The Africa Policy Lens (APL) has warned that Ghana could lose significant revenue if the government proceeds with a proposal to reduce the agreed lithium royalty rate for Barari DV Ghana Limited from 10% to 5%.

According to the APL, the previous government, after Cabinet approval to review royalty rates for lithium and associated minerals, reached an agreement with Barari DV Ghana Limited that set Ghana’s royalty at 10%—five percentage points higher than the standard rate applied in the broader mining sector.

However, the current administration, whose members had previously criticised the 10% rate as insufficient, has proposed reducing the figure to 5%. The move has generated public debate and concern from policy groups, including the APL.

Speaking at a press conference in Accra, the APL said it was surprised that the government was considering a rate lower than what was mutually agreed upon, arguing that such a change would diminish Ghana’s projected earnings from the Ewoyaa Lithium Project.

“The best international practices in mining investment dictate that royalty rates are not determined by short-term market fluctuations. Even in jurisdictions where sliding-scale royalties apply, upper thresholds are set with future price increases in mind,” the APL stated. The organisation argued that recent declines in lithium prices did not, in its view, justify a downward revision of Ghana’s royalty rate.

Citing the definitive feasibility study for the Ewoyaa Project, the APL said the project’s all-in sustaining cost (AISC) was estimated at about US$610 per tonne, based on a spodumene concentrate price of US$1,587 per tonne. “At this benchmark, the company achieves margins of roughly 62% per tonne before royalties,” the group said.

The APL further noted that even at current market prices of US$1,000–1,195 per tonne, the project remained profitable, with estimated margins of more than 40% per tonne. It referenced Zimbabwe’s 2024 introduction of an additional 2% levy on gross lithium revenues—on top of its existing 5% royalty—as an example of a country increasing, rather than reducing, its take despite falling prices.

In its financial projections, the APL estimated that Ghana could lose between US$210 million and US$630 million over the project’s expected 12-year life if the royalty rate were reduced to 5%. This calculation is based on assumed lithium concentrate prices of US$1,000–3,000 per tonne and annual production of 350,000 tonnes.

“Such losses would represent revenue foregone with no avenue for recovery,” the group stated.

The APL concluded that, in its assessment, the 10% royalty rate remains economically sound and in the national interest. It added that even with higher royalty levels—up to 30%, in its estimation—the project would likely remain commercially viable.