The Government of Ghana could lose up to $500 million in potential revenue if it proceeds with current plans to refine lithium domestically, a new report by the Natural Resource Governance Institute (NRGI) has revealed.
According to the study, a local lithium refinery—whether state-owned or privately operated—would only become financially viable if it acquires lithium concentrate at prices significantly lower than global market rates.
Such a scenario would drastically reduce government earnings from taxes, royalties, and dividends tied to Ghana’s lithium mining sector.
The NRGI modelled two primary scenarios: the export of raw spodumene concentrate, and domestic refining of the mineral.
The findings indicate that exporting lithium, particularly to well-established Chinese facilities, would generate far greater fiscal benefits for Ghana.
In a mid-range price forecast, the analysis shows that local refining could reduce government revenues from $2.7 billion to $2.2 billion over a 20-year period—resulting in a loss exceeding $300 million.
The shortfall is attributed to the high capital costs, limited domestic supply, and insufficient technical expertise in lithium processing.
China currently refines over 90% of the world’s lithium, thanks to significant economies of scale, lower production costs, and state-backed subsidies.
The NRGI notes that other countries attempting to build new refineries—such as Australia and members of the EU—have seen projects stall or collapse due to similar financial constraints.
Given these findings, the NRGI recommends Ghana adopt a “mine-and-monitor” strategy. This would involve advancing the lithium extraction project at Ewoyaa while closely observing global developments in refining technology and economics.
The think tank advises against investing public funds in a domestic refinery under the current conditions.
While there is strong political and public support for in-country value addition, the report urges decision-makers to weigh the economic trade-offs carefully.
Notably, the potential $500 million revenue loss is greater than Ghana’s 2024 budget for basic education.
“The push for local value addition is understandable and commendable,” the report concludes, “but it must be economically viable and sustainable.”
