In a landmark ruling, the International Centre for Settlement of Investment Disputes, a tribunal affiliated with the World Bank, has ordered the Tanzanian government to pay $109.5 million (Sh265 billion) in compensation to a foreign investor, Indiana Resources Limited, an Australian-based exploration company.
The dispute arose from Tanzania’s cancellation of Indiana Resources’ nickel mining Retention Licence during the Magufuli-era in 2018.
Following this controversial decision, Indiana Resources initiated arbitration proceedings against the United Republic of Tanzania, seeking restitution for the unlawful expropriation of their Ntaka Hill project.
The tribunal’s award, delivered on July 14, 2023, compels Tanzania to pay the specified sum, which includes accrued interest, to the claimants, comprising Indiana Resources and other entities holding a combined 62.4 percent stake in Ntaka Nickel Holdings Ltd., Nachingwea UK Ltd., and Nachingwea Nickel Ltd. The enforcement of the award will take place immediately.
To understand the background of the case, in 2015, Tanzania granted a Retention Licence for the Ntaka Hill Project, valid for five years.
However, in 2017, the Tanzanian Government amended the Mining Act 2010, abolishing the Retention Licence classification without offering any replacement.
Subsequently, in 2018, Tanzania published the Mining (Mineral Rights) Regulations 2018, effectively terminating all Retention Licences, including the one held by Indiana Resources, and reclaiming the rights to those areas.
In the period between 2018 and 2019, Indiana Resources engaged in extensive discussions with Tanzanian government officials, including the Minister for Minerals and the Mining Commission, seeking a suitable tenure mechanism to reinstate their project licence.
Throughout these interactions, the Tanzanian representatives assured the claimants and Indiana’s board members that their historical investments would be recognized and their rights safeguarded.
However, on December 19, 2019, the Tanzanian Mining Commission made a public invitation to tender for the joint development of areas previously covered by Retention Licences.
Strikingly, this invitation did not reach Indiana Resources or the claimants, as it was only advertised on the Ministry of Minerals’ website.
Furthermore, on December 20, 2019, the Mining Commission issued a revised invitation to tender that removed the requirement for the successful bidder to compensate the previous retention licence holder for exploration costs incurred.
Reacting to the tribunal’s award, Indiana Resources Executive Chairman, Bronwyn Barnes, expressed satisfaction and readiness to enforce the compensation.
He highlighted the significant investment lost by shareholders due to Tanzania’s unlawful expropriation of the Ntaka Hill project.
Emphasizing their determination and unwavering stance throughout the arbitration proceedings, Barnes extended gratitude to the shareholders who supported the company during this time.
The enforcement phase will now commence, as the award is recognized and enforceable in any of the 158 member states that have ratified the ICSID Convention, including Tanzania.
Indiana Resources intends to pursue the award’s enforcement against Tanzania diligently and will keep shareholders informed of the progress in this matter.
