Australia-based miner Atlantic Lithium is facing significant challenges in developing its Ewoyaa project in Ghana, West Africa. The company is now appealing to the Ghanaian government for fiscal concessions, citing a dramatic slump in global lithium prices that threatens the project's economic viability.

In its appeal to the Ghanaian government, Atlantic Lithium is requesting several fiscal adjustments to improve the project's financial viability. These include:

• Reducing royalty rates from the current 10% to 5%, aligning with the rate applied to Ghana's gold mining sector. Alternatively, the company proposes a sliding scale for royalties, linked to lithium prices.

• Revisions to the corporate income tax rate of 32.5%.

• Removal of import duties on capital equipment required for the project.

The Ewoyaa project, which aims to be Ghana's first lithium mine, holds substantial promise, with estimated resources of 35-40 million tonnes of lithium-bearing ore. Atlantic Lithium envisions it becoming a major global producer of spodumene concentrate, positioning Ghana as a key player in the lithium supply chain, outside of Australia, Chile and China. The project is estimated to produce approximately 360,000 tons of lithium annually, intended for export to the United States.

However, the collapse of lithium prices, which have plummeted by over 80% since their peak in November 2022, has cast a shadow over the project. This decline is attributed to a combination of oversupply and a slower-than-anticipated growth in electric vehicle (EV) adoption worldwide.

"We have done the math and it doesn't make sense at all," stated Ahmed-Salim Adam, Atlantic Lithium's general manager, in a recent statement. "We have written to the minister of lands and natural resources for urgent help on the fiscals. If not, the project cannot proceed."

The project's development has already been hampered by delays in parliamentary ratification, and the price downturn has further complicated matters, impacting the company's development timeline. While there has been a recent slight recovery in lithium prices due to a normalization of global auto production, industry analysts remain cautious about the long-term outlook. Tom Price, Panmure Liberum's head of commodities, noted that "EV-led demand growth remains strong, it continues to be overwhelmed by mine supply growth," and also pointed to the impact of U.S. President Donald Trump's 25% tariff.

The relative newness of West Africa to the lithium market also poses a challenge. Analysts suggest that investors tend to favor more established markets during periods of price weakness.

Atlantic Lithium reports having invested $70 million in the project since 2016. However, the current economic conditions have forced the company to scale back operations significantly. This has included workforce reductions, with 25 employees laid off in October and plans to dismiss approximately 50 more in May.