Tanzanian graphite producer is claiming R3.8bn from African Rainbow Capital and Patrice Motsepe over alleged violations of a non-compete agreement. From Moneyweb.
Pula Graphite – the Tanzanian graphite producer suing African Rainbow Capital (ARC) for $195 million (R3.8 billion) over alleged violations of a confidentiality and non-compete agreement – has asked the Tanzanian High Court to move the court hearing forward before ARC delists from the JSE and A2X.
The case was originally filed in Tanzania in 2022 against ARC, ARM, its founder Patrice Motsepe, and UK-based investment fund ARCH Emerging Partners.
The case was refiled in November 2023 after the 2022 filing was dropped for technical reasons.
Pula has asked the Tanzanian court to move its court date forward following the 18 March 2025 announcement by ARC to delist from the JSE and A2X.
ARC’s share price has nearly doubled over the past year and is currently trading above R9.35, close to the R9.75 at which shareholders will be bought out. ARM’s share price on the other hand is less than half of what it was in early 2023.
ARM’s share price decline has been driven in part by fallout from the Tanzanian case, lower commodity prices, and a sharp cut to dividends. The Pula damages claim of R3.8 billion represents more than half the roughly R6 billion ARM had in cash at the end of December 2024.
‘Profoundly interesting coincidence’ – Pula chair
“This move clearly changes the status quo relative to our suit against ARC,” says Pula chair Charles Stith.
“I find it a profoundly interesting coincidence that this announcement was made within days of the announcement of the calendar for proceeding with our suit against ARC.
“The timing is interesting because the delisting would happen on or around June 2nd, which would be during the court required mediation period that would conclude sometime in mid or late June, if we stuck to the original timeline announced by the court in March.”
An early hearing will allow the mediation process to commence much sooner, prior to the potential delisting of ARC, says Pula in a statement.
“Pula Group and Pula Graphite partners strongly believe that a potential delisting could seriously jeopardise their ability to engage in a meaningful mediation process as well as the recovery of any damages, if successfully awarded by the court.”
Though not specifically mentioned by Pula, there is speculation that Pula wants to avoid any potential disposal of assets once ARC is delisted, hence the request to move the court hearing closer.
Moneyweb reached out to ARM for comment but did not receive a reply by the time of publication.
Claims
The only party to file a response to the case in 2023 was ARC, which claimed that the Tanzanian court did not have jurisdiction to hear the complaint, nor was there any cause of action.
ARC also argued that it was not a party to the agreement and, therefore, could not be sued for breaching it.
The Tanzanian court rejected these arguments with costs in February 2024.
In its court papers, Pula alleges that ARM breached a 2019 non-disclosure and non-compete agreement by investing in Evolution Energy Minerals, a rival graphite project near Pula’s Ruangwa site in Tanzania. Ruangwa is rated among the top 10 graphite sites in the world.
ARM was previously in discussions with Pula over the possibility of investing in its graphite project but then decided against it, opting instead to invest in Evolution Energy Minerals, which is developing the nearby Chilalo Graphite Project in southern Tanzania.
These discussions would have given ARM access to Pula’s confidential data, it is claimed.
Pula argues in its court papers that Motsepe’s companies had violated the agreement not to use confidential information in a way that was detrimental to its interests and that the investment in Evolution “substantially facilitated the development of the Chilalo Project, which is not only within the same geographical territory as that of Pula’s Project but also a direct competitor in the graphite business”.
Pula says it continues to suffer financial losses, inconveniences, and expenses as a result of the claimed breaches.
Motsepe and ARM have denied breaching the confidentiality agreement, saying there is no merit to the claims brought against it by Pula.
