The Tanzanian government has found itself within mining dispute after three mining companies operating in the country, over various mining disputes.
The three have engaged the government in among other disputes a breach of international laws and mining licenses.
Winshear Gold Corporation
Canadian miner, Winshear Gold Corporation was the first miner to serve notice of intent to the Tanzanian government on January 10, which is in accordance with the 2013 Agreement for the Promotion and Reciprocal Protection of Investments (Bilateral Investment Treaty – BIT) was delivered to the Attorney General of Tanzania.
According to the company’s statement, the dispute develops out of certain acts and omissions of the United Republic of Tanzania in breach of the BIT and international law, relating to the Company’s investment in the SMP Gold Project located in Tanzania.
The gold miner commenced exploration activities on the SMP Gold Project in 2006. Successfully the company via its Tanzanian subsidiary applied for and was granted 4 Retention Licences which covered the mineral resource areas. Retention Licences were valid for a period of 5 years and could be extended for the second period of 5 years before applying for a Mining Licence.
In 2017 the Tanzania government brought various amendments to the Mining Act 2010, which also abolished the legislative basis for the Retention Licence classification with no replacement classification.
On 10 January 2018 Tanzania published the Mining (Mineral Rights) Regulations 2018. Under Regulation 21 of said Regulations, Tanzania cancelled all retention licences issued prior to 10 January 2018 at which point they ceased to have any legal effect.
The rights over all areas under retention licences, including those under the SMP Retention Licences, were immediately transferred to the government of Tanzania.
Consequently, on 19 December 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas previously covered by Retention Licences, including the SMP Retention Licences.
Winshear found the abolition of the SMP Retention Licences and the removal of the rights to the land conferred has rendered the Project valueless. Thus, as a direct consequence of the legislative, regulatory and other measures by Tanzania, the Company has lost completely its investment.
In the statement, Winshear clear stated that the company confirms taking all necessary actions to preserve its rights and protect its investments in Tanzania.
“The Company’s desire is for both parties to reach a mutually acceptable outcome. If such an outcome is not achieved within the next six months, the Company expects it will have no alternative but to pursue its claims before an international tribunal and seek full compensation for damages the Company has suffered as a result of Tanzania’s acts and omissions. Winshear has retained international arbitration counsel to advise,”
The Australian company has worked aggressively for the past 18 years in developing its Ntaka Hill Nickel Project, whereas to date the miner has invested over $ 41 million in defining the current resources and preparing development plans and studies.
In its notice, the miner cited its dispute in relation to the Ntaka Nickel Project retention licence.
According to the miner statement, Tanzania has breached obligations it owes to Investors under the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United Republic of Tanzania for the Promotion and Protection of Investments and international law.
In this context, Tanzania published the Mining (Mineral Rights) Regulations 2018. Under Regulation 21 of these Regulations, Tanzania cancelled all Retention Licences issued prior to 10 January 2018 at which point they ceased to have any legal effect. The rights over all areas under Retention Licences, including the Retention Licence held for the Project, were immediately transferred to the government of Tanzania
The miner noted that all efforts were taken to ensure that both parties reach an amicable solution, however, things changed.
“On 19 December 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas covered previously by retention licences (the “19 December Tender”). It was a condition of the 19 December Tender that the successful bidder compensates the previous retention licence holder for its exploration costs incurred.
Additionally, the miner highlighted that” This public invitation was not sent to the Company but was advertised on the website for the Ministry of Energy and Minerals. On 20 December 2019, the Mining Commission of Tanzania announced a revised public invitation to tender (the “20 December Tender”),”
The latter removed the condition that the successful bidder compensate for the previous retention licence holder for its exploration costs incurred. Through the measures described above, it is now clear that Tanzania has removed the ownership of the project from Investors, and in doing so has breached its obligations to the Investors under the BIT and international law.
As Winshear, Indian Resources seeks to push the dispute to the international tribunal and seek full compensation for the loss suffered.
Montero began exploration activities on the Wigu Hill project in March 2008 when it was held under Prospecting License. Montero was advised by the Mining Commissioner, to apply for a Retention License in 2014 and it was granted in 2015 and was valid for a period of 5 years.
According to the Canadian miner statement, the dispute arises out of certain acts and omissions of the United Republic of Tanzania in breach of the BIT and Internal law, relating to the miner’s investment in rare earth element project located in (Wigu Hill) Tanzania.
“On December 19th 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas previously covered by Retention Licenses, including the area of the Wigu Hill Retention License (December 19th Tender). The abolition of the Wigu Hill Retention License and the removal of the various rights to the minerals conferred by this licence has rendered the Wigu Hill project valueless to Montero. Therefore, as a direct consequence of the legislative, regulatory and other measures made by the Tanzanian government, Montero has lost completely its investment,” the statement reads.
Further, the statement insisted on initiating a six-month consultation period between the parties during which time they are to attempt to amicably settle the dispute. If no amicable settlement is reached in this period, then Montero may then initiate international arbitration proceedings in accordance with the BIT between Canada and the United Republic of Tanzania.
Hence, following the notice of intent the Tanzanian government action is still awaited.