Tanzania challenges $110 million award to Indiana Resources

By Kelvin Matandiko, DAR ES SALAAM Tanzania

The government of Tanzania has challenged an order to pay nearly $109.5 million to a foreign nickel mining firm that claimed costs over legislation that revoked its project license.

A World Bank tribunal, the International Centre for Settlement of Investment Disputes (ICSID), recently ordered Tanzania to pay the money to Indiana Resources and other claimants as compensation for a breach of obligation.

The tribunal delivered its award on July 14, 2023, and Tanzania was ordered to pay compensation of more than $109.5 million (including interest already accrued) to the claimants for the cancellation of the nickel mining retention licence.

Attorney General Eliezer Feleshi confirmed yesterday that the application for annulment of the award and request for a stay of enforcement of the award had already been filed.

In a letter dated July 28, the Secretary-General of the ICSID, Meg Kinnear, notified the case parties that the Centre registered the application for annulment of the award filed by the United Republic of Tanzania.

“The Secretary-General registers an application for annulment of the award filed by the United Republic of Tanzania and notifies the parties of the provisional stay of enforcement of the award,” the ICSID letter reads in part.

Solicitor General Boniphace Luhende said the application for a stay of the court decision’s enforcement is aimed to protecting the government’s aircraft, which might be seized in connection with the award.

Dr Luhende said the government has about 15 reasons that it will present before the judges to justify the annulment.

“Unfortunately, we cannot divulge more details, but we are ready to fight against the award,” he said.

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.

Some commentators supported the move by the government of Tanzania to seek annulment of the award, which recently attracted debate over local resources.

Former general secretary of the National Union of Mine and Energy Workers of Tanzania (Numet), Mr Nicomedes Kajungu, said there is now hope that the government may win against the firms, which he said were holding the mining blocks without development.

“The government had noted that some investors conducted exploration and collected the mineral data but held the land without developing it. That’s why it decided to revoke the licences,” he said.

“Some companies sold the mineral data at a high cost while the government gained nothing,” he added.

Other observers who reacted to the issue advised the government to initiate dialogue with the investors who are already in disputes with Tanzania to avoid damaging awards in the future.

According to the Tanzania Trade and Investment Coalition (Tatic), which analyses international trade treaties, the government has signed 20 bilateral investment treaties between 1965 and 2019, of which others are ongoing.

Until yesterday, Tanzania lost five cases related to the bilateral investment treaties.

These include the agreements with Sweden (2022), The Netherlands (2021), and England and Northern Ireland (2008).

Two other cases involving Canada are awaiting decisions by the international tribunal.

On July 20, UK real estate developer Pennyroyal Limited filed another case over a terminated lease for a Zanzibar resort project.

The government has confirmed that it has started paying compensations worth $165 million to Eco Energy Group, which won its case against Tanzania. The government had revoked the company’s ownership of 20,400 hectares of sugar plantations.