Ghana stands to forfeit as much as $500 million in government revenue if it moves forward with plans to refine lithium domestically, according to a recent report from the Natural Resource Governance Institute (NRGI).
The report cautions that a state-owned or privately-operated refinery would only achieve financial equilibrium if it acquires lithium concentrate at prices below market value, which would undermine revenue generated from royalties, taxes, and dividends from existing mining activities.
The analysis evaluates two scenarios: exporting raw lithium spodumene concentrate versus local processing. The findings are significant—exporting results in greater net revenue for the government, particularly when the concentrate is sold to Chinese refineries, which currently lead the global market and operate at significantly lower costs.
In a medium-price scenario, local refining is projected to decrease expected government revenue from $2.7 billion to $2.2 billion. Even with a refinery operating for 20 years, losses could surpass $300 million, primarily due to Ghana’s high capital expenses, limited feedstock availability, and insufficient refining expertise.
Conversely, China dominates over 90% of the global lithium refining market, benefiting from economies of scale, inexpensive reagents, and government-backed subsidies. Most new refineries outside of China, including those in Australia and Europe, have faced cancellations or delays due to similar financial challenges.
NRGI advises Ghana to implement a “mine-and-monitor” approach—promptly initiating lithium production at Ewoyaa, fostering exploration, and monitoring global refining developments before allocating public funds to a potentially unprofitable refinery.
While there is strong advocacy for local value addition, the report emphasizes the need for policymakers to consider economic viability and opportunity costs, noting that the anticipated $500 million loss surpasses Ghana’s entire education budget for basic schools in 2024.
