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Ghanaian Pension Funds and other Fund Managers have been urged to consider investing in the mining value chain to increase and retain profits that accrue to local companies from mining activity. The Ghana Stock Exchange and the Minerals income Investment Fund held a day’s workshop for Fund Managers in Accra in a bid to demystify mining as an asset class for long term investments or patient capital.

BUILDING KNOWLEDGE AND AN OPPORTUNITY SPACE

The Managing Director of the Ghana Stock Exchange, Madam Abena Amoah observed that there was an urgent need for managers to be aware of the endless opportunity space in the mining industry and factor it in their investment analysis. However, “there is the need to build the knowledge capital to be able to pursue these opportunities. There is no mystery to mining and the mining value chain. We just have to network properly, raise awareness about the opportunity and design the vehicles that can be used to invest in the space.”

Fund Managers were introduced to the architecture of mining from exploration to development by the Chief Technical Officer (CTO) of MIIF, Kwabena Barning, a miner with more than 20 years’ experience in different aspects of mining related activity. Barning provided insight into a gamut of work including mining operations, mining support services all the while highlighting distinct areas for investment opportunities including the beneficiation axis of minerals like Bauxite, Manganese, Iron and Lithium.

“Mining is a heavy activity industry. It requires patient capital and a lot of it. What drives mining is the technical knowledge and the financial wherewithal. If Ghanaians want to benefit from the different minerals in our soil, the key is to participate in asset ownership. That way you become primary beneficiary of the mining activity happening,” said Kwabena Barning.

SEQUENCING ENTRY WITH MIIF’S EXPERIENCE AS A BACKDROP

While the Fund Managers seemed aware of the enormous potential of mining, entering the sub-sector had always proved daunting. The Chief Investment Officer of MIIF Bubune Sorkpor anchored the pursuit of value investing from MIIF as a model they could adopt.

“The opportunities are incredible. For instance, we have invested US$ 40 million in Asante Gold Corporation, and Atlantic Lithium where we are significant stakeholders. We are participating at the asset level and have board seats in these listed entities; meaning Ghana has a seat at the decision table for these global companies. We are on the cusp of investing some US$ 30 million in the Ada Songhor Salt project, and that will support its goal of becoming the biggest Salt-producing facility in Africa. MIIF will be working with this project to list it on the GSE. We hope to derisk projects like this and present co-investment opportunities to retail investors, pension funds and other institutional investors in Ghana” Bubune Sorkpor said.

The workshop also discussed major opportunities for Fund Managers to invest along the mining value chain, specifically, mine support services companies and exploration. “In 2022, Goldfields Ghana alone spent 896 million US dollars to procure goods and services for the mines. Over 90% of this amount went to in-country suppliers, who make up 70% of our 1,600 active suppliers. This demonstrates the huge investment opportunity in the entire mining value chain,” Sorkpor said.

“There is almost US$4 billion worth of business in the local content area reserved for only Ghanaians. These are businesses who provide various services for the mining companies and are in dire need of investment to take advantage of our local content laws and provisions. You need to understand the mining industry, the needs, perform stringent due diligence and structure the right financing for them these mine support services providers. This is ready business waiting to happen and that is where the opportunity for investments exists” Mr. Sorkpor said.

Using Atlantic Lithium as a case study for an exploration project that is transitioning into production in 18 months, the MIIF CIO talked up the risks of early stage investment and the potential upside of the project based on: importance of lithium, the geology and resource of the tenement, the extractability of the ore through a conventional dense media and the location of the asset. Over the 12.5-year mine life, the operation is expected to generate US$ 6.6 billion in revenue and free cash flow of US$2.4 billion with an average life of mine EBITDA of US$316 million per annum.

Regarding new asset classes, the MIIF CIO introduced participants to the MIIF sponsored Physical Gold-Backed ETF which is being developed. Bubune Sorkpor continued; “Think of a Gold Backed ETF (Exchange Traded Fund) which is tradable on the stock exchange. The gold is vaulted and serves as a store of value and a hedge against currency fluctuations. This is a different assist class altogether from equity and debt holdings. According to him, the underlying asset will be gold, which is highly liquid with market makers, and priced in USD. This will afford Ghanaian Fund Managers an alternative asset class that tracks the price of gold, provides a currency hedge, is fungible and highly liquid. “ This opportunity deepens our goal of a 360 value chain integration. If you look at the price of gold in the year 2000 as well as the cedi to dollar exchange rate then, a simulated investment in a cedi denominated Gold-Backed ETF then would have generated over 100 times a cedi investment. We expect to launch this product on the GSE this year” the MIIF CIO concluded.

ADDITIONAL MINING VALUE CHAIN INVESTMENTS

MIIF has set up a commodities trading desk in-house which has facilitated gold trade to the tune of

$320million between October 2023 and 2024 February. So far, our partnership with the Chamber of Bulk Oil Distributors (CBOD) is running seamlessly. The end goal is to bring in as much foreign exchange as possible to help stabilize the cedi. “We plan to grow this and eventually build sophisticated financial instruments and derivatives on the back of these trades.”

EXPANDING CAPITAL ACCESSIBILITY TO MINING

The relationship between MIIF and the Ghana Stock Exchange is based on a Memorandum of Understanding through which MIIF intends to deepen Ghana’s Capital Market activity.

In the words of the MIIF CEO which was re-echoed by the MIIF Chief Technical Officer Mr Kwabena Barning, “The objective of MIIF in line with the vision of the President of the Republic of Ghana, Nana Addo Dankwa Akuffo Addo, is to help develop the entire mining eco-system of Ghana by supporting the sector’s accessibility to capital and most importantly create Ghanaian mining champions. The capital markets have remained the engine for accelerated access to long term capital for mining companies worldwide and it is important that this lever is given to Ghanaian mining companies. It is also important that we develop incentives to encourage international mining companies to list on the GSE which would deepen the Ghanaian capital market.”

Ghana’s Minerals Income Investment Fund has become the fourth largest shareholder in Atlantic Lithium Ltd (AIM:ALL, OTCQX:ALLIF, ASX:A11) following the acquisition of 19.25 million shares at US$ 0.298 per share. The Mineral Sovereign Fund of Ghana has paid up US$5 million for a 3.06% stake in the parent company of Atlantic Lithium, which is on track to develop its first lithium mine, the Ewoyaa Lithium Project in Ghana in early 2025.

Subject to the execution of an already inked binding agreement, MIIF will transact a significant stake in the Ghana based project by investing a further US$27.9 million in the local project to acquire a 6% portfolio in the operations of the Ewoyaa mine and other tenements referred to as the Cape Coast Portfolio in Ghana.

A release by Atlantic Lithium lauded MIIF for its professionalism, meticulous understanding and rigour applied to the negotiations and closing of this transaction. Neil Herbert, executive chairman of Atlantic Lithium, said the investment from MIIF “recognises the considerable, long-lasting benefits that the company, through lithium production at Ewoyaa and the broader Cape Coast lithium portfolio, can bring to Ghana, while also being indicative of Atlantic Lithium’s significant value upside to existing and prospective investors”. He added that as the company moves closer to beginning construction at Ewoyaa later this year, it expects to benefit greatly from MIIF’s support.

“Notably, this includes MIIF’s contributing interest towards the project’s development expenditure, which further de-risks the success of the project.”

Edward Nana Yaw Koranteng, the Chief Executive Officer of MIIF, said the fund also seeks to support investors into the mining space in Ghana through co-investments  as it “provides a de-risking mechanism” for global investors.

