KEY POINTS
- Pula Group sues Motsepe for $195 million over alleged non-compete agreement breach.
- Motsepe denies the claims, asserting that ARM considered but declined investment in Pula’s project.
- Case could set a legal precedent for local mining firms against foreign competition in Tanzania.
South African billionaire Patrice Motsepe and his associated companies are facing a $195 million (R3.4 billion) lawsuit in Tanzania, marking one of the largest legal challenges in the country’s commercial court.
The case is set to resume on Monday, bringing significant attention to the issues surrounding corporate conduct in the African mining sector.
Pula Group sues Motsepe over non-compete breach
Tanzanian firm Pula Group’s lawsuit against Patrice Motsepe and his companies—African Rainbow Minerals, African Rainbow Capital, and ARCH Emerging Markets—alleging breach of a non-compete agreement claims this breach occurred when Motsepe’s group invested in Australia’s Evolution Energy Minerals, which undermines Pula’s adjacent graphite project.
Pula’s Chairman, Charles Stith stated that the lawsuit seeks compensation based on a third-party valuation of the potential losses from this competitive disadvantage. In response, Motsepe’s companies deny any wrongdoing, with an African Rainbow Minerals spokesperson asserting that ARM considered but ultimately chose not to invest in Pula’s project, maintaining that they communicated this decision.
Non-compete breach case impacts Tanzania’s mining sector
The controversy revolves around a two-year non-compete contract that Pula Group claims was violated when Motsepe’s companies negotiated with an Australian entity.
Charles Stith, Pula’s chairman and former U.S. ambassador to Tanzania, emphasized the broader implications, stating that Tanzanian mining is largely controlled by Australian and Canadian firms, leading to “unfair and predatory practices” that disadvantage local stakeholders. Stith believes the case could set a legal precedent to protect local mining firms from international competition.
Pula Group has encountered challenges in advancing the lawsuit, with Motsepe’s companies disputing service and jurisdiction. ARM’s legal team has sometimes failed to appear in court, complicating matters further.
As the case progresses, its outcome could significantly reshape Tanzania’s mining sector, impacting local firms competing against foreign interests.
