Patrice Motsepe faces $195-million lawsuit over alleged non-compete breach in Tanzania

Oluwatosin Racheal Alabi -

Key Points

  • Patrice Motsepe dismisses $195 million lawsuit as "absolute nonsense."
  • Tanzanian firm Pula Graphite Partners alleges breach of non-compete agreement.
  • The project aims to create over 4,000 jobs through hotels, resorts, and residential developments.

Tanzanian mining firm accuses Motsepe of breaching non-compete agreement

Patrice Motsepe, South Africa’s first Black billionaire and chairman of African Rainbow Minerals (ARM), is facing a $195 million (R3.4 billion) lawsuit in Tanzania. The lawsuit, filed by Tanzanian mining company Pula Graphite Partners, accuses Motsepe and his associated companies — African Rainbow Minerals (ARM), African Rainbow Capital (ARC), and ARCH Emerging Markets — of breaching a non-compete agreement.

Pula alleges that these companies violated a two-year non-compete clause by investing in Evolution Energy Minerals, an Australian mining project situated near Pula's graphite site.

Charles Stith, Pula’s chairman and a former U.S. ambassador to Tanzania, claims that Pula suffered significant financial losses as a result of being placed at a competitive disadvantage. He argues that the case highlights the broader issue of foreign influence in Tanzania’s mining industry, where firms from Australia and Canada allegedly outmaneuver local businesses.

Despite these accusations, Motsepe has forcefully rejected them as "absolute rubbish" and "absolute nonsense." Speaking at ARM's annual general meeting, he declared that his companies operate with "integrity, ethics, and good governance," emphasizing that ARM, ARC, and ARCH acted within the confines of the law.

Motsepe defends ARM, calls lawsuit an attack on company integrity

Motsepe has vowed to challenge the claims in court, calling the lawsuit an attack on the ethical foundation of African Rainbow Minerals (ARM). Founded in 1997, ARM is one of South Africa's largest diversified mining companies, with operations spanning gold, iron ore, platinum, manganese, and coal.

Motsepe owns an estimated 45 percent of ARM, reinforcing his position as one of Africa’s wealthiest individuals with a net worth of approximately $2.9 billion. His investments span mining, financial services, and private equity, largely through his holding company African Rainbow Capital (ARC).

In response to the accusations, Motsepe’s legal team clarified that ARM’s only engagement with Pula occurred when the Tanzanian company approached it with a proposal to invest in Pula's graphite project. However, ARM declined the opportunity and formally communicated its decision to Pula.

According to Motsepe, ARCH Emerging Markets — a private equity fund in which he holds a significant stake — was the only entity that engaged with Evolution Energy Minerals. He emphasized that ARCH's actions were independent of ARM, with no communication or coordination between the two entities.

Pula has also accused Motsepe’s companies of stalling the proceedings, citing challenges to the Tanzanian court's jurisdiction and failures to appear at hearings. However, Motsepe’s representatives have denied any deliberate delays, asserting that his legal team is actively engaged in the case.

This legal battle could have significant implications for Tanzania's mining sector. It raises critical questions about the dominance of foreign mining firms and the competitive pressures faced by local operators. However, for now, Patrice Motsepe remains defiant, ready to defend the integrity of his companies and protect his financial interests.