
Geological investigations, additionally, present deposits in numerous components of the nation, from the south to the north, predominantly round Cape Coast, Kumasi, Sunyani, Bole and Wa. However, the nation is but to begin the mining of this mineral.
Earlier, whereas talking at a brief ceremony to signal a mining lease for Barari DV Ltd., Mr Abu Jinapor, stated the federal government took a call to not deal with this mineral the identical manner the opposite minerals have been handled.
It was, due to this fact, mandatory to place in place a particular coverage for the exploitation and administration of this mineral earlier than granting any mining lease.
He stated after sequence of consultations, Cabinet permitted a coverage for the exploitation and administration of inexperienced minerals together with lithium, and the mining lease granted the corporate, incorporates the coverage permitted by Parliament.
“The Lease we are signing today differs from our standard Mining Lease, in that, it incorporates the agreed terms we have concluded with the company, based on the Policy approved by Cabinet,” the Minister defined.
Mr. Jinapor stated the agreed phrases give Government and the folks of Ghana higher worth within the mining of this mineral.