In an unfolding controversy surrounding Ghana’s burgeoning lithium industry, Bright Simons, Honorary Vice President of IMANI Centre for Policy and Education, has shed light on troubling trends tied to the government’s recent $33 million investment in Ghana’s first lithium mine.
According to him, while Ghana’s investment, channelled through the Minerals Income Investment Fund (MIIF), aimed at securing a substantial stake in the country’s lithium sector, recent developments have raised questions over the prudence of the strategy, as delays, a global dip in lithium prices, and governance concerns cloud the initiative.
“The government gets a free stake in every mine built Ghana. But this stake tends to be small so if it wants more it must buy from the investors putting up the mine. Thus, Ghana, through an agency called MIIF, decided to invest ~$33m for a higher stake in the country’s first lithium mine using money from its gold”.
Bright Simons, Honorary Vice President of IMANI Centre for Policy and Education
This investment Bright Simons argued has granted Ghana dual stakes: one in the local entity operating the mine and another in the company’s London-listed parent entity, which serves as the financial powerhouse behind the mine.
According to Bright Simons, the lithium mine’s development has been hampered by several issues: sluggish bureaucratic processes, a delay in securing off-takers—buyers who pay upfront to guarantee supply—and a dramatic downturn in global lithium prices.
This combination, he noted has battered the lithium company’s financial stability, causing its share price to plummet by over 70% since Ghana’s initial investment.
Fundraising Difficulties Diluting Stakes of Existing Investors
Bright Simons further added that the reduced share price has not only slashed the market value of the company but has also compounded fundraising difficulties, as each new financing round requires issuing more shares, thereby diluting the stakes of existing investors, including Ghana.
“The lithium company has ~$7.3m of cash in the bank left from previous share sales. But as its share price slides, its market value also drops making it more expensive to raise money. Existing investors see the size of their stakes drop in each new fund-raising round.
“Civil Society activists flagged this issue strongly (see article below) but to no avail. Because the company is still very young, this kind of ‘stake dilution’ will continue. Eventually, Ghana’s stake would be reduced to almost nothing. Unless Ghana keeps spending more money on shares in each round of fund-raising”.
Bright Simons, Honorary Vice President of IMANI Centre for Policy and Education
Moreover, the Honorary Vice President of IMANI disclosed that this past week, the company raised an additional $6.6 million to sustain operations, with the majority—$5 million—supplied by Assore, the largest shareholder controlled by South African billionaires.
Conflict of Interest
Notably, company directors were also major buyers, acquiring shares at an 11.5% discount to market prices. Among these directors according Bright Simons was the CEO of MIIF, representing the Ghanaian government’s interest on the board, whose participation under such favourable terms has stirred scepticism.
Bright Simons pointed out that while board members purchasing stock in distressed companies is typically perceived as a vote of confidence, receiving shares at a discounted rate alters the narrative, potentially indicating insider advantage rather than sacrifice.
“When one of those Directors is an institutional representative of a government rather than a normal Director, it raises serious eyebrows,” he stated, pointing to the potential conflict of interest arising from the CEO of MIIF benefitting from these discounted shares.
For Bright Simons the implications of this scenario are grave, not only for Ghana’s lithium aspirations but also for local investors who feel sidelined by the company’s decision to pursue a private placement rather than a rights issue.
He also claimed that this strategy excluded Ghanaian shareholders from participating in the latest fundraising, sparking discontent among key stakeholders who lament being denied equal opportunity to safeguard their investments.
Bright Simons urged stakeholders to scrutinize the lithium project, stressing that citizens, civil society, and the media must work together to “unpack the jargon” and ensure the public is fully informed about activities in the natural resource sector.
With the government’s investment facing devaluation and the size of Ghana’s stake dwindling, the IMANI’s Honorary Vice President underscored the importance for transparency and accountability in the management of the country’s natural resources.
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