Dar es Salaam. A $195 million legal dispute involving two major players in Tanzania’s graphite mining sector, Pula Group and African Rainbow Capital (ARC), came before the Commercial Division of the High Court this week, where a witness for Pula testified on Monday.
The case, filed in May 2023, centres on allegations of breach of a non-compete clause contained in a confidentiality agreement linked to graphite mining projects in Tanzania.
Pula Group is suing companies associated with South African businessman Patrice Motsepe, including African Rainbow Minerals (ARM), ARC and ARCH Emerging Markets, alleging that they breached contractual obligations by investing in Australia-based Evolution Energy Minerals, which operates a graphite project near Pula’s development site in Ruangwa District, Lindi Region.
The dispute is based on a two-year non-compete agreement signed in July 2019 between Pula and ARM.
According to court documents, a key provision of the agreement barred the parties from engaging in competing activities during the validity of the contract.
Pula claims ARM breached the clause by delaying implementation of the agreement and later cooperating with Evolution in a competing graphite project in Ruangwa.
Appearing before Judge Frank Mirindo on Monday, a witness for Pula, whose identity was withheld, maintained the company’s position that ARM violated the non-compete clause.
Pula is represented in the case by Senior Counsel Beatus Malima, while Senior Counsel Gasper Nyika is appearing for ARC.
During the proceedings, ARC argued that it was not a party to the agreement signed between Pula and ARM, maintaining that the two firms are separate entities operating independently.
ARC also contended that the matter should be heard in South Africa rather than Tanzania, arguing that the agreement between Pula and ARM is governed by South African law.
However, Pula argued that although ARM and ARC are legally separate entities, they did not operate independently in this case.
The company claimed ARC invested in Evolution while fully aware that Evolution owned a competing graphite project in Ruangwa.
Pula further cited filings submitted to the Australian Stock Exchange by Evolution, which allegedly indicated that ARC and Mr Motsepe held relevant interests in the competing project and that Mr Motsepe had controlling interests in all entities named in the suit.
On the question of jurisdiction, Pula argued that Tanzania is the proper forum because the graphite project protected under the non-compete clause is located in Ruangwa and operated by Pula Graphite Partners, a Tanzanian company.
ARC also argued that it had no locus standi in the matter and urged the court to strike out the suit, claiming Pula had failed to provide sufficient evidence linking ARC to the agreement.
Judge Mirindo ruled that if ARC wanted the court to determine the application based solely on the evidence already before the court, it would do so without allowing ARC to present witnesses.
Following the ruling, ARC’s legal team opted not to pursue the application further.
The trial is scheduled to continue on May 25, when ARC’s witnesses are expected to begin testifying.
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