Ewoyaa Lithium Deal: Is 5% Royalty Justified by Falling Prices?

Ghana’s Parliament awaits ratification of the Ewoyaa lithium deal. This situation puts the investor and local community in limbo. However, the deal generates significant controversy and accusations of political hypocrisy. The previous government (NPP) initially secured favorable terms in October 2023. Specifically, the NPP raised the royalty rate to 10% from the statutory 5%. They also secured a 13% free carried interest. This interest was above the standard 10%. Furthermore, the NPP included a critical 1% community development fund drawn directly from revenue, not profits.

The opposition National Democratic Congress (NDC) vehemently opposed the initial agreement. In 2024, the NDC and many Civil Society Organizations (CSOs) called the agreement a “bad deal.” Consequently, public opinion and opposition stalled the lease ratification. The NPP could not pass the deal through Parliament.

The political situation has since shifted. Today, the NDC holds power and now handles the Ewoyaa lithium deal. The government recently revised the agreement’s fiscal terms. Crucially, the revision reversed the cardinal royalty item. The royalty rate now stands at 5%, down from the previous 10%. The government justifies this reduction. They claim falling global lithium prices necessitated the change.

Natural resource governance experts quickly debunked the price claim. Policy think tanks like IMANI questioned the justification. Therefore, critics now accuse the NDC of hypocrisy. They spoke against the 10% deal. Now, they defend a new 5% royalty deal. Critics argue a price fall does not justify halving the royalty rate overnight.

The original NPP deal contained multiple advantages for Ghana. For instance, they reduced the lease period to 15 years from the traditional 30. Shorter lease periods allow the State to renegotiate terms sooner. Moreover, the deal included a 1% revenue commitment for community development. This means Atlantic Lithium must automatically transfer funds for local development annually. The deal also ensured the State held a 19% equity stake overall. Anti-corruption agencies should investigate the sudden conversion. They must determine how a 10% royalty agreement became a 5% royalty agreement overnight. Ultimately, the State must ensure the Ewoyaa lithium deal benefits Ghanaians meaningfully.