Introduction: The Myth of Abundance and the Reality of Data

As concerns over global warming force a shift to battery technologies, a new class of critical minerals such as lithium, cobalt, and rare earths has taken center stage. For West Africa, historically tied to older minerals like gold and bauxite, this transition is a make-or-break moment.

Yet, the region is locked into a pernicious “myth of 30%”, which suggests that the continent holds a third of the world's resources and needs only to wait for global demand to knock. The truth is that much of the continent is seriously starved of the essential industrial minerals needed for structural economic transformation.

This abundance mindset obscures a precarious reality: the continent is data-poor in an era where geological intelligence is the primary currency of exploration. African governments often sell exploration licenses like lottery tickets without knowing the odds of winning, while foreign entities use AI and mirror geology to extract value from African data to de-risk investments elsewhere.

Furthermore, the fiscal instruments used to capture value, static royalties and manual tax assessments, suffer from Katanomics, a structural fracture between political ambition, policy design, and execution. Bridging this gap requires Sovereign Intelligence and the deployment of Digital Public Infrastructure (DPI).

Illegal Mining: Ghana requires billions to reclaim, restore degraded lands - EPA

The Ewoyaa Case: Katanomics in Action

The Ewoyaa Lithium Project in Ghana serves as a prime case study. Unlike the established gold sector, lithium is a greenfield regulatory space. The political narrative of historic value capture collided with the operational reality of the developer, Atlantic Lithium, a junior explorer navigating the Valley of Death between discovery and production.

The state’s initial negotiation for a fixed 10% royalty was jettisoned without any credible account, despite vibrant political debate, a classic symptom of the katanomic syndrome in which political voice does not translate into policy accountability.

The subsequent renegotiated 5% base royalty rate failed to account for extreme price volatility (lithium prices swung from $500 to $6,000 per ton in two years) or the metal’s complex chemistry-economics. Unsurprisingly, was greeted with civil uproar.

Eventually, a sliding-scale mechanism was introduced. While pragmatic, this shift was presented without serious fiscal modelling, betraying the need for rigorous, data-backed sensitivity analysis. What Ghana received instead was a fiat outcome, a situation begging for de-katanomisation.

Interactive Fiscal Analysis: Deconstructing the Government Take

De-katanomisation means understanding the true impact and import of fiscal regime design and moving beyond headline numbers to model the Effective Government Take under various scenarios. The following interactive modules allow us to toggle the variables that define the state’s revenue versus the operator’s survival.

Scenario A vs. B: The royalty baseline. First, we analyse the impact of the royalty rate itself. In a market downturn, a high fixed royalty serves as a fiscal bulwark for the state, but the private operator must sacrifice margin. Conversely, a lower baseline offers relief to the investor but reduces the state’s guaranteed off-the-top revenue.

Scenario A: Base Royalty (5%), Fixed AISC Costs

Lithium Royalty: The "Cliff Effect"

Visualize how fixed royalty thresholds create perverse incentives to "game" the price. Compare the Step (Cliff) model vs. a Smoothed model.

Annual Production (Tonnes)
500000
Adjust to see impact on annual revenues (e.g., 500,000t).

Royalty Regime
Step (Cliff)
Smoothed
Current Ghana model (fixed bands)

Market Price (USD/t)
$1,500

$1,000
$2,500
$3,000
$4,000
Fixed Costs
AISC $610

Royalty Rate
5.0%
Govt Take
$236.5M
Total Annual
Company Net
$208.5M
Total Annual
Govt 53.2%
Company 46.8%
Scenario B: Higher Base Royalty (10%), Fixed AISC Costs

Lithium Royalty: The "Cliff Effect"

Visualize how fixed royalty thresholds create perverse incentives to "game" the price. Compare the Step (Cliff) model vs. a Smoothed model.

Annual Production (Tonnes)
500000
Adjust to see impact on annual revenues (e.g., 500,000t).

Royalty Regime
Step (Cliff)
Smoothed
Current Ghana model (fixed bands)

Market Price (USD/t)
$3,000

$1,000
$2,500
$3,000
$4,000
Fixed Costs
AISC $610

Royalty Rate
10.0%
Govt Take
$657.0M
Total Annual
Company Net
$538.0M
Total Annual
Govt 55.0%
Company 45.0%

Cost Base: All-In Sustaining Costs (AISC). However, royalty rates do not exist in a vacuum. The All-In Sustaining Cost determines project profitability. In an inflationary environment or during complex geological extraction, costs can spiral, making even a modest royalty rate punitive. These scenarios demonstrate how cost variability interacts with the royalty burden.

Scenario C: Base Royalty (5%), Variable AISC Costs
Lithium Royalty: The "Cliff Effect"

Visualize how fixed royalty thresholds create perverse incentives to "game" the price. Compare the Step (Cliff) model vs. a Smoothed model.

Annual Production (Tonnes)
500000
Adjust to see impact on annual revenues (e.g., 500,000t).

