Land Minister Defends Enhanced Lithium Deal, Highlights Community Fund and Sliding-Scale Royalties
The Minister for Lands and Natural Resources and Member of Parliament for the Ellembelle Constituency, Hon. Emmanuel Armah-Kofi Buah, has held a press briefing to explain and defend the enhanced lithium agreement.
Speaking to the media, Hon. Armah-Kofi Buah said the revised lithium deal introduces, for the first time, a 1 percent community development fund aimed at transforming host communities. According to him, this fund will support the construction of roads, hospitals, schools, and other social infrastructure, independent of central government funding.
He explained that the model goes beyond traditional corporate social responsibility, ensuring that communities directly benefit from natural resources found in their areas. He noted that when the resources are eventually depleted, residents will be able to point to lasting development as a direct result of the lithium project.
Addressing claims that the government negotiated only a 10 percent benefit, the Minister said the agreement actually allows Ghana to move beyond that figure. He stated that the government is targeting up to 12 percent benefits through a sliding-scale arrangement tied to global commodity prices.
Drawing comparisons with the gold sector, Hon. Armah-Kofi Buah explained that when many mining agreements were negotiated, gold prices ranged between $1,500 and $1,900 per ounce, but prices have since risen to about $4,000. He said the government introduced certainty through a sliding-scale royalty system, allowing state benefits to increase from a constant 5 percent to between 9 and 10 percent as prices rise, while also sharing the burden with companies when prices fall.
He further noted that under previous legal frameworks, negotiations were restricted to a fixed 5 percent royalty rate. However, he said the new liberal regulatory framework he has introduced allows for flexible, sliding-scale agreements across the mineral sector.
According to the Minister, this approach enables the state to capture more revenue during favorable market conditions while protecting investors during downturns. Using lithium as an example, he said that when prices were initially negotiated at around $3,000, Ghana stood to gain significantly. With the current sliding scale, even at $2,500, the country can achieve a 10 percent royalty, and at $3,000 and above, royalties can rise to 12 percent. He estimated that this arrangement could save the government more than $500 million.
Hon. Armah-Kofi Buah added that the sliding-scale system provides certainty for investors, assuring them that royalties will automatically reduce when prices tumble, while allowing the state to benefit when prices rise. He also revealed that the enhanced lithium agreement now includes infrastructure provisions, which were absent from the 2023 agreement.
He expressed confidence that the strengthened agreement strikes a fair balance between national interest, community development, and investor confidence.
Report by PKB
