Lands and Natural Resources Minister Emmanuel Armah-Kofi Buah has introduced a new mining regulation in Parliament, featuring sliding-scale royalties and a 1% community development fund to strengthen Ghana’s mineral agreements.
The proposed regulation introduces a sliding-scale royalty framework across the country’s mineral sector, marking a shift away from fixed royalty arrangements that have long dominated mining agreements.
“I have to say that I have brought an elaborate regulation that gives us a sliding scale agreement for our mineral resources to the floor of Parliament.”
Hon. Emmanuel Armah-Kofi Buah, Minister for Lands and Natural Resources
At the heart of the new framework is a mechanism that allows Ghana to capture more value during periods of high commodity prices, while automatically easing the burden on mining companies when prices fall.
According to Hon. Armah-Kofi Buah, the approach reflects lessons learned from years of fixed royalty structures that failed to respond to volatile global commodity markets.
“The advantage is that it allows the state to capture the benefits in good times, like in the gold sector,” he explained, adding that the policy has been applied across the mineral sector.
By linking royalties directly to price movements, the regulation ensures that national revenues rise when markets are strong, without placing undue pressure on operators during downturns.
The Minister stressed that this flexibility is critical in an era of fluctuating commodity prices, particularly as Ghana positions itself as a key player in emerging critical minerals such as lithium.
Lithium Agreement Sets New Benchmark
Using Ghana’s lithium agreement as a practical example, Mr. Armah-Kofi Buah illustrated how the sliding-scale model improves upon earlier arrangements.
He recalled that when Ghana’s first lithium agreement was negotiated, global lithium prices were around $3,000 per tonne, and the country secured a 10 percent royalty rate.
“Today, with the sliding scale, when we get to $2,500, we achieved 10%. When we get to $3,000 because of the sliding scale, we’ll go to 12%.”
Hon. Emmanuel Armah-Kofi Buah, Minister for Lands and Natural Resources
According to the Minister, this adjustment could translate into savings of over $500 million for the state at that price level, underscoring the fiscal significance of the reform.
He added that the model does not only favour the government. “This sliding scale also gives the companies consideration when prices tumble in difficult times,” he noted, explaining that royalties would automatically adjust downward to reflect market realities.
Certainty for Investors, Stability for the State
Beyond revenue gains, the Minister emphasised that the sliding-scale system offers predictability and confidence to investors. “What is important for investors, it gives them certainty,” he said, noting that companies can be assured that Ghana’s fiscal terms will respond fairly to price movements.
“They are very sure that in Ghana, when the price tumble will not be in trouble because the government automatically will reduce royalties.
“When the prices go up, the government will also take advantage and capture the benefits.”
Hon. Emmanuel Armah-Kofi Buah, Minister for Lands and Natural Resources
Industry observers say such certainty is increasingly important as mining companies weigh long-term investments amid global economic uncertainty and heightened competition for capital.
The regulation before Parliament also introduces enhanced provisions in Ghana’s lithium agreements, building on lessons from the 2023 deal. Mr. Armah-Kofi Buah said infrastructure provisions, which were absent in the earlier agreement, have now been incorporated.
“I’m very happy today that we’ve strengthened it,” he said, describing the updated lithium agreement as more comprehensive and forward-looking.
The new provisions aim to ensure that mining projects contribute not only through royalties and taxes, but also by supporting infrastructure development in resource-rich areas.
Community Development Fund Breaks New Ground
One of the most notable additions to the framework is the introduction of a dedicated community development fund. For the first time, lithium agreements will include a provision allocating one percent of gross revenue directly to host communities.
“I am excited about an enhanced, a lithium agreement that also embodies, for the first time, a 1% community development fund for the community that will transform the community.”
Hon. Emmanuel Armah-Kofi Buah, Minister for Lands and Natural Resources
The Minister explained that this fund is intended to operate independently of central government allocations, empowering communities to finance their own development priorities.
“This is a model that I am going to try to push in all the agreement,” he added, stressing that communities must have a dedicated source of funding beyond traditional corporate social responsibility initiatives.
“So think about it, 1% of growth revenue going to the community. That would translate into roads, hospitals, independent of the central government.
“So that when the resource is gone, we can look back and say that in this particular community because of these resources, that is why we are seeing beautiful roads, we are seeing hospitals, we are seeing schools.”
Hon. Emmanuel Armah-Kofi Buah, Minister for Lands and Natural Resources
Extending the Model Across the Sector
The Minister concluded by emphasising that the sliding-scale approach is not limited to lithium. He confirmed that similar reforms have been applied in the gold sector, where fixed royalty arrangements are also being reviewed.
“For those who have been talking a lot about, oh, we negotiated 10%, today I tell you, we have a better agreement in Parliament,” he said, arguing that the new framework ensures higher returns when prices rise while maintaining investor confidence.
As Parliament debates the regulation, the proposal is expected to spark broader discussions on how Ghana can maximise long-term value from its mineral resources while promoting sustainable development and social equity.
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