The Africa Policy Lens (APL) has warned of a huge financial loss to the state if the government goes ahead to reduce the agreed royalty rate of the lithium deal between Barari DV Ghana Limited and Ghana from 10% to 5%.
The previous government, following a Cabinet approval to review royalty rates for Ghana’s lithium and associated minerals, reached a mutual agreement with Barari DV Ghana Limited, for an upward 10% royalty stake for Ghana – 5% extra royalty stake in the the main mining sector.
However, the new Mahama government has now proposed a reduction of the 10% stake for Ghana to 5% – a situation which has sparked outrage.
At a press conference in Accra on the controversy, APL expressed surprise at the Mahama government’s eagerness not to implement a mutual agreement which favours Ghana, but rather advocating for a reduced stake, which will cost the nation millions of dollars.
“The best international practices in mining investment dictate that royalty rates are not determined by short-term market fluctuations. Even in jurisdictions that apply sliding-scale royalty regimes, upper thresholds are established in anticipation of future commodity price increases. Consequently, claims that the recent decline in lithium prices justifies a reduction in Ghana’s royalty rate are untenable,” the APL said, rejecting government’s ‘market fluctuation’ reasons for its proposed 5% royalty for Ghana.
It added: ”The definitive feasibility study of the Ewoyaa Project estimates an all-in sustaining cost (AISC) of approximately US$610 per tonne, based on a lithium spodumene concentrate (5.5–6% lithium oxide) price of US$1,587 per tonne. At this benchmark, the company achieves margins of roughly 62% per tonne before royalties. Moreover, even at current market prices of US$1,000–1,195 per tonne, as reported by Trading Economics in November 2025, the project remains profitable with margins exceeding 40% per tonne. Notably, in response to falling lithium prices in 2024, the Government of Zimbabwe introduced an additional 2% levy on gross lithium revenues, supplementing its existing 5% royalty. This underscores that temporary price declines do not compel sovereign governments to reduce royalty rates without sound economic justification.”
The APL, continuing its detailed analysis, predicted a huge loss of between $210 million to $610 million if government goes ahead to reduce the royalty rate from 10% to 5%.
“Assuming lithium concentrate prices remain within the range of US$1,000–3,000 over the projected 12-year mine life, with annual production of 350,000 tonnes, Ghana would forfeit between US$210 million and US$630 million if royalties were reduced from 10% to 5%. Such losses represent revenue effectively ceded to the company, with no mechanism for recovery.
“Indeed, at prevailing and projected price levels, even a 30% royalty rate would not render the Ewoyaa Lithium Project unprofitable. It follows, therefore, that the current 10% royalty rate must be maintained as both economically rational and strategically necessary.”