South32 files request for arbitration in Colombia royalty dispute

Cerro Matoso nickel mine – Image courtesy of South32

South32 has filed a request for arbitration at the World Bank over a dispute with Colombia concerning royalty payments from its majority-owned Cerro Matoso ferronickel mine, the company confirmed on Tuesday.

In February the Andean country’s comptroller opened an investigation into alleged unpaid royalties of 619 billion pesos ($152.3 million) from iron and nickel production at Cerro Matoso between 1982 and 2012.

Cerro Matoso, one of the largest open-pit ferro-nickel mines in the world, is located in a rural part of Cordoba province, in the north of Colombia. During the 2019 financial year Cerro Matoso produced 41,100 tonnes of nickel.

In February Colombia’s comptroller opened an investigation into alleged unpaid royalties of 619 billion pesos from iron and nickel production at Cerro Matoso

South32, which was spun off from BHP Group, is primarily listed in Australia.

The request for arbitration, filed with the World Bank’s International Center for Settlement of Investment Disputes in accordance with the UK-Colombia bilateral investment treaty, was submitted by South32’s UK unit on March 27.

The arbitration request follows a number of measures taken by Colombia, which include “seeking arbitrarily to re-calculate royalties owed and paid by its … subsidiary Cerro Matoso SA,” South32 said in an email to Reuters.

On the same day, the company withdrew its production guidance for Cerro Matoso following restrictions placed on the mining industry by Colombia’s government to halt the spread of coronavirus.

The South American country’s comptroller did not immediately respond to a request for comment.

($1 = 4,064.81 pesos)

(By Oliver Griffin; Editing by Steve Orlofsky)

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