Tanzania consents to pay a furious Australian investor $90 million in a mining dispute

Tanzania and the Australian mining company Indiana Resources have achieved an out-of-court settlement in which Tanzania agrees to pay $90 million to terminate the arbitration proceedings at the International Centre for Settlement of Investment Disputes (ICSID).

Though the settlement sum is less than the $109 million award that ICSID had ordered Tanzania to pay Indiana in July 2023 after concluding that it had unjustly expropriated the company’s license to operate nickel mining operations in the nation, this might potentially put an end to the protracted case.

In a statement, Indiana claimed that the agreement will spare the business from having to spend more time and money chasing the full award amount, which had risen to $121 million by the previous week due to interest accruing at the rate of $1 million per month.

Tanzania had withheld payment while pursuing an annulment of the award in protracted proceedings before the World Bank-affiliated tribunal. Indiana claims that these proceedings would only be concluded if the tribunal obtains the entire settlement amount.

Tanzania has already paid the first $35 million of the three installments that will be paid under the terms of the agreement that was made on July 29.

By October 25th, another $25 million is anticipated, and by the end of March 2025, the remaining $30 million will have been distributed.

According to Bronwyn Barnes, executive chairman of Indiana Resources, the corporation has the right to “recommence” the ICSID annulment procedure “if Tanzania defaults on the agreed subsequent instalment payments.”

“This encompasses our entitlement to undertake enforcement actions, entailing the confiscation of Tanzania’s assets in any jurisdiction that is a part of the World Bank,” Ms. Barnes continued.

The Australian Securities Exchange approved Indiana Resources’ request earlier this month to temporarily halt trading of its shares in advance of the anticipated Tanzanian settlement.

The suspension was to end on July 29.

This was the second settlement of its kind between Tanzania and foreign companies who sought ICSID arbitration after the John Magufuli government controversially withdrew their mining licenses in 2018.

Tanzania paid the Canadian company Winshear Gold Corp. $30 million in October 2023 as a one-time payment to settle their legal dispute out of court.

The Vancouver-based business was suing for damages totaling at least $96 million, alleging that its retention license for a goldmining operation in southwest Tanzania was taken away.

A third business, Canadian-based Montero Mining and Exploration Ltd., is presently suing Tanzania at the ICSID, seeking $67 million in damages after its permit to run a rare earth element mine in the Morogoro region was revoked.

The matter was last mentioned in January of this year and is still ongoing at the tribunal located in Washington, DC.

The Magufuli administration purportedly wanted to preserve Tanzania’s sovereign authority over its mineral resources, therefore it based its actions on new mining legislation that eliminated retention licenses for international investors.