Parliament’s ratification of Ghana’s first lithium mining lease was anticipated to spark seen exercise in Ewoya. However a number of weeks later, the place nonetheless appears principally quiet, with few indicators of the large-scale growth that many had anticipated.
The lease awarded to Balari DV Ghana Restricted, a subsidiary of Atlantic Lithium, was seen as the start of Ghana’s entry into the worldwide lithium trade.
To higher perceive developments on the bottom, the African Extractive Media Fellowship facilitated a go to to Atlantic Lithium’s workplaces in Mankesim and a visit to the Ewoyaa challenge website.
Discussions with employees on the bottom revealed a robust sense of optimism and urgency concerning the challenge. However the actuality dealing with the corporate is way extra complicated than many observers understand.
One main issue is the almost three-year delay in securing parliamentary ratification of mining lease rights.
For many of that interval, the challenge remained in regulatory limbo.
As a comparatively younger publicly traded mining firm with out the steadiness sheet energy to finance and develop a mine of this dimension by itself, Atlantic Lithium relied closely on its potential to safe financing preparations, strategic traders, and mining contracts.
Nevertheless, with out ratification, it grew to become very troublesome to conclude these agreements.
Buyers and potential financing companions have been reluctant to commit massive quantities of capital to a challenge whose authorized and monetary framework remained unclear. This extended interval of uncertainty considerably lowered investor confidence and slowed progress in financing mine building and growth.
In consequence, expectations that large-scale building actions will start instantly inside two months of ratification might not totally replicate the truth of mine growth financing.
One other vital problem is the ultimate feasibility research (DFS) of the challenge.
DFS is a crucial research utilized by traders and lenders to find out whether or not a mine is commercially viable.
Decide whether or not a challenge is commercially viable, how worthwhile it’s, and whether or not that profitability is sustainable underneath prevailing market circumstances.
Atlantic Lithium’s final DFS was accomplished in 2023 when the lease was first signed. A number of key variables have modified considerably since then.
International lithium costs have fallen from their 2023 highs. Ghana’s lithium financing regime has additionally undergone main modifications following the renegotiation of royalties and state participation.
Moreover, Atlantic Lithium’s earlier strategic relationship with its funding and distribution associate Elevra has been weakened amid ongoing disputes between the events.
Until feasibility assessments are revised to replicate these new market and regulatory realities, severe funding companies are unlikely to fund the challenge.
Ahmed-Salim Adam, Atlantic Lithium’s common supervisor of operations, confirmed that DFS replace work is at present underway and needs to be accomplished inside the subsequent few months, however didn’t present a selected timeline.
As soon as accomplished, the revised feasibility evaluation gives the premise for potential traders, lenders, and takers to judge the challenge.
It additionally guides the challenge’s remaining Closing Funding Resolution (FID), which determines whether or not building can formally proceed.
This helps clarify why present floor exercise seems to be slower than many anticipated.
On the similar time, the corporate mentioned it continues to interact with host communities concerning compensation and resettlement preparations related to mine growth.
Ahmed Salim Adam mentioned the compensation negotiations at present into account embody roughly US$20 million in provisional quantities for affected communities.
The corporate can also be working to resume a number of permits which have expired or are nearing expiration throughout the prolonged ratification course of.
Atlantic Lithium had initially utilized for a lot of of those permits a number of years in the past in anticipation of early ratification, so this delay created a state of affairs the place a number of approvals wanted to be renewed earlier than severe growth actions might proceed.
Following session with Mankesim’s crew, the corporate’s present priorities look like centered round three key areas: finalizing an up to date DFS to safe funding and investor assist, concluding compensation and resettlement negotiations with host communities, and renewing expired permits and approvals.
However just lately, one other dimension has emerged.
Chinese language battery supplies big Zhejiang Huayou Cobalt has introduced plans to amass Atlantic Lithium in a proposed US$210 million transaction, topic to shareholder, court docket and regulatory approvals.
As soon as the acquisition is accomplished, Ewoyaa’s prospects might change considerably.
Not like Atlantic Lithium, Huayou has vital monetary energy, a longtime lithium provide chain and operational expertise by its lithium operations in Zimbabwe and its copper and cobalt operations within the Democratic Republic of Congo.
This might ease financing constraints and speed up the event of the Ewoya mine.
However Huayou’s doable entry additionally raises broader coverage questions for Ghana’s regulators.
These embody how Ghana will handle switch pricing dangers underneath Huayou’s management throughout a number of elements of the battery minerals provide chain, and whether or not regulators will be capable of successfully monitor manufacturing volumes, pricing and royalty funds underneath Ghana’s new sliding scale royalty regime.
Finally, how lithium is priced, processed and offered might have a big impression on how a lot long-term worth Ghana can seize from this challenge.
For now, the quick focus is on the completion and launch of the newest definitive feasibility research.
The challenge was introduced to be commercially viable in 2023 when the unique DFS is accomplished.
However after years of delays, falling lithium costs and modifications to accounting phrases, the newest research will decide whether or not Ewoya nonetheless makes financial sense underneath present market circumstances and whether or not traders are prepared to fund its growth.
