Bright Simons, the Vice-President in charge of Research at the IMANI Centre for Policy and Education, has issued a critique of the government’s approach to the Atlantic Lithium mining deal, asserting that a credible, shared and comprehensive financial model is the only logical basis for decision-making.
Mr. Bright Simons argued that the government is erroneously relying solely on the investor’s definitive feasibility study to justify concessions, particularly following claims that the project is no longer viable due to falling lithium prices.
He maintains that Ghana cannot accurately assess the true profitability, investor viability, or long-term benefits including those to the host community without an independently developed, comprehensive financial model.
This model must incorporate a realistic projection of lithium prices over the mine’s 12-year lifespan, rather than reacting solely to current market fluctuations.
“So, a comprehensive financial model of the project is required to do a sensible job about this. Why? Because whether price moves or falls, it all depends on whether that will have an impact on the profits in the project, but over which period of time.”
Mr. Bright Simons
According to Mr. Bright Simons, joint financial modeling is to position and safeguard the country against a potential giveaway of national resources.
The initial government concern, as conveyed by the Minister, was that the project would not be viable for the investor without additional concessions, which would mean no jobs or mine’s operation.
However, Bright Simons contends that an analysis of viability requires moving beyond today’s lithium price of around $1,100–$1,200, which is still below the investor’s 12-year projected average of $1,587.
He also added that IMANI think tank is ready to collaborate with government technical teams to establish a common set of assumptions and numbers that reflect both the investor’s data and Ghana’s broader economic and social interests, thereby ensuring a sensible, transparent public discussion.
Debunking the Viability Claims: The Profitability Paradox
Mr. Bright Simons challenged the investor’s claim that the project lacks viability, citing figures from the investor’s own definitive feasibility study which suggests a compelling financial position, even in the current price environment.
The production cost for the project is estimated at a low average of $610 per ton. This low cost is attributed to the high ore grade of the deposit, which permits the use of the very cost-effective Dense Media Separation (DMS) method.
At today’s lithium price of nearly $1,200, the company’s gross margin is approximately 45%. Simons finds it incredulous that a business with a 45% gross margin would require tax concessions or reduced obligations to the state to be considered viable, stating that if Ghana were to apply that standard to other thriving sectors, “The whole economy will collapse tomorrow.”
Furthermore, Bright Simons highlighted the historical context, noting that when the previous administration was initially pushed to approve the project, the lithium price was around $800, yielding a gross margin of less than 20%, yet the company still sought approval.
The investor’s original model, projecting a price of nearly $1,600 and a cost of $600, indicated a gross margin of over 65%, suggesting they intended to recover all investment in a mere 19 months.
A slight shift in price that perhaps extends the recovery period to three years is not a basis to request further concessions. Bright Simons concludes that “on the financial basis, the company has no basis to ask for concessions.”
The Legal Path to a Higher Royalty
Mr. Bright Simons also addressed the legal argument frequently cited by the Minister regarding the royalty rate, which is currently fixed at 5% under the Minerals and Mining Act, 2010 (Act 794).
He clarified that this assertion is outdated. He points to the subsequent Minerals and Mining (Amendment) Act, 2015 (Act 900), which revised the law and placed the power to set the royalty rate into the realm of regulation, specifically Legislative Instruments (L.I.).
Crucially, this means the Minister has the executive power to enact a Legislative Instrument, which, if not rejected by Parliament within 21 days, becomes law.
Bright Simons emphatically stated that “Nothing in the law stops him from saying that the current royalty rate for lithium and all transition minerals or critical minerals or whatever is 10%.”
There is no legal constraint preventing the Minister from increasing the royalty rate for specific minerals, like lithium, through a regulatory decision.
This legal interpretation contradicts the government’s implied defense that a higher royalty would require a complex, full amendment of the primary law.
IMANI’s Role in Securing Ghana’s Future
The IMANI Centre for Policy and Education, founded in 2004 as a highly-ranked Ghanaian think tank, is dedicated to promoting peace and prosperity through research and advocacy on free economies, good governance, and public administration.
IMANI has carved out a niche for providing objective, independent analysis and critique on numerous national policy issues, often positioning itself as a strong voice for public interest against government decisions viewed as detrimental to the national purse.
In the context of the controversial Atlantic Lithium deal, IMANI’s involvement is pivotal. By aggressively challenging the investor’s financial claims and the government’s legal rationale, IMANI, alongside other civil society groups, is effectively serving as a public-interest auditor.
Their key contribution is the insistence on co-developing a transparent financial model. This collaboration would ensure that the final agreement not only provides a fair return for the investor but also reflects all the benefits and obligations—including those to the host community that may not have been considered in the investor-centric definitive feasibility study.
By demanding a higher standard of transparency and verifiable modeling, IMANI’s persistent scrutiny aims to secure a better, more sustainable deal for Ghana and its citizens from its nascent green minerals sector. It also sets a crucial precedent for future extractive agreements, minimizing the risk of a new “resource curse.”
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