3 Mining Companies Enter into Dispute with the Tanzanian Government

On 10th January 2020, Winshear Gold Corporation (TSX-V: WINS) notified the Attorney General of Tanzania that there exists an investment dispute between the company and the Government, relating to the SMP Gold Project located in south-west Tanzania.

The SMP project comprises a number of Prospecting and Retention Licenses. The company explains that the project could not be developed to mine status by reason of technical constraints, or other economic factors, which are temporary in nature.

Winshear commenced exploration activities at SMP in 2006. Subsequently, through its Tanzanian subsidiary, it applied for and was granted 4 Retention Licences which gives the licensee tenure over the land before progressing to a Mining Licence, and that covered the mineral resource areas. These licenses were valid for 5 years and could be extended for another 5 years before applying for a Mining Licence. 

In January 2018, Tanzania published the Mining Regulations 2018, canceling all Retention Licences issued earlier. The rights over all areas under these licenses, including those under the SMP project, were immediately transferred to the Government of Tanzania. 

The company explains that the abolition of the SMP Retention Licences and the removal of the rights to the land have rendered the project valueless. Thus, as a direct consequence of the legislative, regulatory and other measures by Tanzania, the company has lost completely its investment.

In December 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas previously covered by Retention Licences, including those connected to the SMP project. 

As a result, Winshear is now taking all necessary actions to preserve its rights and protect its investments in Tanzania. The company expresses its desire to reach a mutually acceptable outcome with the Government of Tanzania. However, if such an outcome is not achieved within the next six months, the company will have no alternative but to pursue its claims before an international tribunal and seek full compensation for damages suffered as a result of Tanzania’s acts and omissions. 

A few days later, on 15th January 2020, Indiana Resources (ASX: IDA) served to Tanzanian President, Attorney General and Ministry of Energy and Minerals, a similar notice in relation to the Retention Licence connected to the Ntaka Hill Nickel Project in north-eastern Tanzania. 

Finally, on 17th January 2020, Montero Mining and Exploration (TSX-V: MON ) delivered a similar notice to the Attorney General of Tanzania, relating to Montero’s investment in the Wigu Hill, a rare earth element project located 170 km south-west of Dar es Salaam.

The reaction of the Tanzanian Government is awaited. At the time of writing, the website of the Tanzanian Ministry of Minerals is under maintenance and is not accessible.