Two mining giants battle it out in court today

DAR ES SALAAM: A MAJOR lawsuit between two significant players in the graphite mining industry, Pula PLC and African Rainbow Minerals Limited (ARM), will be heard today at the Commercial Division of the High Court in Dar es Salaam.

This case, which was previously adjourned following ARM’s appeal for a revision at the Court of Appeal, centres on allegations of contract breach, with Pula PLC seeking 195 million US dollar in damages.

Tanzanian mining firm Pula Group, led by Chairman Charles Stith, has filed a lawsuit against South African billionaire Patrice Motsepe and his companies, including African Rainbow Minerals, African Rainbow Capital and ARCH Emerging Markets.

The claim alleges a breach of a non-compete agreement by Motsepe’s companies when they invested in Evolution Energy Minerals, an Australian company operating close to Pula’s own graphite project.

According to Stith, the 195 million US dollar figure represents estimated losses Pula could face due to a competitive disadvantage following what it considers a breach of confidentiality and non-compete terms.

“Pula’s claim is backed by a third-party assessment of the potential losses due to ARM’s actions,” Mr Stith explained, emphasising that Pula believes ARM’s partnership with Evolution Energy undermines its competitive position in the region.

Motsepe and his companies have denied any breach of contract, asserting that the allegations lack foundation. An ARM spokesperson commented, “ARM explored Pula’s graphite project under a confidentiality agreement but decided against investing and notified Pula accordingly.” ARM declined to elaborate further, citing ongoing litigation.

Central to the lawsuit is a non-compete clause that Pula argues remained in effect while Motsepe’s companies pursued negotiations with Evolution Energy.

ALSO READ: Court rejects Mpina’s petition

Mr Stith, who previously served as the US Ambassador to Tanzania, believes this case may establish a precedent to protect local Tanzanian mining interests from foreign competition, particularly in instances of breached agreements.

The legal proceedings have faced challenges, as the Motsepe group has questioned the court’s jurisdiction and claimed improper service of court documents.

The current phase of the lawsuit, overseen by Judge Abdallah Gonzi, will determine whether to move forward with the main case despite ARM’s pending appeal application for revision.

Pula’s counsel, Nzaro Kanjenje, has encouraged Judge Gonzi to proceed with the main suit, despite the unresolved application at the Court of Appeal.

However, ARM’s legal representative, Gasper Nyika, advocated for adjournment, arguing that moving forward would be “futile” given the pending application.

Initially unaware of the application, Judge Gonzi later decided to postpone proceedings until next month to review the circumstances surrounding the appeal.

This high-stakes legal battle began earlier this year when Pula Graphite Partners and Pula Group LLC filed their 195 million US dollar lawsuit against ARM and its affiliates.

Pula President Mary Stith has dismissed any notion of withdrawing the suit, saying, “We are confident in our legal strategy and committed to refiling if necessary. This case is critical for Tanzanian companies seeking to safeguard their interests against foreign competition.”

The initial agreement between Pula and ARM was a two-year contract, but Pula claims ARM delayed action on the project and instead aligned with Evolution Energy, which operates a competing project in Ruangwa.

Motsepe’s involvement in Evolution Energy, whose operations overlap with Pula’s graphite project in Ruangwa, forms the basis of Pula’s grievance and its demand for damages based on an alleged violation of the non-compete clause.