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Key Points
- Pula Graphite is suing ARC and affiliates for $195 million, alleging misuse of confidential data to back a competing graphite firm near its Tanzanian project.
- The lawsuit could derail ARC’s planned delisting and restructuring, as Pula claims the move risks evading regulatory oversight and shareholder transparency.
- Filed in Tanzania’s High Court, the case may set a legal precedent for cross-border accountability in Africa’s fast-growing mining and energy sectors.
South African billionaire Patrice Motsepe is facing significant legal challenges as his investment firm, African Rainbow Capital (ARC), is being sued for $195 million by Tanzanian graphite developer Pula Graphite. The lawsuit threatens to derail ARC’s plans to delist and restructure, casting a shadow over the firm’s future.
Pula has asked Tanzania’s High Court to fast-track the case, arguing that ARC’s exit from the Johannesburg Stock Exchange (JSE) and A2X Markets would remove key transparency and governance protections. ARC’s March 18 announcement, which described the move as a way to streamline operations and increase shareholder value, is now under heightened scrutiny from both regulators and investors.
Tanzania lawsuit threatens ARC plans
The lawsuit, which was first filed in 2022 and refiled in November 2023, accuses ARC, African Rainbow Minerals (ARM), ARCH Emerging Markets, and Patrice Motsepe of misusing confidential data from 2019 investment talks. Pula claims that this proprietary information was used to support Evolution Energy Minerals, a competitor with operations near Pula’s Ruangwa graphite project in southern Tanzania.
Ruangwa, which Pula describes as one of the world’s top 10 graphite assets, is at the center of the dispute. The company alleges that ARC and ARM undermined its strategic position by breaching a non-disclosure agreement, which resulted in harm to Pula’s competitive edge. Although ARC has challenged the Tanzanian court’s jurisdiction, it remains the only defendant to have submitted a formal defense. In February 2024, the court dismissed ARC’s objection, allowing the case to move forward.
While Motsepe and ARC deny any wrongdoing, the lawsuit could have far-reaching consequences for both the firm and Motsepe’s reputation as one of Africa’s leading figures in mining and finance. Legal experts warn that the case could not only impact ARC’s restructuring plans but also set a significant precedent for corporate disputes in Africa.
ARC’s growth meets its toughest challenge
ARC, which Motsepe founded in 2015 with his Ubuntu-Botho Investments to build Black-owned capital in South Africa, has grown its portfolio in recent years. The firm’s most recent report showed a 4.1 percent increase in its net asset value to R19.39 billion ($1.04 billion) for the half-year ending December 2024.
However, this lawsuit may be the firm’s most challenging test yet. If Pula’s $195 million claim is successful, it could become one of the largest corporate disputes involving Tanzanian mining assets and could set a legal precedent for cross-border accountability in Africa. For both ARC and Pula, the outcome could be pivotal. For Africa’s broader investment community, it underscores the growing importance of transparency, governance, and resource control.
