South African mining and minerals company African Rainbow Minerals (ARM) is facing a lawsuit from Tanzania’s Pula Graphite Partners and its parent company, Pula Group, over alleged breaches of non-disclosure and non-compete agreements.
The suit, which is being heard at the Commercial Division of the High Court of Tanzania, is seeking $195 million in damages and is scheduled for a pre-trial hearing on Jan. 10, 2023.
The case relates to a July 2019 agreement in which the two firms agreed to share confidential information and not enter into agreements with potential competitors for a period of two years.
Pula claims that during this time, ARM invested in an Australian company called Evolution that also explores graphite in Ruangwa, Lindi Region in Tanzania, where Pula’s own graphite project is located.
Pula Group President Mary Mildred Stith says that they have sufficient evidence to prove their case against ARM.
ARM, a major player in the mining industry, with strategic positions in iron, coal, copper, gold, platinum, and other precious metal mining projects, was founded in 1997 by South African billionaire Patrice Motsepe as South Africa’s first black-owned mining company.
Motsepe currently owns a 39.7-percent stake in the company, which is worth more than $1.1 billion and accounts for the majority of his wealth.
In October 2020, Motsepe received $103 million in final dividends from his stake in ARM, less than four months after earning $69.6 million in interim payments.
The company has faced legal challenges in the past, including a dispute with a former shareholder over the sale of a coal mine and a class action lawsuit brought by miners who claimed that ARM and other companies had exposed them to harmful levels of silica dust.
The current lawsuit against ARM is one of the largest involving private parties to be filed in the High Court of Tanzania. It remains to be seen how the case will play out, but it could have significant financial implications for both Pula and ARM.