Table of Contents
Key Points
- South African billionaire Patrice Motsepe and his companies face a $195-million lawsuit in Tanzania.
- Pula Group claims Motsepe's firms violated a non-compete agreement by investing in a neighboring graphite project.
- The lawsuit is one of the largest to appear before Tanzania’s commercial court.
South African billionaire Patrice Motsepe and his companies are facing a $195-million lawsuit in Tanzania, filed by the Tanzanian mining firm Pula Group.
The lawsuit, one of the largest to be heard in the country's commercial court, accuses Motsepe’s firms, including African Rainbow Minerals (ARM) and African Rainbow Capital, of violating a non-compete agreement.
Pula claims Motsepe’s firms breached the agreement by investing in Australia’s Evolution Energy Minerals, a company operating near Pula’s graphite project.
Charles Stith, chairman of Pula Group and former U.S. ambassador to Tanzania, stated the lawsuit seeks compensation based on the potential losses Pula may incur from the competitive disadvantage caused by the alleged breach. "The amount was based on a third-party valuation of what Pula stands to lose," said Stith.
Motsepe’s companies deny breach of contract
ARM has denied wrongdoing, stating it had initially considered investing in Pula’s project but chose not to pursue it. ARM emphasized that it communicated this decision to Pula and had complied with all terms of the confidentiality agreement.
However, Pula argues that Motsepe’s firms engaged in discussions and finalized a deal with Evolution Energy Minerals during the non-compete period.
Case could set legal precedent in Tanzania’s mining sector
Stith believes the case could have broader implications for local mining firms in Tanzania and Africa, protecting them from unfair competition by larger international firms.
He noted that Tanzania's mining sector is dominated by Australian and Canadian companies, and this lawsuit could address these imbalances.
The case has experienced delays, with Motsepe's companies challenging the jurisdiction of the Tanzanian court and contesting the validity of the legal proceedings. ARM's legal team has also reportedly failed to appear in court on multiple occasions, causing further delays.
