Lithium deal: Gov’t could have done better-Bright Simons

Source The Ghana Report

Vice President of IMANI-Africa, Bright Simons, says the government could have positioned itself much more favourably in Ghana’s lithium deal with Barari DV.

He argues that considering all the uncertainties surrounding lithium and its future in the green revolution, the government should have negotiated for a better deal instead of 10% royalties.

Speaking in an interview on Saturday, December 9, Mr Simons explained the options which the government should have pursued.

“What that simply means is that instead of this very simple agreement that they’ve done – in some cases, there is a benefit in simplicity, but in this case, we don’t think so. We think there have to be more options in the agreement in some respects.

“We’ve talked already about royalties; when the operating margin changes, we think that the royalties should be variable. We think even in the case of equity, the way they should exercise the equity is not the way they’ve done it now, which is they’ve done it in a two-pronged manner.

“For the government, it’s a fixed kind of thing, and we say in the future we may negotiate for more. For MIIF, which is the sovereign wealth fund, they’ve allowed them to use warrants, which is a kind of option. So what it means is that they have the right and not the obligation to buy more if the price improves.

“But there are other options that we can use and why not use it for the state too? Because MIIF, given the fact that they can easily exit their position given the fact that they’re a sovereign wealth fund as opposed to the state where the regiment is much stricter, we’re not too happy that the state is not using options, not using warrants. And not just warrants to exercise when the strike price is at a certain level, we want warrant that do other things as well.”

He added that while lithium is the raging trend today, there are aggressive campaigns to find a more sustainable substitute for the mineral.

This, he says, puts the government in a precarious situation if it continues to be overly enthusiastic about the mineral instead of being objective as it forges ahead to ratify the deal.

“And we think that the agreement is too simplistic given the uncertainties in lithium. If you’re doing gold, we’ll not have a problem. But lithium, a lot of crazy things are going on. For one thing, there’s a lot of aggressive push, massive and aggressive push to look for alternatives to lithium-based batteries.

“Laboratories all over the world, some of them funded to the tune of billions of dollars, are experimenting with all manner of battery technologies. A time may come when lithium in batteries are not the big deal in electric vehicles, it’s possible. We don’t know that.

“There’s a recycling boom where after using the electric battery – remember that batteries for NMC, for instance, is just four years, after four years the charging ratios drop to as low as 20% and people just change it. So when you throw away the battery, nowadays, people are recycling the lithium and that boom is increasing. A time may come when we’re getting more lithium from discarded batteries than we’re mining afresh. We don’t know yet,” he said on Joy News.

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