He said that Ewoyaa and the Cape Coast portfolio has “vast prospects with comparatively minimal initial capital requirements” and its proximity to the Takoradi sea-port and other infrastructure “improves its profitability profile”. The Ewoyaa project is world class, with huge prospects in the other tenements under Atlantic Lithium. “The acquisition of a 6% contributing interest in the Company’s Ghanaian subsidiaries will support the funding of ongoing capital and exploration expenditure requirements across Ewoyaa and the broader Atlantic Lithium portfolio. This is just our initial investment in Atlantic Lithium and its Ghanaian subsidiaries. We hope to later invest in the value chain and the development of other by-products, such as feldspar, in line with the Government of Ghana’s critical minerals policy. “Our investment highlights Ghana as arguably the best mining investment destination in Africa which is supported by the options MIIF provides to investors. For us at MIIF, this is the start of a partnership with Atlantic Lithium beyond Ghana. We are confident that this initial investment will enhance and accelerate Ghana’s efforts as an African critical minerals hub and to establish the country’s position in the global EV supply chain.”

MIIF’s investment is outside the compulsory Government of Ghana carried interest of at least 10% which will also be managed by MIIF. The Ewoyaa project alone is valued at $1.4 Billion with a capacity to power 1.4 million Tesla vehicles according to Bloomberg. On the US$27.9m investment in the local asset, MIIF projects an NPV of US$90m for its investment. It will also earn US$312 million in royalties over the life of mine.

The Electronic Vehicles (EV) batteries industry is estimated to be about $7 trillion dollars globally. With the energy transition drive to limit the effects of climate change and over reliance on fossil fuels, the industry will quadruple in the next 25 years, according to watchers of the Lithium market space. According to the CEO of MIIF, MIIF seeks to align its investments with Ghana’s broader EV policy which enjoins the country’s automotive development plan which has seen nine car assembly plants in Ghana and the energy transition plan. “The investment in lithium and other planned investments in critical minerals such as graphite in northern Ghana underscores the strategic objective of making Ghana the battery and EV hub of sub-saharan Africa.

The CEO of the Minerals Income Investment Fund (MIIF), Mr. Edward Nana Yaw Koranteng has stated that the equity participation by MIIF in Atlantic Lithium and its subsidiary Barari DV Ghana Limited which is developing the Ewoyaa lithium mine in Ghana is a game changing benchmark which should guide Ghana’s future investments in mineral resources. MIIF is investing a total of US$32.9 Million into this initial phase with $27.9 Million covering all Atlantic Lithium’s tenements in Ghana representing a 6% stake and US$5 Million representing 3.06% stake in Atlantic Lithium (the global holding company listed on the Australian and London Stock Exchanges). This paid-up capital by a state entity in the mining industry is unprecedented in Ghana’s history. According to Mr. Koranteng, “leveraging MIIF as a sovereign wealth fund to acquire additional equity stake beyond the state’s free carried interest and as a lever to support higher Ghanaian participation in the entire value delivery process should become the standard operating principle for Ghana”.

“The participation of MIIF in the lithium space and the mining sector should be the new norm for Ghana. This also sends a signal of confidence to investors and exploratory companies that Ghana is a preferred mining destination because, the state through MIIF is prepared to take additional equity on commercial terms thereby providing a de-risking mechanism for investors.” Koranteng said.

Why is MIIF investing in Atlantic Lithium?

According to Edward Koranteng, the investment in lithium is mainly premised on the transformative nature of the mineral in terms of industry and as a major component in the global shift away from fossil fuels. The discovery of lithium provides an opportunity to make Ghana a battery manufacturing hub in view of the presence of other critical minerals such as iron ore, manganese and graphite.  The prospect of lithium birthing allied industries in Ghana and creating forward integration into an electronic batteries market that will serve the African market through AfCTA opens value chain opportunities and jobs for Ghanaians on the back of Ghana’s local content laws. In line with Ghana’s local content laws, all contract mining activities must be undertaken by Ghanaian companies and about fifty-six mining inputs are mandated to be procured strictly by Ghanaian companies.

The discovery of lithium also provides impetus to make Ghana the EV capital of sub-Saharan Africa. This is premised on the Government of Ghana’s Automobile Development Plan which has seen nine car assembly plants established in Ghana since 2018 with Ghana likely to overtake South Africa in 2024 for the number of car assembly plants. Mr. Koranteng further said, the global EV market in 2022 was valued at US$193.55 Billion with the global market size reaching US$693.70 Billion in 2030. According to Bloomberg, Ewoyaa alone has the capacity to power 1.4 million Tesla cars although Ewoyaa represents less than 20% of Atlantic’s potential in Ghana underscoring the importance of this mineral.

The production of lithium also comes with industrial by-products such as Feldspar which is used for fibre glass and ceramics. The development of lithium in association with the likes of graphite and feldspar creates value chain and industrial opportunities for Ghanaians. These minerals also expand the royalty base for MIIF which can be further channeled into additional equity and value creating opportunities across all mineral types”. Mr Koranteng indicated that MIIF and Atlantic have begun talks on the development of feldspar to feed the growing Ghanaian ceramics industry with the support of the University of Mines and Technology in Tarkwa.

A simple breakdown of MIIF’s terms

• MIIF is investing US$27.9 Million in Atlantic Lithium’s Ghanaian subsidiaries for a 6% contributing interest covering all the company’s Ghana portfolio assets. MIIF’s investment takes Ghanaian interests to 23.4% made up of Government of Ghana’s free 13%, Ghanaian private shareholder in Barari holding 4.4% and MIIF’s paid up 6% equity injection.
• MIIF also subscribed for 19,245,574 Atlantic Lithium global company / Holding Company shares at a strike price of 20 pence for US$5 Million equating to 3.06% of the holding company. The share price as of 8th December on LSE was 27.23 pence which is above the price MIIF paid for it. This investment also allows MIIF to benefit from Atlantic’s global exploratory efforts including an ongoing potential in Ivory Coast.
• MIIF negotiated warrants or the rights to buy more shares at a locked in price. This is an option MIIF can choose to exercise or not. Consideration to exercise would be premised on share price, trends and other considerations. The negotiated warrants are priced at US$0.36 which entitles MIIF to acquire 9.6 million shares at a value of US$ 3.5 Million.
• MIIF has negotiated with the support of the Government and the Ghana Stock Exchange (GSE) to compel Atlantic Lithium or Barari DV Ghana Limited to list on the Ghana Stock Exchange. The expectation following ratification of the Mining Lease by Parliament is to list in early 2nd quarter 2024 with production starting in January 2025.
• As part of the agreement, MIIF will participate in the competitive process to buy up to 40% of the lithium spodumene to be produced at market price. By having rights to up to 40%, MIIF seeks to leverage this for co-investment opportunities in battery manufacturing and the development of a refinery or opportunities in the processing value chain. MIIF under this arrangement is positioning itself to take equity positions in these opportunities across the value chain.
• Board Representation – MIIF by virtue of its 3.06% will have a Board seat in the holding company. In view of the combined 19%, Ghana will have two Board representation on the local Ewoyaa operations (Barari).

Financial Benefits to MIIF 

According to the Chief Investment Officer of MIIF, Mr. Bubune Sorkpor, such investments are about seizing opportunities. “MIIF saw an opportunity of undervalued shares especially for a company whose flagship project is regarded in the top ten globally”. He emphasized that, “With an intrinsic value ranging between US$1.25 and US$1.9 per share and the growth in the EV space, we believe there is a huge upside in the long term”. Mr. Sorkpor indicated that, a proposed offer from the largest shareholder of Atlantic, Assore of South Africa for 0.33pence or US$0.42 per share translates into a valuation of US$691.6 Million of Ewoyaa, which is quite instructive and aligns with MIIF’s view that the asset is undervalued. MIIF invested at a valuation of US$465m, underlying MIIF’s ability to negotiate favorable terms for Ghanaians.

Mr. Sorkpor outlined the main high level financial gains for MIIF as follows.

• Free cash flow over life of mine – US$2.4 Billion with an average life of mine EBITDA estimated at US$316 million per annum.
• MIIF’s Post Tax NPV on Ewoyaa alone on the 6% paid interest is US$ 90 Million
• Based on the negotiated 10% royalty rate which is currently the second highest in the world for lithium after Chile, MIIF will earn US$ 624 million over life of mine.

