PULA Graphite Partners, a Tanzanian company, and its parent company the Pula Group, has filed a suit against South Africa-based African Rainbow Minerals (ARM) in the Tanzania High Court for 195 million US dollars for breaching their non-disclosure and non-compete agreement.
The amount of the suit is based on a third party valuation of what Pula stands to lose as a result of the competitive disadvantage resulting from AMR’s violation of their agreement.
In July 2019 Pula and ARM signed a two year agreement that committed them to sharing confidential information that would put the company at a competitive disadvantage should either share or use it to enter into an agreement with a potential competitor.
During the period covered by the agreement ARM invested in an Australian company – Evolution—exploring for graphite in the Ruangwa, Lindi. Pula’s graphite project is also in the Ruangwa region.
When asked to comment on the suit, the president of the Pula Group, Dr Mary Mildred Stith refused to comment, with the exception of saying that, “not only do the facts of the case support [their] complaint against ARM, but that [they] have evidence that proves [their] claim and that [they] will disclose that evidence at the appropriate time.”
The case is important for a number of reasons. It is one of the largest suits between private parties to have been filed in the High Court. It is also important because it underscores the competitive disadvantage that Tanzanian companies face in their efforts to develop opportunities in mineral resource sector.
Currently, 52 per cent of the companies doing mineral exploration in Tanzania are Australian and only 4.0 per cent are Tanzania. Tanzanian shareholders have a 50 per cent equity stake in Pula Graphite Partners.
Mineral exploration has a significant potential to growth of the country’s economy and increase the share that Tanzanians and Tanzanian companies have in the country’s rich reserves of mineral resources.
In South Africa companies involved in exploration account for over 250,000 good paying jobs and thousands of businesses from drilling companies to geological consultants to companies that doing testing on mineral resources.
The case also stands to underscore that Tanzania has among the world’s largest graphite deposits. The quality of those deposits is world-class.
Both of these factors position Tanzania at the centre of the green revolution taking place in the energy sector.
Minerals like graphite are essential to batteries for storing energy. In fact, there’s more graphite in lithium-ion batteries than lithium.
A pre-trial hearing is scheduled to be held on January 10th.
