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Magufuli dances macabre with mining

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Revoking exploration licenses in Tanzania has given President John Magufuli something to think about image credit: dw.com

By LM Louw

30 September 2020 – As Tanzania heads into its next general election president John Magufuli seems to have the edge on his long list of competitors. However, his run-ins with foreign mining companies are far from over.  

Although Magufuli seems to be popular amongst the majority of Tanzanians, the same cannot be said about a number of exploration and mining companies who have lost their licenses in Tanzania after Magufuli came to power. As Magufuli merrily continues his election campaign, the love hate relationship between the current president and foreign investors becomes more heated every day. Last year several junior mining companies and exploration outfits threatened to drag the Tanzanian government to court after their exploration rights were revoked.

The latest dispute has been lodged by dual listed, Australian based Indiana Resources. According to Indiana’s executive chairman Bronwyn Barnes, the company has put in a claim against the Tanzanian government for more than USD95-million. According to a statement by Indiana, it lodged a Request for Arbitration (RfA) with the International Centre for Settlement of Investment Disputes (ICSID), a division of the World Bank earlier this week.

The dispute pertains to what Indiana claims to be the illegal expropriation of the Ntaka Hill nickel project and additional breaches of the agreement between the UK, the Republic of Northern Ireland and Tanzania for the Promotion and Protection of Investments (UK-Tanzania BIT).

As the majority shareholder in Ntaka and Nachingwea (both incorporated in the UK) Indiana is the manager of the Joint Venture (JV) for the project.

Barnes says that the RfA contains an initial estimate of compensation for loss of the project and damages sustained by the investors resulting from the actions of the government of Tanzania, which is currently in excess of USD95- million.

Documents relating to the RfA have been sent by the ICSID Magufuli, Doto M. Biteko, the minister for Minerals and Prof Adelardus Kilangi, the attorney general of Tanzania notifying them of the arbitration proceedings. The ICSID Convention has been ratified by 154 states, including Tanzania.

An award issued by an ICSID tribunal is enforceable in any one of those 154 member states as if it were a judgment of one of their own courts. Partly because of this, states have overwhelmingly and historically complied voluntarily with the payment terms of such awards. Indiana has engaged an international law firm to act on its behalf.

“We have worked diligently over the past six months to prepare to lodge our request for arbitration with ICSID and place an estimate on the value of the claim for compensation for the expropriation of the project. The lodgement of our RfA formally commences the arbitration process and we will now prepare to present our full claim for compensation for the loss of the asset and damages resulting from the actions of the Tanzanian government. With litigation funding in place to support all legal costs relating to arbitration, we can proceed to prepare for arbitration knowing that shareholders’ interests have been fully protected and will not incur any further losses in seeking compensation. I would also like to reaffirm that USD95 million is our minimum compensation claim and there is clear scope for this amount to increase once our full claim for compensation is put forward,” says Barnes in a public statement.

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