Tigers Realm looking for options after warning its Russian coal business might breach sanctions
The ASX-listed Tigers Realm Coal is considering how to keep its Russian mines operating after the company was warned by DFAT it could be in breach of Australian law.
Listed coalminer Tigers Realm Coal is considering its options to keep operating its Russian coal mines despite Australia’s sanctions against Vladimir Putin’s regime, after the company was warned by DFAT it could be in breach of Australian law.
Tigers Realm operates coking coal projects in Russia and in 2022 booked a $52.7m net profit after producing 1.1 million tonnes of coal, of which about 800,000 tonnes was exported from Russian ports to customers in Asia, with total coal sales generating $185.8m.
But Tigers Realm remains one of the few Australian-listed companies still operating in Russia more than a year after Mr Putin’s invasion of Ukraine, following the exit of companies such as Orica and Worley last year, as Australia and key allies ramped up sanctions aimed at putting pressure on the Russian government to withdraw troops from its neighbour.
Orica sold its Russian business to local management, with other major Australian companies either selling or shuttering their Russian operations.
But Tigers Realm has continued to operate its own business in Russia, despite return sanctions from Russia that the company says have made it difficult to take profits out of the country in the form of dividends – or even pay non-Russian suppliers and directors.
On Monday, Tigers Realm said it was considering its options to keep operating, after seeking advice from the Department of Foreign Affairs and Trade on whether it could be in breach of the current sanctions regime.
“DFAT’s indicative assessment is that the operations are likely to be prohibited by, or subject to authorisation under regulation 4A of the Australian Sanctions Regulations, which relates to sanctioned imports,” the company said.
“The company does not agree with DFAT’s indicative assessment that its operations comprise a sanctioned import.”
Tigers Realm said it was considering its options over the warning, saying it had been “invited” by DFAT to apply to Foreign Affairs Minister Penny Wong for an exemption to the sanctions regime, which could take up to eight weeks for a decision.
“Alternative options available to the company include seeking judicial relief, and/or restructuring the company’s business and corporate group,” the company said.
Falling afoul of Australian law is not the only risk faced by the company’s operations, with Tigers Real warning shareholders in its March annual financial report it was finding it increasingly difficult to source equipment and supplies for its mining operations.
“The group’s ability to continue as a going concern is, in part, dependent on its ability to continue being able to source equipment and supplies necessary for its operations,” Tigers Realm said.
“Furthermore, debt financing, including lease financing for new equipment, has become substantially more expensive.
“The increase in the cost of lease financing combined with significant exchange rate volatility has led the group to conclude that, for the time being, it is not advisable to utilise lease financing for the acquisition of new equipment.
“These factors, combined, may restrict the group’s ability to expand production in line with previously announced plans.”
Tigers Realm’s major shareholder is Sirtex Medical founder Bruce Gray, who holds about 60 per cent of the company’s stock.
Tigers Realm shares closed at 0.9c, down 28 per cent, or 0.3c, on Monday.
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