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  • Legal disputes as Tanzania settled with Winshear Gold Corp Canadian mining company, ending up paying $30 million following a dispute over the expropriation of its SMP Gold project in Southwest Tanzania.
  • After breaching treaty Tanzania is liable to pay Australian mining firm Indian Resources Limited at least $109 million in damages.
  • Tanzania began taking the trend of legal battles to the mainstream in the past years.

By July 2023, Tanzania had lost five cases related to the bilateral investment treaties, and these cases cost the East African government millions of dollars, according to the Tanzanian Trade and Investment Coalition (TATIC).

For instance in October 2023, Tanzania settled with Winshear Gold Corp Canadian mining company, ending up paying $30 million following a dispute over the expropriation of its SMP Gold project in Southwest Tanzania.

Over the past five years, Tanzania has waged actions against various parties including the world’s mining giant Barrick Gold Corp, Standard Chartered and recently Australian mining firm Indiana Resources Limited, for which Tanzania was ordered to pay $109 million in damages.

Recently Tanzania suffered another blow when it reached a significant settlement agreement with Indian Resources Limited, summarizing a tedious legal battle over the expropriation of the Ntaka Hills Nickel Project.

The legal saga was triggered by a nickel mining license cancellation by the government of Tanzania

According to a report by The Citizen, as a result, the government has agreed to pay a total of $90 million to Indiana Resources and its associated entities, marking the end of nearly seven years of arbitration at the International Centre for Settlement of Investment Disputes (ICSID), a World Bank division.

Further, on the matter, Tanzania’s Attorney General Eliezer Feleshi confirmed the settlement in a short message that the two sides had reached a settlement to end the dispute

“Yes, it is true,” the Tanzanian AG wrote.

The report also highlighted that Indiana Resources, which holds a majority stake in Ntaka Nickel Holdings Ltd (NNHL), Nachingwea UK Ltd (NUKL), and Nachingwea Nickel Ltd (NNL), in a statement issued early on July 29, announced that Tanzania will make the payment in three instalments.

The first instalment of $35 million has already been received, with $25 million is due on or before October 25, 2024; and the final $30 million is to be paid by March 30, 2025.

However, the road to a settlement wasn’t tinted with roses, the government of Tanzania challenged the cost all the way to ICSID of the award ordered which included interest already accrued.

The Tanzanian AG filed the annulment of the award and requested for a stay of enforcement of the award.

According to the report Solicitor General Boniphace Luhende challenge was intended to protect the government’s aircraft which could have been seized in connection with the award.

READ: Tanzania’ s mining renaissance: President Samia invites foreign miners

The legal battle

Mining in Tanzania. [Photo/ International Mining]
In addition to Indiana, a 62.4 percent shareholder of the combined holdings of Ntaka Nickel Holdings Ltd, other claimants include Nachingwea UK Ltd, and Nachingwea Nickel Ltd.

On April 21, 2015, Tanzania issued a Retention licence for the Project, covering the same area as the Ntaka Hill Prospecting licence, for a period of 5 years.

In July 2017, the Government of Tanzania amended the Mining Act 2010 by, inter alia, abolishing the legislative basis for the Retention licence classification with no replacement classification.

On January 10, 2018, Tanzania published the Mining (Mineral Rights) Regulations 2018, which made it clear that all Retention Licences no longer existed and that the underlying rights over all areas under Retention Licences, including the Retention Licence held for the project, reverted to the Government of Tanzania.

During the period from January 2018 to December 2019, the company actively engaged with the Tanzanian Minister for Minerals and the Mining Commission in an effort to resolve a suitable tenure mechanism for the project licence to be reinstated.

Post Settlement statements

According to The Citizen report, Executive Chairman Bronwyn Barnes expressed satisfaction with the settlement, highlighting its significance for Indiana Resources.

“I am very pleased to have concluded this settlement on behalf of the Claimants with representatives from the Government of Tanzania,” Barnes said.

“Following the cancellation of our licence for the Ntaka Hill Nickel Project in January 2018, we pressed our claim for compensation. The settlement amount represents over 82 percent of the original award handed down by ICSID in July 2023 and will save the Company considerable time and costs in pursuing further proceedings.”

Barnes said the settlement as a demonstration of Tanzania’s commitment to working with international investors.

The Executive indicated that if Tanzania defaults on any of the agreed payments, Indiana Resources retains the right to recommence annulment processes or seek enforcement through ICSID.

The ICSID annulment hearing, which took place in Washington, DC on July 26, 2024, will be put on hold pending the completion of the settlement process. The firm also said that it will request that the ICSID ad hoc Committee suspend proceedings until Tanzania fulfills its payment obligations.

According to Indiana, should Tanzania fails to meet the payment deadlines, the Claimants can seek to resume annulment proceedings or pursue arbitration under the London Court of International Arbitration Rules.

READ:Tanzania’s Mining Act Amendments: Navigating Future Prospects and Challenges

Legal disputes with international firms

Unfortunately, a streak of legal battles eating away Tanzania’s book seem to follow the East African nation. On July 20, 2023, UK real estate developer Pennyroyal Limited filed another case over a terminated lease for a Zanzibar resort project.

According to The Citizen report, the government of Tanzania confirmed it began paying compensations worth $165 million to Eco Energy Group, which won its case against Tanzania.

The legal loss was birthed by Tanzania’s action to revoke the company’s ownership of 20,400 hectares of sugar plantations.

Tanzania began taking the trend of legal battles to the mainstream in the past years. The cases went from tussling with big giants and attaining global controversial settlements such as $300 million from Barrick.

On the bright side, Tanzania hasn’t been shooting blanks. Some of its legal cases were rooted in merit and sound matters, including tax disputes with Barrick which took over Acacia mining.

The company before taken over by Barrick faced myriad of serious charges related to its Tanzanian operated mined North Mara. The sheet included corruption, environmental pollution, tax evasion and illegal concentrate export.

In October 2019, Barrick which owns 63.9 percent of Acacia shares reached a deal with Tanzania approved by the British court with a walloping $1.2 billion.

According to a statement by Barrick, the agreement includes the payment of $300 million to settle outstanding tax and other disputes, the lifting of a concentrate export ban, and the sharing of future economic benefits from mines on a 50-50 basis.

Another milestone achieved and maybe the only one in a long while since the legal battle streak benga was the establishment of an Africa-focused international dispute resolution framework as part of the agreement.

According to the mining giant, the deal comes days after the Canadian company fell short of analysts’ estimates for third-quarter gold production due to low output at its North Mara mine in Tanzania.

“A new operating company named Twiga Minerals will be formed to manage the Bulyanhulu, North Mara and Buzwagi mines after a review by Tanzania’s attorney general, the statement added. The Tanzanian government will also buy a shareholding of 16 percent in each of the mines, according to the agreement a report by Reuters said in part.

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Padili Mikomangwa is an environmentalist based in Tanzania. . He is passionate about helping communities be aware of critical issues cutting across, environmental economics and natural resources management. He holds a bachelors degree in Geography and Environmental Studies from University of Dar es Salaam, Tanzania.

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