Tanzania ordered to pay Indiana Resources $109.5 million

The Tanzanian government has been ordered by the International Centre for Settlement of Investment Disputes, a World Bank tribunal, to pay $109.5 million (Sh265 billion) as compensation for breach of obligation to a foreign investor.

The arbitration proceedings against the United Republic of Tanzania stem from a grievance by an international investor, Indiana Resources Limited, an Australian-based exploration company.

The Tribunal delivered its award on July 14, 2023, where Tanzania was ordered to pay compensation for the unlawful expropriation of Ntaka Hill of more than US$109.5 million (including interest already accrued) to the claimants who sued the government on the international stage following the Magufuli-era decision in 2018 to cancel their nickel mining Retention Licence.

The claimants include Indiana, a 62.4 percent shareholder of the combined holdings of Ntaka Nickel Holdings Ltd., Nachingwea UK Ltd. (both incorporated in the United Kingdom), and Nachingwea Nickel Ltd. The majority shareholder says that enforcement of the award will commence immediately.

Case background

On April 21, 2015, Tanzania issued a Retention license 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.

At all times, it is said that the Tanzanian government representatives reassured the claimants’ representatives, as well as Indiana board members that visited Tanzania for the purpose of collaborative engagement with the government, that their historical investment would be recognised and that their rights would be respected and protected.

On December 19, 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas covered previously by Retention Licences.

This initial invitation to tender provided that the successful bidder must compensate the previous Retention Licence holder for its exploration costs incurred.

This public invitation was not sent to the company or the claimants but was advertised on the website for the Ministry of Minerals.

One day after that invitation to tender was published, the Mining Commission of Tanzania announced a revised public invitation to tender on December 20, 2019, which removed the requirement that the successful bidder must compensate the previous retention licence holder for its exploration costs incurred.

Indiana Resources Executive Chairman Bronwyn Barnes said the firm is ready to enforce the award.

"I am delighted that we have received the Award from ICSID and that the amount of the award reflects the substantial investment that has been lost by shareholders through Tanzania’s unlawful expropriation of Ntaka Hill. My message to shareholders has been consistent: we had a clear and compelling position to support our claim for compensation and have worked tirelessly for five years to ensure that we maintained our position with strength and determination. The conclusion of arbitration proceedings brings me great satisfaction, and I would like to sincerely thank those shareholders who have supported the Company during that time."

"We now move to the enforcement phase. The ICSID Convention has been ratified by 158 Member States of the World Bank, including Tanzania. This means that any award issued by an ICSID tribunal is enforceable in any one of those 158 member States as if it were a judgment of one of their own courts. We have consistently said that we would look to enforce an award against Tanzania, and that work will commence now. I will keep shareholders updated as we progress."