Increasing MIIF’s Equity Stake

On the question or criticism that MIIF should increase its equity stake, Edward Nana Yaw Koranteng told journalists that, MIIF intends to increase its stake but will emphasize a lot more on the value chain opportunities such as processing and in other lithium prospects coming up. He indicated that, as a paid investor, there will also be cash calls in line with the anticipated rapid development towards production following ratification by Parliament which must be done to avoid dilution of its shares.

Complementing Government of Ghana’s Lease Agreement 

MIIF’s position complements Government of Ghana’s Mining Lease Agreement with Barari DV Ghana Limited and arguably makes the proposed Lease, the best mining lease post-independence Mr. Koranteng further emphasized that, the contribution of MIIF in this arrangement underscores a complete paradigm shift from what could previously be described as colonial styled-mining contracts to a more forward looking, value laden lease agreement that covers greater equity, value chain development supported by a local content policy which leads to greater job creation, highest royalty rate, a development levy on gross revenue and the development of our capital markets through a listing on the Ghana Stock Exchange.

Ewoyaa’s Prolific Lithium belt

Atlantic Lithium in July 2023 published its Definitive Feasibility Study (DFS) for the Ewoyaa Lithium Project, asserted that Atlantic’s revenues over the 12-year life of mine. For just Ewoyaa, it is $6.6 billion with a post-tax Net Present Value (NPV) of 1.4 billion dollars using a discounting Factor (DCF) of 8%, and free cash flow over life of mine of $2.54 billion. The project’s Internal rate of Return (IRR) is 94% with a payback period of about 19 months. Atlantic intends to grow the potential of Ewoyaa through a rigorous exploration drive that will increase the resource ore for the project. At present, Ewoyaa is the 3rd largest lithium mine in Africa and the 10th biggest in the World.

The Chairman of Atlantic Lithium, Neil Herbert sees Ewoyaa as a new pillar of growth in Ghana’s diversified mine interests and submits to the country’s integrated thinking about the Ewoyaa project through MIIF’s investments based on sound market research and investment principles as well as the construction of the processing plant to forestall the export of raw lithium.

“We consider Ewoyaa as a Ghanaian project for Ghanaians. Having MIIF as a shareholder not only de-risks the Project from a funding perspective but, equally importantly, further aligns the Company with the best interests of its Ghanaian stakeholders, who we are proud to represent. Furthermore, an investment by Ghana’s sovereign wealth fund demonstrates the Government of Ghana’s conviction in the Project, showcasing its intent to support the critical minerals agenda and position the country as a leading mining investment jurisdiction in Africa.”

About MIIF

MIIF is Ghana’s sovereign minerals fund mandated by the Minerals Income Investment Fund Act 2018, (Act 978) as amended, to maximise the value of dividends and royalties’ income accruing to the Republic in a beneficial, accountable and sustainable manner and to monetize Ghana’s mineral wealth in a manner that will secure the future wealth of the country.

The Minerals Income Investment Fund (‘MIIF’) has held its first stakeholder engagement series with Civil Society Organisations (‘CSO’s) and other stakeholders at the Marriott Hotel in Accra.  The purpose of this engagement with CSOs was mainly to provide an overview of the setup of MIIF, performance of MIIF and its potential as a lever for the development of the mining sector. The engagement, was also to create a contribution loop where CSO’s and stakeholders could constructively critique MIIF and its programs, provide inputs into the workings of the company, provide an avenue to answer all questions around MIIF and to advance an inclusionary path going forward.

The Forum was attended by Civil Society Organizations, partner agencies such as the Mineral Commission, EOCO, Ghana Revenue Authority and industry players such as the Chamber of Mines, Academia and selected members of the media. Some of the speakers were Hon. Mireku Duker, Deputy Minister of Lands and Natural Resources, the former Managing Director of Stanbic, Chief Alhassan Andani, the Managing Partner of AB & David, Mr. David Ofosu-Dote, the Managing Director  of Ghana Stock Exchange Ms. Abena Amoah, Mr. Eric Asubonteng, Senior Vice President-Africa Non-operated JVs, AngloGold Ashanti  ,  Mr. Kwame Jantuah, Chairman Oil and Gas Association of Ghana industries and Mr. Forster Gyamfi, Ghana Extractives Transparency Initiative.

Concept of MIIF highly commendable    

“I think the government should set up more MIIFs” said David Ofosu-Dorte, a Senior Partner of AB& David, the fifth largest law firm in Africa.  “The idea of ringfencing your royalties or windfall to generate more wealth in the value chain is a commendable Idea. I think we should have created a ‘MIIF’ much earlier for Cocoa and Timber amongst others to be able to generate more value for those sectors,” Ofosu-Dorte said when he delivered a presentation on ‘Minerals Regulation, Investment Framework & Value Maximization: Lessons from Ghana and other Jurisdictions.

Collaboration with CSOs and stakeholders

Chief Alhassan Andani, the former Chief Executive Officer of Stanbic Bank Ghana and the Founder and Executive Chairman of LVS Africa, a value investing partner in entrepreneurs observed, the MIIF story of growth under a robust investment framework is commendable and in need of more collaboration with private, public, and civil society organisations.

“What I hear around the room is more collaboration to further deepen the good work of the fund. How can we work together with the CSO’s here present, the knowledge in the mining and the business community to create and sustain the wealth that comes out of gold and other precious minerals bestowed on this country by God?

Chief Andani affirmed his view after partaking in a high powered panel discussion among discussants which included, Abena Amoah, the Managing Director of the Ghana Stock Exchange, Eric Asubonteng, a Senior Vice President of Goldfields and former President of the Ghana Chamber of Mines and Prosper Fosu, a Principal Executive of the Ghana Extractives Transparency Index (GHETI). Other discussants on the panel were Kwame Jantuah an energy and minerals executive and a former member of the National Development Planning Commission who is also an active participant on the Ghana CSO’s platform as well as Edward Nana Yaw Koranteng, the CEO of MIIF.

Transparency and Civil Society involvement

A cross section of CSO’s in the extractives sector endorsed the path of stakeholder involvement that MIIF is threading and the Fund’s transparency approach. The fact that MIIF has come into the public arena to educate and consult stakeholders and has recently published its audited accounts for the 2021 and 2022 financial years especially came in for recommendation.

Dr. Theo Acheampong, an Economist and Political Risk Analyst who moderated the event, Ben Boakye the Executive Director of the African Centre for Policy Analysis, ACEP and Patrick Stephenson an Extractives Governance expert commended MIIF for opening up to Civil Society Organisations and demanded that MIIF maintains the Stakeholder Forum platform for consultation and robust criticism in the interest of the country.

“We need a forum like this to keep the communication lines between the Fund and Civil Society opened. We seek the long-term interest of Ghana, and we should not be seen as antagonists or a disruptive group. The CSO’s can even agitate for the law that governs MIIF to be beefed up so that we can protect the gains you are making for the country. We only want to ensure that Ghana’s interest is protected at all times.” Stephenson said.

Ben Boakye of ACEP who is one of the strongest advocates for resource governance and research echoed the concerns of Ghana’s CSOs. “A forum like this is important as we have the opportunity to discuss issues pertaining to the Fund. We ask questions about governance and investment decisions because it is public money, and it has to be invested right. I have heard some very good things today and we need more collaboration so MIIF can become better”, said Ben Boakye.

“The concept of creating MIIF is commendable. The Fund needs to get the CSO’s involved. I have heard today of some of the brilliant strategies MIIF is pursuing and the value the Fund brings to the minerals subsector. We need MIIF to continue to be successful for the sake of Ghana’s future. The Minerals Income Investment Fund is definitely on a good path.” Dr. Acheampong said.

