(Ecofin Agency) - Sarama Resources has initiated arbitration proceedings against Burkina Faso, claiming $115 million in damages following the withdrawal of its mining permit. The dispute traces back to 2023 when the Canadian company faced the abrupt cancellation of an exploration permit the firm held for 12 years. Sarama deems the decision "incoherent" and is determined to explore all legal avenues to be compensated.

On December 12, 2024, Sarama announced its decision to pursue arbitration through the International Centre for Settlement of Investment Disputes (ICSID), a division of the World Bank Group. The company is seeking at least A$180 million (approximately $115 million) in compensation due to the government's withdrawal of the Tankoro 2 exploration permit, which is crucial for its Sanutura Project. This project is located in the southern Houndé Belt of Burkina Faso, a region hosting major gold reserves.

The ICSID has been a venue for various mining companies facing disputes with African governments. Notably, in July 2023, it ordered Tanzania to pay Indiana Resources over $100 million for illegally expropriating a nickel project. Sarama has engaged the international law firm Boies Schiller Flexner (UK) LLP to represent it in this arbitration case.

The dispute began when Burkina’s Ministry of Energy and Mines informed Sarama it had withdrawn its rights to the Tankoro 2 exploration permit. For over a decade, Sarama has maintained its presence on the permit and notes that Dr. Bachir Ouédraogo, the then Minister of Mines, renewed it on December 24, 2021, following the payment of required fees. 

Despite this renewal, Sarama received notice from the government that its application failed. As of the time of writing this article, Ecofin Agency has been unable to contact local authorities, who are yet to comment on the withdrawal matter or Sarama’s allegations.

Although Mines Minister Simon Pierre Boussim signed an order on August 22, 2023, withdrawing 119 exploration permits, it did not mention Sarama's Tankoro 2 permit.

For now, it is unsure if ICSID will uphold Sarama's claim or not. However, should arbitration proceedings commence, both parties may still consider an out-of-court settlement.

Emiliano Tossou