Tanzanian company Pula Group has approached the High Court in that country for a ruling to speed up its $195 million (R3.78 billion) damages legal suit against Patrice Motsepe-owned African Rainbow Capital Investments (ARC).

Pula Group chairman Charles Stith and Pula President Dr. Mary Stith said in a statement Tuesday that following ARC’s announcement to delist on March 18, they had advised their attorneys to file a Certificate of Urgency in the High Court to move the mention of its suit against ARC forward into April; it was originally scheduled for May.

Stith said of the plan to delist: “This move clearly changes the status quo relative to our suit against ARC. 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 2, 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,” he said.

A successful application will allow the mediation process to commence sooner, prior to the potential de-listing of ARC.

He said 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. An ARC spokesperson said the company was unlikely to comment at this stage.

In the main case or point of dispute, Pula Group and Pula Graphite Partners had filed a suit against ARC, Motsepe, and ARCH Emerging Partners (ARCH), a UK-based investment fund, in November 2023, for violating a non-compete agreement signed by the companies.

In July 2024, the Tanzania High Court ruled that Motsepe, ARM, and ARCH no longer had standing in the main case for failure to appear at an earlier hearing, which meant they were effectively in default.

At the expedited mention, the Court is anticipated to rule on Pula Group’s ability to extend its claim against ARC beyond the 12-month period that the Court provides for commercial matters such as this, an expedited timetable for pre-trial mediation between Pula Group, Pula Graphite Partners, and ARC, as well as the default judgement against Motsepe, ARM, and ARCH.

The case revolves around allegations of breaching a non-disclosure and non-compete agreement signed in 2019. Pula claims that ARM used confidential information shared during the agreement period to collaborate with a competitor, Evolution Energy Minerals, on a graphite project in Tanzania.

Stith said the lawsuit highlights concerns about foreign dominance in Tanzania's mining sector and aims to protect local businesses from predatory practices.

ARC announced its plans to delist from the JSE and A2X Markets on March 18, 2024, based on factors such as limited public shareholding, low liquidity in shares, and the desire to better reflect the value of investments.

Pula’s four graphite licenses are in Tanzania’s rich Graphite Belt, which is among the world’s richest in quality and quantity. Pula’s priority graphite project is in the Ruangwa District in the Lindi Region.

Graphite is used in applications like batteries, especially in lithium-ion batteries, lubricants, pencils, and as a refractory material. It is also critical in emerging technologies, such as electric vehicles and renewable energy, because it is a key component in energy storage solutions.

ARC’s share price gained 2.56% to R9.26 on the JSE Tuesday afternoon. A year ago, it traded at R5. African Rainbow Minerals’ share price increased 3.66% to R138.38, while a year before it traded at R173.05.

BUSINESS REPORT

graphite

Pula Group seeks expedited ruling in R3. 8bn lawsuit against African Rainbow Capital