Value Chain development is the only way to local wealth creation.

The Deputy Minister of Lands and Natural Resources, George Mireku Duker said: “Ghana has not realized yet the full value that we deserve from mining gold over hundreds of years. This is because we have not developed the value chain that is around mining. Without the value chain development intended to create local wealth from the resources, acquire know-how and boost employment, we will forever live on scraps and not enjoy our God-given natural resources”.

The Deputy Minister was delivering the keynote address that opened the MIIF Stakeholder Forum. He said the importance of mining could not be overstated as both large and small scale mining provided jobs for more than 4 million people, people being 13% of the country’s population.

To be able to properly benefit from mining, Hon. Mireku Duker said government is aligning the laws that will create space for Ghanaians in the value chain. “For instance, mining supplies – thanks to work by the Minerals Commission and my ministry, are now wholly in the hands of Ghanaians. Additionally, tailings storage facility construction, medical services, assaying, and motor-rewinding are now reserved exclusively for Ghanaian businesses However local content supplies based on importing from abroad and selling are meaningless if we don’t take steps to encourage manufacturing and selling; a lot of wealth ends up being exported to other countries. MIIF and the Minerals Commission (MINCOM) to work together to create the capacity for local business in the value chain to thrive and create that long term ability to benefit enormously from the value chain.”

At least 90 participants drawn from CSOs, the mining Industry, the Ghana Stock Exchange, Small-Scale miners, and Mining Suppliers took part in this initial MIIF stakeholder Form.

ABOUT MIIF

MIIF was set up the Minerals Income Investment Fund Act, 2018 (Act 978) as amended to receive royalties from minerals accruing to government, invest those royalties to secure the future wealth of the country and also manage the equity interest of Ghana in large scale mining firms.  Founding on this three-pronged mandate of the fund, the current management and board of MIIF have developed unique strategies for all 11 minerals that currently pay royalties to government. MIIF has significant equity in Asante Gold Corporation, a Ghanaian, Canadian and Frankfurt listed Explanation and Mining company and has closed a $32.9 million two part investment in Atlantic Lithium an Australian company which has discovered commercial quantities of Lithium in Ghana. 

The Minerals Income Investment Fund (MIIF) has agreed a two-part capital investment totaling $32.9 million in the first ever lithium mine to be developed in Ghana. MIIF announced its intention of investing in Atlantic Lithium, which trades on the alternative market on the London Stock Exchange(LSE) and the Australian Stock Exchange (ASX)  at the Africa Down Under Mining Conference in Australia. The investment is broken down into $27.9 million for 6% stake in the local assets and US$ 5 million in the Holding Company representing a 3% stake of 19,245,574 Atlantic Lithium shares at a strike price of US$0.2598 against which a non-binding Heads of Agreement has been executed. The announcement follows almost 15 months of negotiations which also involved the Minerals Commission and other State interests.  Atlantic’s shares in London jumped 25% on the news of MIIF’s investment, which investors consider as a de-risking mechanism for the Ghanaian Ewoyaa Lithium Mine

An outlay of MIIF’s strategic investment

MIIF’s investment is outside the compulsory Government of Ghana carried interest of at least 10% which will also be managed by MIIF. The Ewoyaa project alone is valued at $1.4 Billion with a capacity to power 1.4 million Tesla vehicles according to Bloomberg. On the US$27.9m investment in the local asset, MIIF projects an NPV of US$90m for its investment. It will also earn US$312 million in royalties over the life of mine (This could be higher on the back of Government of Ghana’s proposed increase in royalty rates). MIIF also projects a 600% upside on the listed equity in which it will hold 3%.

MIIF further expects future upsides to this investment as additional work is being done to upgrade the mineral resources, as currently only about 10% of the mineral resource is measured.  Edward Nana Yaw Koranteng, the Chief Executive Officer of MIIF told journalists at the Africa Down Under Event in Perth, Australia that “MIIF is a statutory minerals sovereign wealth fund with a focus on supporting the growth of mining in Ghana, but its operations also provide a de-risking option for investors in the mining space. The investment in Atlantic Lithium underscores this underlying objective and projects Ghana as an investment destination of choice on the continent.” Mr Koranteng elaborated further that, critical minerals are now of important security and strategic interests to all countries with Ghana being no exception. The need for a fine balance between protecting the security and strategic interests of the state and incentivizing investors into the critical minerals space cannot be understated. This is why this investment by MIIF is a watershed moment not only because it is our first investment in the lithium space but because a commercial arm of an African Government is providing co-investment options on commercial terms”.

Mr. Koranteng further said, “MIIF is positioning itself to invest along the entire value chain with beneficiation as a core objective in line with the Government of Ghana’s proposed critical minerals policy”. Atlantic’s investments include the construction of a lithium processing plant in the Central region. Ghana’s automobile development strategy has led to six international automobile companies establishing assembly plants in Ghana with the region as the principal market. The government of Ghana can leverage this and on the back of the lithium investment make Ghana the EV and batteries hub in Africa, said Mr Koranteng.

Atlantic’s recently published Definitive Feasibility Study (DFS) for the Ewoyaa Lithium Project,   concluded that Atlantic’s  revenues over the 12 year mine life for just Ewoyaa Mine is $ 6.6 billion with a post-tax Net Present Value (NPV) of 1.4 billion dollars  using a discounting Factor (DCF) of 8%, and free cash flow over life of mine of $2.54 billion.  The Projects Internal rate of Return (IRR) which measures the potential profitability of investments is 105% with a payback period of about 19 months.” Mr Koranteng stated that, with the support of the Minister of Finance, the Minister of Land and Natural Resources, the CEO of the Minerals Commission, and the Managing Director of the Ghana Stock Exchange, MIIF’s investment has certain conditionalities which have all been agreed to in principle. These are the construction of a processing plant in the Central Region, the joint development of Feldspar which is a lithium by-product used to produce ceramics, board representation, consideration of MIIF as an offtaker on commercial basis for 40% of the lithium spodumene and the cross listing of Atlantic Lithium on the Ghana Stock Exchange.

 MIIF, EV batteries and Tesla

The Electronic Vehicles (EV) batteries industry is estimated to be about $7 trillion dollars globally. With the energy transition drive and targets of energy transition to limit the effects of climate change and over reliance on fossil fuels, the industry will quadruple in the next 25 years, according to watchers of the Lithium market space.

Tesla Inc., perhaps the largest EV manufacturer by market capitalization predicted that Lithium production may not meet demand over the next 15 years moved early to acquire an interest in the Ewoyaa project through Piedmont Lithium, which has signed a 50% offtake agreement with Atlantic Lithium for onward supply to Tesla Inc and LG Chem. According to Bloomberg NEF, “Ewoyaa could produce about 65,000 metric tons lithium carbonate equivalent, enough to power about 1.4m Tesla Model 3s.

The Chairman of Atlantic Lithium, Neil Herbert applauded MIIF’s decision to invest in Atlantic and recognized it as a new approach to working in Ghana. “We consider Ewoyaa as a Ghanaian project for Ghanaians. Having MIIF as a shareholder not only de-risks the Project from a funding perspective but, equally importantly, further aligns the Company with the best interests of its Ghanaian stakeholders, who we are proud to represent. “Furthermore, an investment by Ghana’s sovereign wealth fund demonstrates the Government of Ghana’s conviction in the Project, showcasing its intent to support the critical minerals agenda and position the country as a leading mining investment jurisdiction in Africa. In Ewoyaa, Ghana has a new pillar in its diversified minerals offering, further developing its esteemed mining credentials, which date back over a century. “MIIF’s investment in the Company’s Ghanaian subsidiaries will be used towards ongoing development, exploration and study expenditure across Ewoyaa and the Company’s broader portfolio. MIIF’s contributions will significantly derisk the success of the Project. In this way, we feel MIIF will share ownership in Ghana’s efforts to drive the country’s position in the global EV supply chain.”

