Report Raises Red Flags Over Piedmont Lithium’s Ghana Deal Citing Corruption
Ghana’s hopes of processing large volumes of lithium could be a mirage following question marks raised about Piedmont Lithium, the company aiming to mine the mineral.
The findings of Blue Orca Capital after their investigations have exposed Piedmont Lithium’s operations, suggesting corruption and political influence.
Piedmont Lithium entered into a transaction to acquire half of the ownership of London-based Atlantic Lithium in an investment worth over $100 million.
The company aimed at profits and revenues through Piedmont’s Tennessee facility in the United States by 2025.
However, a short-seller report from Blue Orca on Wednesday, March 8, cites corruption and other infractions, likely to collapse the whole deal with investors losing out.
Blue Orca’s reports said it was unlikely for Ghana’s parliament to ratify Atlantic’s mining licenses because it was exposed to corruption and political influence.
They also believe that a court action could reverse the mining leases acquired for the project in future.
“Atlantic still needs Ghana’s Parliament to approve and ratify its mining licenses and permits in order to build the lithium mine.
“Based on precedents in Ghana and around Africa, including a recent decision by Ghana’s highest court, we do not believe that authorities in Ghana (including the Parliament) will ratify Atlantic’s mining licenses tainted by corruption,” the report said.
Blue Orca further alleged that Atlantic paid tens of millions of dollars in potential royalties to a company to close the deal.
“In our opinion, evidence of Atlantic’s payments to the son of a high-level politician for mining licenses is textbook evidence of corruption,” Blue Orca concluded.
Furthermore, the research firm suspects the company could lose its US$141.7 million grant from the US Department of Energy, announced in 2022.
Details of the report indicated that Atlantic acquired a local Ghana entity, Joy Transporters, to obtain mineral rights and licenses on two of the four tenements (Saltpond and Cape Coast) for Atlantic’s flagship lithium project in Ghana in 2021.
However, Blue Orca uncovered trails suggesting that Atlantic paid the owners $730,000 in stock to acquire Joy Transporters and promised the sellers an additional 2.5% production royalty potentially worth tens of millions of dollars.
The report said Atlantic never directly disclosed the names of Joy Transporters’ principals, but extensive due diligence of public information, databases and corporate records in Ghana indicates that the son of a high-ranking politician owned Joy Transporters.
Meanwhile, the expose is reported to have triggered a halt in the trading of shares by Piedmont Lithium on Thursday morning.
Reasons for pausing trading are scanty, but it is believed that officials of Piedmont Lithium are preparing to respond to the latest findings.
Reports suggest that Atlantic Lithium has also halted trading to address the issue.