PDAC: Foreign seizures spotlight legal vigilance

Resource nationalism abroad is hiking costs for miners and showing how they need solid agreements and recourse avenues, lawyers said at the Prospectors and Developers Association of Canada (PDAC) conference.The past few months have seen Western miners initiate arbitration proceedings amid disputes with host governments in West African countries, including Barrick Gold (TSX: ABX; NYSE: GOLD) in Mali, French uranium miner Orano in Niger and Sarama Resources (TSXV: SWA) in Burkina Faso. In some cases, authorities arrested employees, revoked permits and cancelled projects.“There’s this evolving scope of what the protections are for, not only full protection and security, but for equitable and fair treatment (and) protection against illegal expropriation without just compensation,” Tom Villalon, associate at Three Crowns law firm, said Tuesday on a PDAC panel. “And it may rise to a new chapter of interesting and very complicated investor-state work.”Seeking $120M redressVancouver-headquartered Sarama had been exploring at the Sanutura gold project in the country’s southern Houndé Belt but the post-coup government of Ibrahim Traoré cancelled the permit for the multi-million-ounce Tankoro project in 2022.The next year, Sarama heard from then-mines minister Simon-Pierre Boussim that the permit could be bought. It was later given to a local Burkinabe company, according to law firm Boies Schiller Flexner (BSF), which has taken on Sarama’s case in international arbitration.The company is seeking $120 million in compensation.“Sarama’s claim under the Canada-Burkina Faso Bilateral Investment Treaty (BIT) is reflective of the unfortunate resurgence of resource nationalism that has accompanied the wave of coups d’état across West Africa in recent years, including in Burkina Faso,” BSF partner Kristen Young told The Northern Miner by email on the sidelines of PDAC. “The Centre for Settlement of Investment Disputes (ICSID) registered Sarama’s claim on Dec. 23 2024, and we look forward to vindicating Sarama’s rights in full under the treaty.”State miner takes licenceThe New York-based BSF is also representing Emmerson (LSE: EML), which is developing the Khemisset potash project in northern Morocco.Emmerson held a mining licence for Khemisset through its Moroccan subsidiary, Potasse de Khemisset. But after a dispute over the company’s environmental and social impact assessment over 2023 and 2024, a regional English-language newspaper reported in January 2024 that Morocco state miner OCP Group had won rights to develop an adjacent potash project. The move annulled Emmerson’s licence, BSF said.Last November, Emmerson’s UK and Moroccan subsidiaries served a notice of dispute under the 1990 UK-Morocco treaty. The company seeks the full compensation of the loss of Khemisset. Though that amount is yet to be quantified, the project’s post-tax net present value (at an 8% discount rate) is estimated at $2.2 billion, according to Emmerson’s latest corporate presentation.“Emmerson’s claim under the UK-Morocco BIT arises out of arbitrary and discriminatory treatment of a mining investor in favour of a state-owned company, similar to Poland’s breaches in the GreenX Metals (ASX, LSE: GRX) arbitration,” Young said, citing the Australian coal miner’s case from 2020.The United Nations Commission on International Trade Law ruled in GreenX’s favour last October and awarded it about $325 million in damages, though Poland continues to challenge the award through courts in the United Kingdom and Singapore. A final resolution is pending.‘Adaptability, innovation’In all such cases, mining companies must do more than just comply with local agreements, Young said.“Mitigation of risks such as political changes demands adaptability and innovative strategies,” she said. “Where companies have a direct agreement with the state, they should negotiate robust contractual protections. These include stabilization clauses, which protect investors from adverse changes in law or policy after the agreement has been signed, and arbitration clauses, which allow companies to bypass the local courts, which may not be impartial or reliable.”  Young also recommends companies ensure from the start that their investments are covered by the protections of one or more bilateral investment treaties, which give access to international arbitration in the event of unlawful expropriation or interference by states.VIDEO: Critical minerals race driving resource nationalismFinally, Young said companies should think carefully before putting all of their resources into one region, especially if there is political instability.“Diversification of assets across different countries reduces the impact of political risks in any one region,” she said.Notable international disputes now include First Quantum Minerals (TSE: FM) in Panama after the government shut its Cobre Panama copper mine in November 2023, as well as Barrick in Mali, according to John Turner, co-head of global mining at Canadian law firm Fasken.“Even the government of Panama is signalling that that mine will get back into production, so that will be a big signal when that happens,” Turner told The Northern Miner by phone on Thursday.“With Barrick and Mali, that’s obviously a bit of a special circumstance. Those mines are very important to Barrick, but it sounds like they’re making progress, which is good. The government was taking executives hostages, which you know is never good for business.”Disputes on the horizonBack at PDAC, Villalon, who spoke on a panel about “2025’s emerging trends in mining disputes,” drew a correlation between commercial tensions due to China’s critical mineral export bans over the last few months, and the Vattenfall case in Germany.Swedish nuclear power plant operator Vattenfall was forced to close its facilities in 2011 in Germany after that country opted to phase out nuclear power following the Fukushima disaster. Vattenfall launched arbitration through the ICSID against Germany under the Energy Charter Treaty, arguing unlawful expropriation of its assets.In 2021, Germany awarded the company €1.42 billion (C$2.2 billion) in a settlement. “That’s an interesting example of what could come, Villalon said, “as we start to see more sort of retaliatory measures coming from the US White House, but also from Beijing.”Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com