 About MIIF

MIIF is Ghana’s sovereign minerals fund mandated by the Minerals Income Investment Fund Act 2018, (Act 978) as amended, to maximise the value of dividends and royalties income accruing to the Republic in a beneficial, accountable and sustainable manner and to monetize Ghana’s mineral wealth in a manner that will secure the future wealth of the country.

At present, MIIF receives royalties from at least ten minerals currently being mined in Ghana including Gold, Manganese, Limestone and Diamonds. MIIF has equity stake in Asante Gold Corporation, a Canadian company trading on the Canadian, Frankfurt and Ghana Stock Exchanges. All of Asante Gold’s assets including the Bibiani and Chirano gold mines are domiciled in Ghana. The Fund also recently invested in the Injaro Venture Capital Trust Fund targeting the value chain delivery process for Ghanaians in mine support services

The Minerals Income Investment Fund (MllF) as part of its mandate to support the development of the entire mining value delivery system in Ghana has signed a groundbreaking partnership agreement with the University of Mines and Technology (UMan. The agreement which was executed at the offices of MllF on 16th August 2023 covers four principal areas. These are the construction of a world class Technical Training Centre which would also accommodate a modern Gold Jewelry Making and Training Center, an undergraduate and postgraduate scholarship program for women from the mining communities and an annual speaker series program.

MllF’S CONCEPTION OF THE PARTNERSHIP

The agreement between MllF and UMaT details support in the four key areas with a two-pronged objective being, the continuous transformation of the University into a center of global excellence and as a major source of quality local human capital to support a fast expanding and sophisticated mining sector. The Chief Executive Officer of the Minerals Income Investment Fund, Edward Nana Yaw Koranteng elucidated further that, “the agreement underpins the beneficiation objective on which MllF was established”.

CONSTRUCTION OF THE TECHNICAL CENTRE OF EXCELLENCE AND JEWELRY TRAINING CENTRE

The Technical Center will be an important cog for advanced technical training as new minerals are continuously being discovered in Ghana and new methods of value extraction formulated which requires a constant development of skills to meet these changing trends. Ghana needs the technical capacity and quality human capital to ensure that value is created and retained in Ghana. Mr Koranteng said, “real value in mining cannot be found in just taxes and royalties. The real benefit is found in the creation of value through value addition to the minerals, by having significant equity stake across the entire value chain, by creating an industry on the back of the new local content policy especially through the manufacturing of most of the inputs to be sourced locally. But most importantly, we cannot support this transformation without the requisite set of skills or the human capital. This is why the technical support, the Jewelry making and training center and scholarships with a bias towards engineering are so important”.

Ghana is the number one gold producer in Africa and well known for its high-grade gold. Unfortunately, our gold craftsmanship and Jewelry making (albeit authentic) is still rudimentary and has pushed Ghana out of a circa $ 700 Million-dollar annual global jewelry market. According to Mr Koranteng, Ghana can leverage on its cultural appeal and create a global jewelry market destination if it can hone these skills. The goal is to train as many jewelers as necessary to turn Ghana into a jewelry making hub. This is part of our goal to see value addition to gold in the country instead of just exporting the raw material. The art of jewelry making is dying in Ghana and there is an urgent need to train new jewelers that will further the credentials of the country as an attractive jewelry hub in Africa comparable to the United Arab Emirates and India where an integrated jewelry chain exists from design to sales markets exist.”

WOMEN IN MINING SCHOLARSHIP

The women in mining scholarship scheme will cover up to 50 women or girls a year for the next ten years from the start of the 2024 academic year. This program shall cover only brilliant girls or women from needy families in the mining communities. “The mining sector in Ghana carries a misconception of it being a man’s job thereby depriving it of quality human resource as only one out of four women complete” said Mr Koranteng. The MllF Women in Mining Program will at each cycle train two hundred (200) women to attain degrees in both undergraduate and postgraduate mining engineering studies. We aim to demystify the notion that mining is a man’s activity and as well as train women to occupy managerial positions in the mines.

KNOWLEDGE  SHARING

Other details of the MllF-UMaT collaborative agreement include sponsoring the MllF Speaker Series, a thought leadership event created by the Fund for the University that brings an industry leader in Mining, Finance or Business to the doorstep of academia to share experiences and knowledge in their respective fields.

The MllF-UMaT Speaker Series seeks to establish a relationship between industry and academia to finetune education for the world of work.

A GAME CHANGING SUPPORT

The Vice Chancellor of UMaT, Dr. Richard Amankwah described the MllF-UMaT agreement as a game changer in the history of the University.

“This is the most transformative thing to happen to our university since its inception some thirty years ago. As a Vice-Chancellor, I have never seen an institution which is as forward thinking as the Minerals Income Investment Fund. Their support for UMaT is well thought through and hits the bulls-eye. The University of Mines and Technology is a unique University in Africa. This support from MllF will make us better in designing our education for the world of work,” Dr. Amankwaa said.

BUILDING GHANA

The   Board   Chairman   of   the   Minerals   Income Investment Fund, Professor Douglas Boateng says this first-of-its kind sectorial-  academic  partnership supports       the        United   Nations Sustainable Development Goals (UNSDGGs) 4,5,8,9 and Agenda 2063 Transformation Framework of the African Union. “There  are  some  immediate  quantifiable  benefits. However, the long-term  human capital and societal impact can only be judged from 2027 and beyond. In all  successful  economies,  sectorial  organizations constantly   support     forward-thinking    academic institutions with meaningful funding and resources. The era for token gestures by sector organizations is over. We hope that MllF’s initiative will spur others to responsibly   do  their  fair   share  in  strengthening academic   institutions   in  support   of   building  the Ghana we all want. Whatever we do as MllF is not for today. It is for generations after us and we believe this partnership  is geared  towards  securing  the  future wealth of Ghana,” Professor Boateng said.

ABOUT MllF

MllF is Ghana’s sovereign minerals fund mandated by the Minerals Income Investment Fund Act 2018, (Act 978) as amended, to maximise the value of dividends and royalties income accruing to the Republic in a beneficial, accountable and sustainable manner and to monetize Ghana’s mineral wealth in a manner that will secure the future wealth of the country.

At present, MllF receives royalties from at least ten minerals currently being mined in Ghana including Gold, Manganese, Limestone and  Diamonds. MllF has equity stake in Asante Gold Corporation, a Canadian company trading on the Canadian, Frankfurt and Ghana Stock Exchanges. All of Asante Gold’s assets including the Bibiani and Chirano gold mines are domiciled in Ghana. The Fund also recently invested in the lnjaro Venture Capital Trust Fund targeting the value chain delivery process for Ghanaians in mine support services. MllF is also at the closing stages of an equity investment into Atlantic Lithium, an Australian company which has discovered commercial quantities of Lithium in Ewoyaa in the Central Region of Ghana.

The Ghana Minerals Income Investment Fund is defying the odds and the general economic downturn plaguing the world by its meteoric rise in just 18-months. From a circa US$125 million dollars in October 2021, the Assets Under Management (AUM) for the fund is set to reach the One-billion-dollar mark by January of 2024 making it one of the fastest growing specialised funds in the world over the same period.  “The growth trajectory of the Fund is attributed to the hard work of the entire team at MIIF. They have powered this incredible rise in the last 18- months. The key issues for us, as a Fund is keeping fidelity to the founding law and the President’s vision to create long term sustainable value for Ghanaians. We have been able to build the AUM by innovatively expanding our royalties base, the performance of the gold sector, strategic investments, good asset allocation and our treasury management” says Edward Nana Yaw Koranteng, the Chief Executive Officer.

