Prime
Tanzania settles its dispute with Canadian firm, to save $43 million
What you need to know:
- For Tanzania, the settlement is a significant achievement in terms of financial savings and avoiding the risk of a potentially more costly and disruptive legal process.
Dar es Salaam. Tanzania has reached an agreement to amicably settle its dispute with Canadian mining company Montero Mining & Exploration Ltd, saving $43 million in the process.
The settlement brings to a close a nearly seven-year-long dispute over the expropriation of the Wigu Hill rare earth element project.
In September 2023, Tanzania’s Solicitor General confirmed that a hearing date had been set for the case, although it remained unclear whether the government intended to pursue an out-of-court settlement. However, on November 20 Montero announced that a settlement had been reached.
Under the settlement, Montero will receive a total of $27 million, which is 39 percent of the $70 million initially demanded by the company.
The settlement sum will be paid in three installments, with Montero having already received $12 million as of November 2024. The remaining balance of $15 million is to be paid in two installments by January 2025 and February 2025.
This agreement not only ends the protracted legal battle, but has also saved Tanzania from a lengthy and costly court hearing, the risks of a potentially adverse ruling, and the challenges of enforcing a judgment.
The dispute arose in 2018 when the Tanzanian government cancelled the retention licences for Montero's Wigu Hill project, which the company argued amounted to expropriation.
Montero had invested approximately 15.5 million Canadian dollars in the project since its inception in 2008. Despite several attempts to resolve the matter amicably, the company moved forward with an investment arbitration claim, which was filed with the International Centre for Settlement of Investment Disputes (ICSID).
Monteron president and CEO Tony Harwood expressed satisfaction with the resolution, emphasizing that it allows both parties to move forward without the need for continued arbitration.
“I am pleased Montero was able to reach an amicable settlement with the government of Tanzania to bring a mutually beneficial end to this dispute. This resolution allows both parties to move forward, and we wish Tanzania every success in attracting new mining investment,” he said.
As a result of the settlement, Montero and Tanzania have sent a joint request to the arbitral tribunal to suspend the ICSID arbitration proceedings after the first payment has been received by Montero, and provided the final payment has been received by Montero, the parties will request the arbitral tribunal discontinue the ICSID arbitration altogether.
The settlement marks a significant moment in Tanzania’s efforts to resolve long-standing disputes with foreign investors in the mining sector.
This development comes shortly after Tanzania reached a similar agreement with another Canadian mining company, Winshear Gold Corp, suspending arbitration proceedings over a separate expropriation claim concerning the SMP Gold Project in Southwest Tanzania.
The Wigu Hill project was set to be one of the key developments in Tanzania’s rare earth mining sector, with significant potential for both local and international stakeholders.
Mr Harwood had repeatedly stated that the company’s development efforts had created substantial value for Tanzania, despite the eventual dispute over the project’s licences.
For Tanzania, the settlement is a significant achievement in terms of financial savings and avoiding the risk of a potentially more costly and disruptive legal process.
