Tanzania: Mining licence expropriations cloud Samia’s business-friendly credentials

By David Whitehouse

Posted on Friday, 10 February 2023 12:16
President of Tanzania, Samia Suluhu Hassan in Paris, February 2022 (photo: Vincent Fournier for JAMG)

Lack of progress on cases filed with a World Bank arbitration mechanism concerning the expropriation of mining exploration licences under late President John Magufuli cast a shadow over the claims of successor Samia Suluhu Hassan to have ushered in a more business-friendly environment.

Montero Mining & Exploration, which trades on Canada’s TSX Venture Exchange (TSV-X), is seeking CS$90m ($67m) in compensation for the expropriation of the Wigu Hill rare-earth retention licence by Tanzania’s government in 2018, Tony Harwood tells The Africa Report.

The company started exploration activities on the Wigu Hill project, about 170km southwest of Dar es Salaam, in March 2008. The company spent C$15.5m on discovery and development and was granted a retention licence in 2015. But the government in 2018 revoked all retention licences, including Wigu Hill.

Harwood argues the company is protected against expropriation without compensation under a bilateral investment treaty concluded between Tanzania and Canada in 2013. Tanzania’s mining commission issued a public invitation to tender for the area covered by the licence in December 2019. The company has made repeated attempts to reach a solution with the government without success.

Montero filed the claim with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) in January 2021, and the ICSID tribunal was constituted in November of that year. The ICSID Convention has been ratified by 158 states worldwide, including Tanzania. An award by an ICSID tribunal is legally enforceable as if it were a judgment in the domestic courts.

“It’s a reasonably straightforward case,” Harwood says. “There’s no doubt we were expropriated.” He expects the case to be concluded this year.

Indiana, Winshear

Samia succeeded the late Magufuli in March 2021, leading to increased corporate confidence. The Fraser Institute’s Policy Perception Index shows that Tanzania improved its score in 2021, climbing to 67th out of 84 jurisdictions surveyed, versus 75 out of 77 in 2020. Canada’s TRX Gold has said it may seek to raise debt as part of its plan to expand production at the country’s Buckreef project.

Further expropriation cases are also yet to be resolved. ICSID arbitration is also ongoing over Tanzania’s expropriation of licences for the Ntaka Hill nickel project held by Australia’s Indiana Resources.

  • Indiana states on its website that Tanzanian government representatives reassured company representatives visiting the country that their investment and rights would be respected and protected.
  • Indiana’s former licence area was likewise opened to public tender in 2019. The ICSID evidentiary hearing for the Ntaka Hill arbitration was concluded on February 2.
  • Winshear Gold, formerly called Helio Resource Corp and also listed on TSX-V, has a similar claim. The company is pursuing ICSID arbitration for the expropriation of its SMP gold project in the southwest of the country and says it is owed more than C$130m.

Samia has “a bit of business sense,” and “has moved things forward,” Harwood says in Johannesburg. But for Montero, which has left the country, the damage has been done and remains unrepaired. While Samia has “toned down” Magufuli’s policies, she comes from the same ruling party, Chama Cha Mapinduzi (CCM).

The company was not even told in advance of the expropriation. “As a junior, you lose credibility,” and, having sought to persuade others to back the project, his personal credibility was also damaged, Harwood says.

Bottom line

Investors will remain cautious over Tanzania’s credentials while the legacy of Magufuli-era decisions remains unaddressed.

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