Royalty Regime
Step (Cliff)
Smoothed
Current Ghana model (fixed bands)

Market Price (USD/t)
$1,500

$1,000
$2,500
$3,000
$4,000
Variable Costs
Volume-dependent AISC ($645.7)

Royalty Rate
5.0%
Govt Take
$228.1M
Total Annual
Company Net
$199.1M
Total Annual
Govt 53.4%
Company 46.6%
Scenario D: Higher Base Royalty (10%), Variable AISC Costs
Lithium Royalty: The "Cliff Effect"
Visualize how fixed royalty thresholds create perverse incentives to "game" the price. Compare the Step (Cliff) model vs. a Smoothed model.

Annual Production (Tonnes)
500000
Adjust to see impact on annual revenues (e.g., 500,000t).

Royalty Regime
Step (Cliff)
Smoothed
Current Ghana model (fixed bands)

Market Price (USD/t)
$3,000

$1,000
$2,500
$3,000
$4,000
Variable Costs
Volume-dependent AISC ($645.7)

Royalty Rate
10.0%
Govt Take
$648.5M
Total Annual
Company Net
$528.6M
Total Annual
Govt 55.1%
Company 44.9%
Solving the "Cliff Effect" with smoothing. A critical flaw in the bracket or step approach to royalty design adopted by Ghana’s Lands Ministry is the cliff effect. When a royalty rate jumps instantly at a specific price threshold, for example from 7% to 10% at $2,500 per ton, it creates a perverse incentive.

To eliminate this, the remedy is a smoothed sliding scale. Instead of steps, the royalty rate is calculated using a continuous interpolation formula. This ensures that earning more revenue always results in higher net profit, removing incentives for transfer pricing manipulation.

Scenario E: Smoothed Royalty, Fixed AISC Costs
Lithium Royalty: The "Cliff Effect"
Visualize how fixed royalty thresholds create perverse incentives to "game" the price. Compare the Step (Cliff) model vs. a Smoothed model.

Annual Production (Tonnes)
500000
Adjust to see impact on annual revenues (e.g., 500,000t).

Royalty Regime
Step (Cliff)
Smoothed
Current Ghana model (fixed bands)

Market Price (USD/t)
$3,050

$1,000
$2,500
$3,000
$4,000
Fixed Costs
AISC $610

Royalty Rate
12.0%
Govt Take
$686.4M
Total Annual
Company Net
$533.6M
Total Annual
Govt 56.3%
Company 43.7%
Operationalizing Policy: The Digital Gazette
But even the best mathematical model is useless if the administrative machinery cannot implement it. In a "Katanomic" state, complex rules are hard to enforce manually due to weak analytic vigilance. We propose the Digital Gazette, a transformation of mining codes from static PDF documents into computable regulatory logic.

In this architecture, the Minerals Commission publishes fiscal logic in standardized, version-controlled code. This creates an immutable audit trail and allows critical policy audiences, including CSOs, journalists, and analysts, to run simulations and audit regime performance in real time. The state shifts from a passive regulator to an active, automated governor while simplifying compliance for all actors.

Data Sovereignty and the Enterprise Marketplace
A crucial component of this infrastructure is the National Data Cloud. By mandating that exploration data be uploaded in machine-readable formats with QA and QC metadata, the state asserts ownership over its geological IP.

These technologies also enable an enterprise mineral data marketplace. In this ecosystem, private and B2B royalties on e-cadastral data used for successful exploration can be tracked and managed effectively. A chain-of-benefits model ensures original data providers are compensated when their data leads to discovery, incentivising investment in high-resolution mapping and AI enrichment.

The Feldspar Pilot: A Sandbox for Reform
Harmonising these advanced systems across West Africa is a heavy political lift. To build policy stamina, we propose a low-stakes sandbox using feldspar.

Feldspar is a byproduct of lithium mining and is vital for the region’s ceramic tile industry. Because it is not a security mineral with high geopolitical stakes, it offers an emotional sandbox environment. Governments can test the Digital Gazette, smoothed royalty protocols, and cross-border data rails on feldspar trade between Ghana and Nigeria without threatening national budgets.

Conclusion: From Resource Nationalism to Smart Sovereignty
The transition from the old deal to the new deal at Ewoyaa is a microcosm of Africa’s broader struggle. While recent regulations show pragmatism, they remain vulnerable to the structural flaws of analogue governance.

By adopting DPI modules such as smoothing algorithms, Digital Gazettes, and sovereign data marketplaces, West African states can transcend resource nationalism and achieve smart sovereignty.

The strategic game is not won by shouting louder at the negotiating table, but by having the digital intelligence to know the odds, own the data, and automate value capture. Starting with the humble feldspar tile, the region can build the institutional muscle required to govern the electric vehicle battery value chain of the future.

Meanwhile, watch as Ashie Moore pays tribute to late Naser Toure