Today marks a pivotal moment in Tanzania’s graphite mining industry as the Commercial Division of the High Court in Dar es Salaam hears a significant lawsuit involving Pula PLC and African Rainbow Minerals Limited (ARM).
The case, which has been postponed previously due to ARM’s appeal for a review at the Court of Appeal, revolves around allegations of a contract violation. Pula PLC is seeking $195 million in damages.
Pula Group, a Tanzanian mining company led by Chairman Charles Stith, has initiated legal action against South African businessman Patrice Motsepe and his affiliated companies, including ARM, African Rainbow Capital, and ARCH Emerging Markets.
The lawsuit alleges that Motsepe’s firms breached a non-compete agreement by investing in Evolution Energy Minerals, an Australian company that operates near Pula’s graphite project.
According to Stith, the $195 million claim reflects the potential losses Pula could suffer due to a competitive edge being compromised by what it views as a breach of confidentiality and non-compete obligations.
“Pula’s claim is supported by a third-party evaluation of the potential losses arising from ARM’s conduct,” stated Stith, who emphasizes that ARM’s involvement with Evolution Energy threatens Pula’s competitive standing in the area.
In response, Motsepe and his companies have refuted the breach of contract allegations, asserting that the claims are unfounded. An ARM spokesperson remarked, “ARM evaluated Pula’s graphite project under a confidentiality agreement but ultimately opted not to invest and informed Pula accordingly.” ARM has chosen not to provide additional comments, citing ongoing legal proceedings.
The core of the lawsuit hinges on a non-compete clause that Pula contends was still active while Motsepe’s companies engaged with Evolution Energy.
Stith, a former US Ambassador to Tanzania, believes this case could set a legal precedent for protecting local Tanzanian mining interests from foreign competition, especially in cases of contract violations.
The lawsuit has faced hurdles as the Motsepe group has challenged the court’s jurisdiction and argued that there was improper service of legal documents.
The current session, presided over by Judge Abdallah Gonzi, will decide whether to advance with the primary case despite ARM’s outstanding appeal for revision.
Pula’s attorney, Nzaro Kanjenje, has urged Judge Gonzi to move forward with the main suit, regardless of the pending application at the Court of Appeal.
Conversely, ARM’s legal representative, Gasper Nyika, argued for an adjournment, stating that proceeding would be “futile” given the pending appeal.
Unaware of the application at first, Judge Gonzi later opted to delay proceedings until next month to examine the situation surrounding the appeal.
This intense legal confrontation began earlier this year when Pula Graphite Partners and Pula Group LLC lodged their $195 million lawsuit against ARM and its affiliates.
Pula President Mary Stith has firmly stated that there is no intention to withdraw the lawsuit, expressing confidence in their legal approach and a commitment to refiling if needed. “This case is crucial for Tanzanian businesses aiming to protect their interests against foreign competition,” she said.
The original agreement between Pula and ARM was a two-year contract, but Pula alleges that ARM delayed project action and instead aligned with Evolution Energy, which runs a competing project in Ruangwa.
Motsepe’s participation in Evolution Energy, which operates in proximity to Pula’s graphite project in Ruangwa, is at the heart of Pula’s complaint and its demand for damages due to an alleged breach of the non-compete clause.
