Ghana’s Lithium deal saga: Market-linked royalty way to go -Samuel Ackom writes

In a bold step toward modernising its resource governance, Ghana’s Minister for Lands and Natural Resources, Emmanuel Armah-Kofi Buah, announced on December 3, 2025, the introduction of a comprehensive legal instrument that will tie mineral royalties to fluctuating global market prices.

This sliding-scale framework, set to be presented to Cabinet for approval before heading to Parliament, marks a departure from the country’s longstanding fixed 5% royalty rate on mining operations, including the burgeoning lithium sector.

As Kofi Buah emphasised during a press briefing, the move addresses a long-standing gap in the Minerals and Mining Act, aiming to create “permanent guidelines” that ensure fair returns for the state while fostering investment stability.

The announcement comes at a critical juncture for Ghana, Africa’s second-largest gold producer and an emerging player in critical minerals like lithium. With global commodity prices swinging wildly, lithium carbonate prices, for instance, plummeted from over $80,000 per metric ton in late 2022 to around $15,000 by mid-2024 before rebounding – this flexible system promises to align national revenues more closely with market realitie

A tailored framework for volatile times
Ghana’s existing royalty system operates on a fixed rate of 5% applied to the gross revenue from mining operations, as enshrined in the Minerals and Mining Act of 2006. This uniform approach, while offering simplicity and predictability for investors, fails to adjust for market volatility, resulting in substantial revenue shortfalls during price booms.

Over the past decade, this rigidity has cost the nation dearly; for example, during the gold price surge from 2020 to 2022, when average prices exceeded $1,800 per ounce, the fixed rate meant Ghana forewent additional royalties that a progressive system might have captured.

Estimates from organisations like the Natural Resource Governance Institute and the International Monetary Fund suggest that such mismatches led to foregone revenues exceeding $1 billion cumulatively, with annual losses in the hundreds of millions from gold exports alone, which averaged over $6 billion yearly. These figures highlight how the current framework has limited the government’s ability to maximise returns from resource windfalls, exacerbating fiscal pressures amid economic challenges.

Under the proposed instrument, royalties will no longer be a rigid 5% of mineral value but will adjust on a sliding scale based on international benchmarks. When prices soar, rates could climb to capture more windfall profits; during downturns, they would dip to keep operations viable. Buah clarified that the current 5% remains the baseline for lithium and other minerals until the new rules take effect, underscoring the urgency of legislative action to prevent revenue shortfalls.

This is not merely regulatory housekeeping. It is a calculated response to the inequities exposed by fixed rates. In 2023, Ghana’s mineral exports surged 15% to $7.8 billion, driven largely by gold, yet the fixed royalty structure meant the state captured only a fraction of the upside from price spikes. Mining contributed about $900 million to government coffers in 2022 alone, but experts argue that a market-linked model could add hundreds of millions more over the next decade, especially as Ghana ramps up lithium production.

For a nation where mining accounts for over 10% of GDP and employs tens of thousands, the benefits are multifaceted. Higher royalties during booms could fund infrastructure, education, and healthcare in resource-rich regions, reducing the “resource curse” that has plagued other African exporters. Meanwhile, lower rates in slumps would deter mine closures, preserving jobs and local economies.

The Ewoyaa lithium project in the Central Region, Ghana’s flagship green mineral venture, exemplifies this: with reserves estimated at 25 million metric tons of high-grade spodumene, it could generate $2.7 billion in state revenues over 20 years under optimal conditions, but fixed royalties risk eroding that potential during price dips.

Lessons from global peers: Sliding scales in action
Ghana’s innovation is not happening in isolation; it is part of a global trend toward progressive taxation in extractives. Countries with similar systems have reaped measurable gains, offering blueprints and cautions for Accra’s rollout.

Take Chile, the world’s top copper producer and a lithium powerhouse. Since 2010, its sliding-scale royalties for copper adjust from 5% to 14% based on quarterly price averages, while lithium faces a similar progressive regime. This flexibility helped Chile weather the 2015–2016 commodity crash, maintaining operations and collecting $4.5 billion in mining royalties in 2023 alone, up 20% from pre-pandemic levels. For Ghana, emulating this could stabilise lithium inflows; projections suggest the metal’s demand could hit 3 million tons annually by 2030, fuelled by electric vehicles, potentially valuing Ghana’s untapped deposits at $10 billion.

Peru provides another compelling case. Its hybrid model combines ad valorem royalties with a special mining tax that scales with operating profits, yielding rates from 2% to 8.4%. In 2022, this netted $1.2 billion in revenues despite volatile zinc and copper markets, funding social programmes that cut poverty in mining districts by 15% over five years. Yet Peru’s experience highlights pitfalls: overly complex formulas led to disputes, delaying investments by up to 18 months. Ghana’s ministry has signalled a simpler price-threshold approach to avoid such hurdles.

Closer to home, the Democratic Republic of Congo went with a sliding scale in 2018 amid cobalt boom-bust cycles, but implementation stalled due to political gridlock, costing an estimated $500 million in foregone revenues. Australia, meanwhile, employs a tiered ad valorem system (2.5%–7.5%) across states, balancing investor appeal with steady hauls, $15 billion in 2024. These examples underscore a key lesson: success hinges on transparent indexing and stakeholder buy-in, areas where Ghana’s Green Minerals Policy, enacted in 2023, already lays groundwork by mandating 30% state equity in new projects.

Unlocking Lithium’s promise amid broader reforms
At the heart of Buah’s announcement lies lithium, the “white gold” powering the energy transition. Ghana’s deposits, discovered in earnest since 2021, position it as a potential top-10 global supplier. The Barari DV Ghana deal, inked under the prior administration, locked in a 10% royalty, double the standard, but advocacy groups pushed for market linkage to capture future upsides. The new framework responds, potentially aligning with calls from experts like those at the Third World Network-Africa, who warn that royalties alone capture just the “bottom end” of the value chain; true gains lie in local processing and battery manufacturing.

Yet challenges loom. A recent Natural Resource Governance Institute report cautions that aggressive local refining could slash revenues by $500 million over two decades due to high upfront costs, estimated at $1.5 billion for a mid-scale plant — and technical gaps. Ghana’s strategy, blending flexible royalties with value-add incentives, could mitigate this, drawing on models like Bolivia’s state-led lithium partnerships.

A forward path for resource sovereignty
As Ghana’s Parliament deliberates on this instrument, the stakes could not be higher. In an era of geopolitical jostling for critical minerals, evidenced by the U.S.–EU raw materials pacts – the sliding-scale royalty is not just fiscal policy; it is a declaration of economic sovereignty.

By syncing with markets, Ghana can transform volatility from vulnerability into an opportunity, ensuring its mineral wealth fuels inclusive growth rather than fleeting booms.

If enacted swiftly, this reform could redefine Africa’s extractives playbook, proving that adaptive governance yields enduring prosperity. For now, all eyes are on Buah’s Cabinet pitch, a make-or-break moment for a nation poised to electrify its future.

The writer, Samuel Ackom, is a Broadcast Journalist with Channel One TV and Citi FM