By Colin Kruger
Tigers Realm shareholders, including billionaire Paul Little, are set to approve the sale of its Russian coal mines to a Russian businessman, but the threat of legal action for evading sanctions hangs over the group.
The ASX-listed company has been forced into a fire sale of the assets after losing a Federal Court appeal in April over whether it was in breach of sanctions against Russian interests following the Ukraine invasion.
While the sale is expected to receive overwhelming approval from shareholders – board member Bruce Gray is backing the sale with his 59.89 per cent stake – there could be surprises in store as the company provides an update on its talks with the Department of Foreign Affairs and Trade.
Tigers Realm Coal is backed by billionaire Paul Little.Credit: Simon Schluter
“The Australian Sanctions Office, within the Department of Foreign Affairs and Trade, has been in communication with Tigers Realm Coal Limited following the Federal Court’s decision,” a DFAT spokesperson said.
The department is still considering its options in relation to Tigers Realm in terms of both the sale of its Russian interests and its sanctions breach.
The coal miner’s company secretary, David Forsyth, declined to comment on what has come of these talks with DFAT.
“We adhere strictly to our continuous disclosure requirements and provide details/updates on the matters below to the market and shareholders as and when required,” he said. “At this stage we expect the next opportunity will be at the AGM next Tuesday.”
DFAT warned the company in March last year that it was probably breaching the Autonomous Sanctions Act, but Tigers Realm launched legal action in June in the hope of having the finding overturned.
It continued mining and shipping coking coal in sub-zero temperatures from its Russian mines to clients in Asia. None of the coal made its way to Australia.
In April, Tigers Realm lost its Federal Court battle contending that Commonwealth sanctions on importing, buying and transporting Russian coal did not apply to the ASX-listed entity. Its lawyers argued that as the miner was only “transporting” the coal within Russia, it did not fall within the sanctions.
But Justice Geoffrey Kennett said the word “transports” in the sanctions regulation had its ordinary meaning and applied to Tigers Realm’s operations.
The company subsequently announced the sale of its operations – two coking coal mines and an export terminal in the country’s far east – to APM Invest, which is owned by Russian mining tycoon Mark Buzuk, for $US49 million ($74 million) cash.
Russian President Vladimir Putin and Kirill Dmitriev, head of the Russian Direct Investment Fund. Credit: AP
One potential issue is that the proposed deal, which will mean the sales proceeds are returned to shareholders, will return funds to a shareholder, the Russian Direct Investment Fund, sanctioned by the Australian government and described by the US Treasury as being “widely considered a slush fund” for Russian President Vladimir Putin.
The RDIF has rejected that description.
The Australian government sanctioned the fund and its chief executive, Kirill Dmitriev, shortly after Russia’s invasion of Ukraine.
The fund, which has an 8.41 per cent stake in the company, was established by Putin in 2011 as Moscow’s sovereign wealth fund to make it easier for foreign firms to co-invest with the Kremlin in Russian companies.
Logistics billionaire Paul Little and his wife, University of Melbourne chancellor Jane Hansen, own a 5.63 per cent stake via Namarong Investments, but have said they have been unable to sell the stake.
Tigers Realm floated on the ASX in August 2011 at 50¢ a share, with backers including mining entrepreneur Owen Hegarty, touting grand plans of building a new metallurgical coal mine in Russia.
The stock last traded at 0.4¢, valuing the group at $52 million.
Tigers Realm increased its coal output in 2023 by 56 per cent from 2021. Its most recent annual financial report shows the company raked in a revenue of $140 million in the year to December 31, and a net profit of $46 million.
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