With critical minerals a central issue in the global energy transition, Ghana’s 2018 discovery of lithium deposits has brought international attention to the West African country. Five years later, and in the wake of the Covid-19 pandemic, worldwide demand for lithium is even greater, and 2023 has seen Ghana take several steps forwards in positioning itself in the global supply chain.
The first step was conducting a definitive feasibility study in June 2023 for the Ewoyaa Lithium Project on the Cape Coast. Then, in July Ghana’s Cabinet passed a green minerals policy that could have a significant impact on lithium mining upon implementation. Following this, in September Ghana’s sovereign wealth fund, the Minerals Income Investment Fund (MIIF), announced plans to invest some $33m in Atlantic Lithium, the developer of the Ewoyaa Lithium Project, while also taking a direct stake in the mine’s development. These events highlight the potential for the minerals segment and the commitment of the authorities to the lithium industry in particular.
Critical Mass
According to the world’s largest lithium producer, US-based Albemarle, global demand for lithium is set to exceed supply by some 500,000 tonnes by 2030. This is due to surging demand for electric vehicles (EVs) and other battery-based devices central to the energy transition. It is also due to lithium being, historically, a marginal mineral with a small amount of supply. Indeed, as of 2022 there were only 45 lithium mines in operation worldwide, with 11 expected to open in 2023 and a further seven in 2024.
Diversification of the sources of raw material – which is usually extracted as spodumene, a pyroxene mineral containing lithium – and facilities for processing it are both targets for global miners and governments. Ghana’s discovery of deposits and its long-standing strategy to boost local processing place the country in a strong position to leverage this new industry.
Atlantic Lithium – formerly IronRidge Lithium – and Piedmont Lithium are the developers of the Ewoyaa Lithium Project. The definitive feasibility study showed a mineral resource estimate of 35.3m tonnes at 1.25 Li₂O and a potential 3.6m tonnes of spodumene concentrate production over the 12-year life of the mine. Capital costs are likely to be modest, with the mine strategically located close to existing operational infrastructure.
Green Minerals Policy
Despite the developments in Ghana’s lithium segment, the new regulation – expected to be approved by the Parliament before the end of 2023 – rules out the export of raw lithium, Samuel Jinapor, minister of lands and natural resources, told Bloomberg in August. The policy also applies to other minerals necessary for the energy transition, including other mining staples such as manganese and bauxite. Soon after the policy was announced, Atlantic Lithium declared that it was demobilising its definitive feasibility study equipment at the Ewoyaa mine – news which then saw the firm’s share price drop 15%.
A few weeks after the green minerals policy was approved, the MIIF announced it was taking a stake in the Ewoyaa Lithium Project. The fund will invest $27.9m for a 6% share, with the agreement – signed by Atlantic Lithium and Piedmont Lithium in September 2023 – also seeing the MIIF invest $5m in Atlantic Lithium. The MIIF’s investment is expected to go directly towards project development costs, while the fund will also contribute 6% of the exploration and development costs of the project on an ongoing basis. The deal leaves Atlantic Lithium and Piedmont Lithium with 47% shares each in the Ewoyaa Lithium Project.
As Piedmont has agreed to offset 50% of the lithium concentrate produced by the mine and supply it to its proposed lithium hydroxide conversion facility in Tennessee, the MIIF’s move safeguards the Ewoyaa investment. This was particularly important in light of the green minerals policy debate. The government is therefore open for investment in lithium and other critical minerals, while also looking to negotiate a more favourable deal for Ghana and its downstream segment.
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