According to Mr. Koranteng, Ghana has been the heartbeat of West African mining for centuries and currently the number one gold producer on the continent. The industry is however seen as not having met its promise of bringing long term prosperity and opportunity to Ghana. It is on this premise that the President of Ghana, Nana Addo Dankwa Akufo Addo, envisioned the setup of the Minerals Income Investment Fund through an Act of Parliament (Act 978) in 2018 to manage all of Government of Ghana’s equity interests in mining companies, manage and invest royalties and dividends received from all minerals into selective investments across the entire mining value chain and to develop and implement measures to reduce the budgetary exposure of the Republic to minerals income fluctuations.

The President’s Charge

“Hopeful this Fund, when properly managed and selectively invested, will over the period of time erase that image and give us a new architecture in the mining industry which includes significant Ghanaian players.” President Nana Addo Dankwa Akufo Addo

In October 2021, President Akufo Addo appointed a new Board of Directors for MIIF chaired by Professor Douglas Boateng, a Professor Extraordinaire in Supply Chain Management and Edward Nana Yaw Koranteng, a lawyer and an investment banker with experience covering Ghana, United Kingdom and sub-Saharan Africa as Chief Executive Officer of the Fund.  “The President charged us to create long term value for Ghanaians. Create a conducive investment environment around the participation of Ghanaians in the mining sector and to make Ghanaians the primary beneficiaries of the natural resources God has bestowed on our dear motherland. “These words underpin the objectives of the Fund and are fundamental in the way we approach business” says Edward Koranteng. 

Getting the fundamentals right

Expanding the royalties base

The main sources of income for the Fund are royalties and dividend payments. Royalties from the minerals are however the most constant with gold responsible for about 93% of all royalties. Ghana has about 15 royalties paying minerals including gold. The initial challenge for the Fund was on how to expand the royalties net which apart from large scale gold was unimpressive. The Fund in this vein developed two main initiatives.

Inter Agency Framework and Committee

The Fund in expanding the royalties base from non-gold minerals such as manganese, salt, sand winning, limestone and quarrying activities established an inter-agency framework and task force. This task force is made up of GRA, MDF, Ghana Standards Authority, Minerals Commission and EOCO. The framework is part of the strategic thrust of MIIF to enhance the collection of royalties, expand the royalties net and streamline communication on royalty payments from non-gold mining companies. “Since the initiative started in December 2021, MIIF, for the first time in its history, receives royalties from sand winners, salt and silver. Royalties from quarries and limestone activities have surged over 105% and 125% respectively.

Royalty tracking system

The Fund has also developed an in-house geo mapping and monitoring system which allows a real time view of mining activities from selected mines in Ghana. This allows tracking of mining companies and payment of royalties on time with the support of the Inter Agency.

Developing a sector Beyond Gold

“Gold is very important because it represents about 93% of our royalties” admits Edward Nana Yaw Koranteng.  The Fund has invested US$ 40 Million in Asante Gold Corporation which is listed in Canada, Germany and now on the Ghana Stock Exchange. Asante owns the prolific Bibiani gold mine and the Chirano gold mine which used to be owned by Kinross of Canada. The investment in Asante has contributed to the highest Ghanaian stake in any international mine with an over 40% Ghanaian ownership.

MIIF is however developing initiatives and investment programs to support the development of the other 16 mineral types in Ghana.  To achieve the objective of developing a value laden integrated mining sector which would bring long term sustainable value to Ghanaians, it is important that MIIF directs/ investment in these mineral sectors and across their individual value chains.

“The core really, is for us to diversify the mineral base where we get our royalties. We are not just looking at the mineral space, we are looking at the entire value chain.” As such, MIIF has developed a strategy for every mineral type in a bid to extensively develop and invest in that mineral’s value delivery system. Ghana can only transform if we hold significant equity positions across the entire value chain for each single mineral” -Edward Nana Yaw Koranteng.

The Salt Opportunity

“Industrial salt is one such mineral if well-developed across its value chain could generate at least US$1 billion in direct revenue every year. At Ada, which is a coastal town in Ghana, the Songhor Salt pans sits on 41,000 acres and can become the biggest producing facility in Africa. The Walvis Bay in Namibia which is the largest in sub-Saharan Africa at 16,700 acres produces circa 950,000 tons per annum”. Mr. Koranteng stated that, the value of salt is in value addition with over 14,000 uses covering oil and gas, mining, food processing, pharmaceuticals, caustic soda, preservatives, textiles, bicarbonate soda etc.

Industrial salt is projected to become a US$49 Billion market in 2030.  Mr. Koranteng emphasised that salt is a priority mineral and the development of the Ada enclave would be transformative for the Ada community and Ghana as a whole. He said, “the Nigerian demand is circa 800,000 tons per annum but imports from Brazil because of the slow development of Ada Songhor in particular which is the only enclave in West Africa with potential purity of 99.9% industrial salt”.

A portion of the Ada Songhor salt pans is being developed by Electrochem Ghana with the company having invested over US$60 Million on its own and already constructed the largest salt loading bay in Africa with a long-term projected outlook of circa 2 Million tons of industrial salt per year. MIIF is investing up to GHC 300 million in equity with a condition for the company to be listed on the Ghana Stock Exchange.

The Lithium Opportunity

According to Mr. Koranteng, the global lithium market size is currently valued at about US$38 billion and projected to grow to US$ 90 Billion in 2030. The market value is estimated at US$ 8.2 Billion with estimated growth at US$22.6 Billion by 2030. Lithium is a transformative mineral of high security and strategic importance for Ghana especially in the light of global decarbonization towards green energy.

Mr. Koranteng indicated that, MIIF is at an advanced stage in finalising a significant equity investment stake in the Australian and UK listed Atlantic Lithium which is developing the Ewoyaa lithium finds in Ghana. The Ewoyaa project which will be Ghana’s first lithium mine operation. It will produce 3.6 million tonnes of spodumene concentrate over a 12-year life with first production targeted for end 2024. The Ewoyaa project has a post-tax net present value (at 8% discount) of $1.5 billion, with free cash flow of $2.4 billion from life of mine revenues of $6.6 billion and an internal rate of return of 105%.

MIIF is investing circa $35 Million in the Ewoyaa lithium space with further plan to invest in value addition components such as chemical plants in line with Ghana’s proposed Critical Minerals Policy.  The Fund will eventually invest in the development of the ceramic sector through the mineral feldspar (by-product of lithium) aimed at supporting strictly Ghanaian offtake and a Ghana ceramics development plan.

Formalising the Future of Ghana’s Gold and the Creation of a mining financial eco-system

The Small Scale Mining Incubation Program (SSMIP)

The Small-Scale Mining Incubation Program (SSMIP) is an investment package designed to help support the small-scale gold mining sector. The licensed small-scale sector contributes up to 40% of the total gold output of Ghana and employs more than 10% of the working population. The MIIF Small-Scale Mining Incubation Program is an equity investment in the form of capital support, mining equipment, gold traceability mechanisms, imbuing beneficiary firms with proper corporate governance principles, exacting responsible mining methods to forestall environmental degradation as well as the provision of a ready offtake market through the MIIF Gold Trade Desk for the licensed miners. According to the Chief Technical Officer and Head of Operations at MIIF, Mr Kwabena Barning, “This initiative will be the most revolutionary in artisanal mining in Africa”. Mr Koranteng emphasized the belief that the SSMIP has the potential to triple the small-scale output which is currently around US$ 2 Billion a year.

The objective of the SSMIP is to develop the creation of Ghanaian mid-tier gold mining companies, which would lead to the formalization of the sector with an attendant impact on eradicating illegal mining. In addition, this program plans to move beneficiary companies from their artisanal status to high performing junior mines which can be listed on the Ghana Stock Exchange. The pilot phase of this project has begun with an initial investment outlay of US$ 30 Million with a plan to cover over 100 companies in the next five years.

