COMMENT
n L
w
a
eo
ou
w - E
eo
dit o r @L
n L
ou
TANZANIA
SLAUGHTERS
THE GOLDEN GOOSE
M
ineral exploration is a risky business. Investors put
their money into something that they cannot see
or touch. Today, the only remaining high quality
ore bodies are located in remote regions of developing
economies. Apart from the uncertainty about reserves,
quality and grade, these investors also need to weight up
the risks of investing in developing countries often located
in fragile regions of the world.
In turn, exploration activities are indispensable for these
fledging economies. Without exploration, there is no future
for a sustainable mining industry. The most fundamental
requirements to nurture a successful exploration sector, is
policy certainty, some form of political stability and an almost
unconditional guarantee that investments will be safe, land will
not be expropriated, and licenses will not be revoked.
Sadly, by following a destructive path of what can only be
described as ‘nationalisation’, the Tanzanian government seems
determined to destroy the goose that lays the golden eggs. In
late January 2020, Canadian outfit Montero Mining became
the third exploration company to declare a dispute with the
Tanzanian government relating to the revoking of its retention
license. Montero was granted a prospecting license when it
commenced an exploration programme for rare earth elements
at Wigu Hill in March 2008.
On advice from the Tanzanian Mining Commissioner, Montero
applied for a retention license in 2014, which was granted in
2015. The retention license was valid for five years. In 2017 the
government of Tanzania announced amendments to the Mining
Act 2010, which abolished the legislative basis for the retention
license classification with no replacement classification. On
10 January 2018, the government published the Mining
(Mineral Rights) Regulations 2018, which under Regulation 21
cancelled all retention licenses issued prior to that date, which
would cease to have any legal effect. The rights to all areas
under retention licenses were immediately transferred to the
government of Tanzania.
www. africanmining.co.za
African Mining Publication
This act has prompted Montero to give notice to the Attorney
General of Tanzania that it intends submitting a claim to
arbitration in accordance with the 2013 Agreement for the
Promotion and Reciprocal Protection of Investments in the
Bilateral Investment Treaty (BIT) between Canada and the
United Republic of Tanzania.
According to Montero the Act is in breach of the BIT and
international law and has resulted in Montero having to write off
its entire investment.
The week before, Australian mining company Indiana
Resources declared a dispute with the Tanzanian government
over repossessed retention licences as well. Indiana released
a statement threatening legal action against Tanzania for
alleged breach of contract. Indiana held a total of ten licenses
and has invested more than AUD60-million (USD41.3-
million) into its Ntaka Hill nickel project in southern Tanzania.
Earlier, another Canadian exploration company, Winshear
Gold, had formally declared an investment dispute with
the government of Tanzania for the same reasons Montero
Mining and Indiana Resources had submitted their claims to
arbitration. Winshear commenced exploration work at SMP in
2006, and was granted, through its Tanzanian subsidiary, four
retention licenses which were valid for five years and could
be extended for another five years before applying for a
mining license. As in the case of Montero Mining and Indiana
Resources, the company lost its complete investment. In a
country where foreign investment is desperately needed,
the latest developments are bound to deter future investors,
and as exploration companies take flight, operating mining
companies wonder who will be next.
Leon
African Mining
African Mining February 2020
1