Why Pula refiled case against South Africa’s ARM

Dar es Salaam. Pula Graphite Partners and its parent company, Pula Group LLC, said yesterday that the non-disclosure and non-compete lawsuit against South African-based African Rainbow Minerals Ltd (ARM) was still ongoing despite a temporary drop in May 2023.

On October 28, 2022, Pula filed an application in a lawsuit claiming a breach of a non-disclosure and non-compete agreement at the Commercial Division of the High Court of Tanzania.

However, the $195 million lawsuit filed by Pula Graphite Partners and the Pula Group LLC against African Rainbow Minerals (ARM) and its six affiliates was abruptly dropped in May 2023 due to technical reasons.

But, according to Pula President Dr Mary Stith, the case was refiled in November 2023 and is still progressing.

“Withdrawing and refiling the suit was based on a technicality. We are comfortable with the course of action recommended by our lawyers. We intend to refine our lawsuit because we believe our case is strong…,” she said in the statement that was sent to the media in Dar es Salaam yesterday.

The plaintiffs are claiming $195 million in damages from ARM for an alleged breach of their non-disclosure and non-compete agreements.

The case is based on a July 2019 agreement between the firms.

In the agreement, the two parties are said to have signed a two-year agreement that compelled them to share confidential information that would put either company at a competitive disadvantage should either company share that information or use it to enter into an agreement with a potential competitor.

As a result of signing the contract, Pula shared confidential information with ARM’s senior executives concerning the mining business and investment in mining activities.

The information included details about the nature of its graphite mining exploration activities in Ruangwa, Tanzania, and technical know-how on Tanzania’s graphite reserves in the region.

A key aspect of the contract was a commitment not to compete while it was valid.

The initial contract between the plaintiffs and ARM was for two years, but Pula alleges that ARM violated the non-compete clause by delaying implementation and deciding to cooperate with a competitor, Evolution, in Ruangwa.

On December 20, 2023, all parties were summoned to appear at the Commercial Court to receive orders on how to proceed with Pula’s action.

Of the four companies under ARM that were ordered to appear before the court, it was only African Rainbow Capital that showed up.

Consequently, Pula filed a default application against Mr Patrice Motsepe, African Rainbow Minerals and ARCH, a British company that bought shares in Evolution, in which Motsepe’s company is a major shareholder.