Developing the capital market

In March 2023, MIIF executed an MOU with the Ghana Stock Exchange (GSE). The MoU was signed with the view to establish a practical framework to set forth the procedures to create an alternative asset class and promote the trade in minerals securities on any of the GSE’s markets. In line with this MOU, MIIF shall endeavor to have all investments listed on the GSE. MIIF contributed immensely to having Asante Gold listed on the GSE and is currently working on investments in lithium, an advanced exploratory gold mine, salt and probably Kaolin with the intention to have these listed on the GSE.

MIIF Gold backed ETF to be listed on the GSE

The Fund is developing a gold backed ETF with the support of the GSE. This will be the second listed ETF after the ABSA South Africa New Gold ETF which has been trading on the GSE. The MIIF gold backed ETF would be a spin off from the incubation program and backed by actual gold. The plan is to list the MIIF ETF in the first quarter of 2024.

Capacity Building and Human Resource Development

MIIF has developed a corporate social investment policy covering primarily education, health and resource capacity building. In this vein, MIIF is sponsoring the construction of the Technical Building of the University of Mines and Technology in Tarkwa. The Technical Building shall also include a jewelry making training center as part of the Fund’s objective of developing the gold value chain and get Ghana tapping into the US$650 Million global jewelry market.

In line with resource development, MIIF from 2024 January will be supporting a “women in mining” scholarship scheme for less privileged girls from the mining communities seeking to study at UMAT at both undergraduate or post graduate levels. The aim is to support up to 50 girls per cycle from the mining communities.

Investing in Local Content

The real value in mining according to Mr Koranteng, through which Ghana could transform is for there to be significant Ghanaian equity positions in not only the mining companies but the entire supply chain or value chain. The recent local content directive under LI 2173, 2012 has virtually created a potential $5 Billion dollar economy under which 58 items for mining companies must be sourced locally.

These provisions provide opportunities for manufacturing of mining components in Ghana, the creation of an expansive value chain, a complete Ghanaian indigenised mining contracting sector which hitherto was controlled by foreigners. MIIF is developing investment product programs to inject equity in some of the major opportunities such as heavy mining. On the small scale and micro supplies level however, MIIF has injected GHS25 Million into the Injaro Private Equity Fund which provides a conduit to providing debt to the mining SME and Micro level or sector. This arrangement allows MIIF to cover the mining micro supply chain in line with the President’s vision.

MIIF as a lever for long term development

The Chairman of MIIF, Prof Douglas Boateng sums it up, “Our task is to be generational in our thinking. What we do is not for us. It is for the future of Ghana. In my view, MIIF is only beginning. With the opportunities in the mining sector, the ability of MIIF to continue to invest will create the difference in the future for generations yet unborn. To change the narrative is extremely important and MIIF has created the muscle to drive the narrative that Ghana surely needs”

The Minerals Income Investment Fund (MIIF) seeks co-investment partners in its bid to invest in the entire minerals value chain in Ghana. MIIF is ready to co-invest and create a de-risking mechanism for investors says Edward Nana Yaw Koranteng, the Chief Executive Officer of the Fund.

The Fund which has been described as “perhaps Ghana’s most important lever of development” took centre stage at the two-day Ghana International Opportunities Summit (GHIOS) at the Hilton Hotel in Park Lane, London with its offering of creating wealth through sustainable investments for Ghana.

Creation of Africa’s Largest Minerals Sovereign Wealth Fund

“We are building Africa’s biggest sovereign minerals fund,” said Edward Nana Yaw Koranteng. Our Assets Under Management has grown from circa $125 Million to current $400 million within 15 months and on track to hit $1 Billion in 2027. MIIF has a robust pipeline of investments and has adopted  aggressive and revolutionary mechanisms in expanding its royalty’s base. The opportunities in Ghana are enormous and goes beyond gold for which Ghana is known for and even regained top spot as number one gold producer in Africa. The opportunities for investors also cover the salt sector, lithium, bauxite, iron ore, graphite, feldspar, chemical plants and refineries across the value delivery chains of the minerals. We are inviting investors to seize these opportunities in the mining sector with MIIF as a partner.” Koranteng said

MIIF, a statutory investment company was created by the Minerals Income Investment Fund Act, 2018 (Act 978) as amended, to receive mineral royalties on behalf of the state, invest the mineral royalties responsibly and manage the equity stake of government in large scale mining companies operating in the country.
The fund went into high gear in 2021 when the CEO, Edward Nana Yaw Koranteng and a new Board of Directors were appointed by Ghana’s President, Nana Akufo-Addo. Since then, the trajectory of the fund has been remarkable and in 2022 outperformed benchmarked global indices such as s S&P 500, FTSE 100, and the GSE-CI.

Investments in the Critical Minerals Sector

A reclassification of minerals such as Manganese, Bauxite Lithium and Salt as ‘Priority or Critical Minerals’ has refocussed attention on their value chain development through deliberate investments by the Fund. “We see vast opportunities in Manganese, Lithium and Salt especially in this era of decarbonisation and the regionalisation of development and trade in Africa, Koranteng told the Summit, which was attended by the Vice President of Ghana, Dr. Mahmud Bawumia.

“At present, we are negotiating investments in Atlantic Lithium, an Australian company which has discovered commercial quantities of Lithium in Ewoayaa near Mankessim, in the Central region of Ghana. We are working on other potential significant lithium finds in Ghana. MIIF intends to invest in the processing plants for these transitive minerals in line with the president’s vision of making Ghana a battery hub in Africa and a centre for Electronic Vehicles in Africa by leveraging on the current Ghana automobile development plan.  Ultimately, we want to become a centre for Electronic Vehicle (EV) assembling or manufacturing for the whole of Africa. We are studying the best and proper way to achieve this grand plan,” said Koranteng.

“MIIF is currently going through the process of a potential investment in industrial salt from the Ada Songhor salt basin in Ghana which is managed by Electrochem Ghana. Salt is a mineral which has over 14,000 uses covering textiles, food processing, oil refining, pharmaceuticals, caustic soda among others and essential to the industrial needs of Ghana and West Africa. As the only prime industrial salt enclave in West Africa, the Ada project would feed the oil and gas and refining in Nigeria for example. The Ada Songhor Salt project sits on 41,000 acres and at full development will become Sub-Saharan Africa’s largest Salt producing company ahead of Walvis Bay in Namibia.” 

Leveraging Ghana’s gold to create more opportunities.

On Gold, Mr. Koranteng bemoaned the lack of beneficiation which rather provides long term investment opportunities. “We have been mining gold for over four hundred (400) years in Ghana with very little beneficiation. MIIF seeks to invest along the value chain with emphasis on Ghanaian mining support services”.

MIIF’s plan is to create a mining eco-system of opportunities through its investments especially in the gold mining sector which employs more than ten million people directly and indirectly. In this regard, MIIF has launched a US$60 Million dollars investment initiative to support the gold small-scale mining sector. The small-scale gold mining sector is fully indigenised and contributes 30% to 40% of Ghana’s total gold output but the sector remains informal and fraught with illegal mining and environmental challenges. MIIF’s initiative dubbed the Small-Scale Mining Incubation Program (SSMIP) will contribute to the formalisation of the sector and lead to the creation of well-structured Ghanaian junior mines.
The SSMIP involves the rigorous selection of licenced small scale mining companies with proven reserves. In this regard, MIIF shall invest equity in selected mines after a rigorous process, by imbuing sound corporate governance, support with the acquisition of machinery, provision of initial working capital, provision of technical support to support efficient mining, and access to market through the MIIF Trade Desk. “Our plan is to list these companies on the Ghana Stock Exchange or the Alternative Exchange and even push the possibility of listing on the Toronto Stock Exchange. This is the vision of President Nana Akuffo Addo, for this important sector, that it be supported and formalised in this vein leading to the creation of local Ghanaian mining champions.” Mr. Koranteng emphasised.

