Tanzania pays Sh4.5 billion to settle dispute with Canadian miner

Tanzania has made a one-time $30 million (about Sh4.5 billion) payment to Canadian mining firm Winshear Gold Corp as an out-of-court settlement to end international arbitration proceedings over a protracted mining licence dispute dating back to 2018.

Contract termination

The Vancouver-based company was claiming at least $96 million (about  Sh14 billion) before the International Court for the Settlement of Investment Disputes as damages for the controversial termination of its retention license for a gold mining project in southwestern Tanzania.
 
Winshear confirmed in a statement that it received the diluted compensation on October 16 under a negotiated deal with the Tanzanian government to "settle the case and terminate the arbitration proceedings." 
 
"The company therefore reports that it has successfully concluded its settlement agreement with the United Republic of Tanzania," it said.
 
The development comes about a month since Winshear's September 19 announcement that it had suspended the ICSID arbitration case after reaching a "conditional settlement agreement" with Tanzanian authorities.
 
The company's license to operate its SMP Gold Project was revoked by the John Magufuli administration under new mining laws that canceled all retention licenses for foreign investors.

Safeguard sovereign control

At the time the move was attributed to the government's stated intention to safeguard sovereign control over Tanzania's mineral resources.
 
The case was subsequently brought before an ICSID tribunal which concluded its hearing in February this year with a final verdict not expected before the end of 2023.
 
However, matters were speeded up in July following an ICSID order for Tanzania to pay another mining firm, Indiana Resources of Australia, more than $110 million in damages for a separate license expropriation conducted in similar circumstances.
 
Tanzanian legal authorities have applied for annulment of the Indiana award and an ICSID ad hoc committee on October 11 held its first hearing on Tanzania’s request for a stay of enforcement to be maintained on the award until the application for annulment has been resolved. 
 
Still, the award helped to trigger fresh negotiations for a deal between Tanzania and Winshear ahead of the final verdict in their case, especially after Winshear chief executive officer Richard Williams asserted that the Indiana award had boosted its own chances of eventual success in its litigation.
 
Another foreign miner currently suing Tanzania at the ICSID for having its license canceled during the Magufuli era is Montero Mining and Exploration Ltd which was operating a rare earth element project at Wigu Hill in Morogoro region.
 
Montero, also a Canadian firm like Winshear, is claiming $67 million in damages.
 
In Winshear's statement on Monday, company CEO Williams described the final agreed settlement as being "good for both Tanzania and Winshear." 
 
"We are pleased to reach a mutually acceptable conclusion to this matter. It is time for both parties to move on," he said.
 
The company said after payment of legal and other litigation costs the net amount it would receive from the settlement was approximately $18.5 million.