Guinea Cancels Mining Permits and Licences: implications for foreign investors

The Guinean Government has reportedly cancelled numerous mining permits and licenses, including those held by foreign investors, as part of a broader review of its natural resource strategy. These actions, taken unilaterally and without payment of compensation, raise serious legal and commercial concerns for affected investors. 

Foreign investors impacted by permit or license cancellation may have recourse to legal remedies, including protections afforded by bilateral investment treaties (BITs) and multilateral investment treaties (MITs) to which Guinea is a party. Affected investors should act promptly and explore all available remedies to protect their interests. It is important to move forward with a carefully designed and comprehensive strategy and there is only a short window of time before harm caused by the cancellations manifests. 

Ashurst is expert at resolving sovereign disputes involving foreign investments and advises clients on risk mitigation and dispute resolution strategies. Please contact us to discuss how we can support your legal and commercial response.

Key Considerations

1. Contractual Commitments, Stabilisation and Dispute Resolution Clauses

Mining agreements often include contractual commitments intended to shield investors from political risks related to adverse legislative or regulatory measures as well as international dispute resolution provisions which might offer access to a neutral decision maker for investors. There might also be other agreements or proclamations from the Government which can offer a pathway for resolution. 

2. Investment Treaties

Guinea has entered into numerous BITS or MITs. These treaties generally include:

• protection against unlawful expropriation;

• guarantee of fair and equitable treatment;

• full protection and security for investments; and

• protection against discrimination on the basis of nationality,

all of which could be engaged by the current measures adopted by the Guinean Government. If the cancellation of mining permits is found to be arbitrary, discriminatory, or lacking due process, affected investors may have grounds to bring claims for damages under the relevant investment treaty.

Investment treaties also typically provide affected investors access to international arbitration (e.g., under the ICSID Convention or UNCITRAL Arbitration rules), providing another avenue to independent judicial review. 

3. The Guinean Mining Code 

The Guinean Mining Code (2011) establishes certain rights for qualifying projects and contains a reference to international arbitration. 

Broader Lessons on Political Risk Mitigation

This development also underscores the broader need for investors to proactively manage political risk when investing abroad, especially in resource-rich but politically volatile jurisdictions. Proactive action can play a crucial role in protecting the value and continuity of foreign investments. This might include: 

• jurisdictional structuring of investments to benefit from favourable treaty protections;

• the inclusion of stabilisation and international dispute resolution clauses in investment contracts; and

• political risk insurance.

Many States are seeking to increase control over and financial benefit from natural resources. Foreign investors who are proactively managing political risks to benefit from legal protection – whether under investment treaties or in contractual provisions – will be in a significantly better position should a dispute arise in the future.

Next Steps for Investors

Investors affected by these cancellations should:

• Review all relevant contracts, licenses, permits, and communications from the Guinean authorities;

• Assess the applicability of any investment treaties between Guinea and their home State;

• Preserve evidence of the investment, governmental actions, and any resulting losses; and

• Consult legal counsel experienced in sovereign disputes to evaluate the viability of a claim and develop a tailored strategy to handle this crisis.