Developing the capital market

Mr Koranteng indicated that, MIIF has signed an MOU with the Ghana Stock Exchange which has over the past twenty years been one of the top performing in Africa. The arrangement with the GSE is essentially on two main objectives, to push mining entities in which MIIF has invested on to the Ghana Stock Exchange (GSE). An example of this is seen in the Canadian listed Asante Gold Corporation in which MIIF has a significant holding which is now listed on the GSE. The second objective is to list the MIIF Gold Backed Exchange Traded Fund.  “We are designing a gold backed Exchange Traded Fund (ETF) which would be listed on the GSE. Our plan is to have this listed by end of the year. The ETFs and the listing of mining assets will deepen the Ghanaian capital markets and provide alternative investments or alternative asset classes to Pension Funds and investors as a whole. We believe this is an opportunity for Ghanaians in the diaspora and investors worldwide.” Mr. Koranteng said

Value-driven mining in Ghana

North American Investors partner with Ghana’s Minerals Income Investment Fund for New Opportunities in mining.

Ghana is at the heart of Africa’s mining and metals sector. This industry, which has been active in the region for centuries, has long brought prosperity and opportunity to the region. Today, as one of Africa’s largest mining countries, Ghana is navigating the changing tides of global commodity markets while looking to new opportunities across the mining landscape.

Diversifying the base

While the West-African country has long been recognised by investors for its strong and stable democracy, Ghana is actively looking to diversify investment options in new avenues of the raw materials economy.

A nation rich in natural resources, the government has identified a variety of growth options across the mining sector and its connected industrial value chains. With key government state-owned entities, such as Ghana’s Minerals Income and Investment Fund (MIIF), driving forward this diversification, the metals and minerals base is being explored beyond the bedrock gold industry.

The mining industry in Ghana presents significant opportunities for investment, something that the government is very aware of. The government has, in recent years, sought to improve the ease of doing business in the country as well as create a more attractive investment environment. Through clear legal frameworks and strong regulations concerning capital and re-investment, Ghana looks to support investors in playing a major role in its developmental drive. Meanwhile, for mining sector investors, the country has sped up the process for mining licence applications, which is critical to support the further development of the industry.

The country’s prime geographic location and its ability to reach most African markets through the dynamic Africa Continental Free Trade Area (AfCFTA) – with the AfCFTA Secretariat based in Accra – are added incentives for investors to choose the country as a base.

With a historically strong and resourceful mining sector, supported by a dynamic supply chain which has created a flourishing mining ecosystem, Ghana already counts as Africa’s largest gold producer. Ghana is aiming to aggressively diversify its minerals base to support its industrialisation drive. The government is supporting exploratory efforts in iron ore, manganese, lithium, diamonds, salt, and bauxite. The government is banking on its existing supply chain infrastructure, investment environment and growth potential to support new and emerging value-added industries.

A promising automotive industry

While gold is still the main driver of the industry, Ghana’s wealth of high-density lithium and manganese deposits is crucial for its future, with the development of lithium-ion battery factories a major option. As Africa’s third-largest bauxite producer, Ghana plans to leverage its nearly 1 billion metric tonnes in bauxite reserves to develop an integrated aluminium industry.

The country’s potential as a future electric vehicle (EV) hotspot, thanks to lithium and manganese, is attracting interest. With six major automobile companies already setting up assembly plants in the country – Toyota, Volkswagen, Suzuki, Nissan, Peugeot and Sinotruck – Ghana has been earmarked as a high-potential future automotive hub. Additionally, Ghana’s large deposits of iron ore and salt are interesting new avenues for value-added growth.

Salt: A top priority

Salt has been identified as a “High Priority Mineral” and there are clear intentions to strategically focus on the development of Ghana’s industrial salt sector and its allied value chain. Ghana sits on sub-Saharan Africa’s largest untapped salt source – the 41,000-acre Ada Songhor Salt lagoon enclave. The enclave – managed by Electrochem Ghana – has the potential for 99.9% processed purity and could bring in upward of $1 billion a year in revenue. The salt industry has the potential to empower many new micro, small- and medium enterprises (MSMEs), particularly female entrepreneurs. MIIF, for its part, is planning to invest heavily in the Ada Songhor Salt Project in 2023, with the goal of listing Electrochem Ghana on the Ghanaian Stock Exchange.

Challenges facing Ghana’s mining industry

The global mining industry is facing complex challenges and Ghana’s mining industry is no exception. These include a lack of access to medium- and long-term capital, current supply chain constrictions, environmental issues, taxes, and inadequate investment across the value chain.

These issues have put Ghanaian mines under pressure to rewire supply chains and rely more on local content. Ensuring a full-fledged ESG (Environmental, Social, and Governance) transformation in mining is, furthermore, integral to the industry’s future. This remains a challenge, particularly for the small-scale gold mining sector, which struggles to meet expectations of increased environmental scrutiny. Finally, taxes and currency exchange are affecting new exploration and creating less opportunity for development across the value chain.

Growth that favours Ghana

With Ghana looking to create Africa’s most competitive and value-driven mining industry, mining plays a key role in the country’s developmental objectives. The government believes that received mining and mineral income should guarantee long-term value for all Ghanaians. It targets industry players and investors who are focused on sustainable development, social inclusion, and environmental considerations.

Strategic partnerships with global financial institutions, development finance and technology firms to develop innovative financial products and digital solutions are a key part of the growth strategy.

Small-scale mining

Much is being done in Ghana to develop and formalise the small-scale mining industry. MIIF, for its part, is investing $500 million through its Incubation Program into small-scale mines with the support of funding partners. This innovative 10-year program seeks to create jobs and boost total gold output by empowering small-scale miners. An initial 30 mining companies are participating in the program, with the first seven set to receive up to $35 million as equity injection by Q2 2023. This amount covers the provision of tracked machinery, mercury-free processing plants, corporate governance support, a traceability mechanism, and market support through MIIF’s Trade Desk.

The Incubation Program will have a significant impact on the sector, with certain positive effects already visible. The formalisation of the sector will lead to a more sustainable, competitive, and environmentally aware small-scale gold mining sector. This will also contribute to eradicating illegal mining.

The program could potentially double small-scale gold mining output in its first three years after full implementation – from $2 billion to roughly $4 billion in revenue. With SMEs accounting for most of Africa’s economy, and these smaller firms being a key driver of employment, the success of initiatives like the Incubation Program could be an example for other African countries to follow.

In further support of SMEs, regulations in Ghana concerning local content development and the resilience of the supply chain require mining companies to procure goods and services locally. This presents long-term opportunities for investors to invest in Ghanaian businesses and underscores the government’s quest to develop the entire mining value chain.

An ESG-aware future

Ensuring the integration of ESG into mining activities is both a major opportunity and challenge in Ghana. Conversations around environmentally sustainable mining, particularly within the small-scale gold mining sector are frequent, with many mining companies looking to find ESG-support mechanisms. This opens the scope for ESG-driven co-investment with foreign financial institutions and development funds to support mining in Ghana through long-term financial support.
The ESG space offers a significant opportunity for Ghana – a nation blessed with an abundance of natural resources and dynamic, value-driven businesspeople. ESG is directly related to funding, with a focus from government on good corporate governance in business. ESG principles that are being incorporated into the industry include quality reporting and disclosures, transparency, and proper risk management models to support mining sustainable development goals.

This presents an opportunity for capacity building and skills development within the sector. Through responsible funding and ESG-based advisory services, the development of industry players that are environmentally responsible will lead to the growth of a sustainable mining industry. This will, ultimately, contribute to socioeconomic development.

There are many reasons to be optimistic about the future of Ghana, its economy, and its mining sector. The significant progress made by the country in recent years shows that its future is bright. Ghana is already a key investment destination in Africa, and investors should continue to look to it for new opportunities, particularly across the dynamic mining ecosystem.

This article was culled from the 2023 World Ahead Publication by the Economist