Bright Simons Challenges Minister’s Claim on Lithium Deal Royalty Rate

In response to the Lands and Natural Resources Minister, Samuel Abu Jinapor’s assertion that the royalty rate in the lithium deal is the highest in the country’s history, Bright Simons, the Honorary Vice President of IMANI-Africa, disputes the claim as false.

Simons contends that Ghana has experienced significantly higher royalty rates in the past, suggesting that the current lithium royalty rate might be shortchanging the country. Despite the recent increase to 10% from the standard 5%, along with a rise in the state’s free carried interest from 10% to 13%, Simons argues that these terms are not as generous as portrayed.

While acknowledging the apparent increase in generosity, Simons points out historical periods where Ghana automatically had a 55% participation rate in the mining industry. He questions the comparison timeline and argues that there have been more favorable terms in the country’s mining history.

Simons also challenges the fixed royalty structure, proposing a variation in the royalty rate based on the operating margin of the mining companies. He suggests that tying the royalty rate to the company’s operating margin allows for adjustments in tandem with fluctuations in mineral prices on the global market, potentially yielding higher returns for the country.

In his analysis on JoyNews’ Newsfile, Simons emphasizes the importance of considering the historical context and exploring alternative royalty structures for a more equitable and beneficial outcome.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top