THISDAY REPORTER
Dar es Salaam .
The controversial contract document states that all disputes will have to be settled by arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL), administered by the London Court of International Arbitration.
’’The arbitration shall take place in London and the language to be used in arbitral proceedings shall be English,’’ says Article 13.5 of the agreement signed on February 17 by the Minister for Energy and Minerals, Nazir Karamagi, on behalf of the government and Barrick Gold Tanzania’s executive general manager in charge of operations, Gareth Taylor, representing Pangea Minerals Ltd.
It defines a ’dispute’ as any controversy or claim arising from the contract agreement or the mining licence granted to Pangea Minerals Ltd, itself being a subsidiary company of Barrick Gold, for the Buzwagi area.
Legal sector sources have confirmed to THISDAY that with such a clause included in the agreement, Tanzania?s own judicial system can have no say whatsoever in the handling of any dispute with a direct bearing on the agreement contents, the mining licence or the project implementation details.
This is despite the existence of another clause in the agreement ? under Article 17 dealing with miscellaneous provisions - where it is stated that ’’the agreement shall be governed by the law of Tanzania and such rules of international law as may be applicable’’.
Speculation has become rife regarding the circumstances behind the signing of the contract in London rather than within Tanzania, where the gold mining project is to be developed in Kahama District, Shinyanga Region.
Various critics have pointed out that while the choice of London as the signing venue was in itself not a violation of any particular law, the fact that Tanzanian government officials will have to fly to the British capital for arbitration with the investor company every time there is a dispute in either the contract or mining licence is enough to raise eyebrows.
It has been noted that the contract appears to give Pangea Minerals Limited, as the project developer, extraordinary leeway in areas of taxation and contributions to national and local government development. It also binds the government to maintain the same taxes and fiscal laws applicable to the company today for the entire duration of the mine, which is a minimum of the next 25 years and a maximum that by the terms of the contract could well be more or less indefinite.
It is stated therein that ’’the duration of the mining licence shall be for a period of 25 years with an option for the company to renew the licence on the same terms and conditions for a further 25 years.’’ This is basically as stipulated in the existing Mining Act of 1998. However, while the Act also stipulates that after being granted an initial 25-year licence, mining companies may be given a second and final licence renewal of just 25 years, the Buzwagi deal is open-ended in this area, effectively giving Pangea Minerals Ltd the option of renewing its licence even after this 50-year cap period, and continuing to do so for as long as it may decide.
According to the agreement, after every 25 years it will be up to the minister of the day in charge of the mining portfolio to use his or her own discretion to grant the licence renewal, with no specified limits of duration.
Other notable areas of the contract include Article 8, which appears to provide Pangea Minerals Ltd?s expatriate personnel and hired foreign sub-contractors for the project with certain, unrestricted favours like expedited issuance of work permits, employment passes, visas and the like.
The company and its contractors will also be allowed to import, without restriction, all items required for the design, construction, installation and operation of the project, including fuel, spare parts and replacements to the spare parts inventory.
The importation of these goods will be subject to compliance with the country’s own normal administrative requirements, ’’provided that any imposts applicable to the importation of fuel, including road toll contribution, will be subject to an annual limit of $200,000’’, says the contract.
Each expatriate coming into Tanzania under the Buzwagi project banner will also be permitted to bring in their personal and household effects, including one car on their first arrival, free of import duty and other taxes. And according to Article 8.5 of the agreement, they will be allowed to export their salaries and pension benefits out of the country during and after employment.
The contract also prohibits the government from ’’nationalizing or compulsorily acquiring’’ the Buzwagi gold mine itself or the mining licence granted to Pangea Minerals Ltd, adding that if it (government) decides to do so anyway, then it should ’’pay compensation in US dollars to an account outside Tanzania specified by the company in an amount and manner that is prompt, adequate and effective.’’
Pangea Minerals Ltd is expected to invest some $400m (approx. 520bn/-) in the Buzwagi gold mining project.
From: ThisDay (Tanzania)
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