28 May 2024

Aussie coal company’s AGM sale shines a spotlight on sanctions regime

ASX-listed Tigers Realm Coal’s sale of its Russian subsidiaries to a Russian mining tycoon at the company’s AGM have once again put the spotlight on Australia’s sanctions regime, says Transparency International Australia and the Australian Centre for International Justice.

In March 2022, the Australian government listed Russian coal as a sanctioned import good though the company has continued to extract, transport and sell Russian coal raising questions of the efficacy of Australia’s sanctions regime.

Tigers Realm Coal’s 2023 financial statement show increased volumes in Russian coal production to 1.6 million tonnes and annual sales to 1.26 million tonnes. Since the war, the company’s Russian subsidiaries have been paying taxes and fees to the Russian state seemingly at odds with the objectives of Australia’s sanctions regime.

The AGM saw Tigers Realm Coal’s shareholders agree to a USD $49 million sale of its Russian subsidiaries, who hold the licenses for two lucrative coal deposits, to Russian tycoon Mark Buzuk.

The sale also looks set to return capital to shareholders including a wholly-owned subsidiary of the Russian Direct Investment Fund (RDIF) – a Russian Sovereign Wealth Fund setup by Putin – which is a sanctioned entity under Australia, US, UK and Canada sanctions laws.

Significantly, the 2024‑25 Federal Budget included $26.4 million over four years to strengthen monitoring and enforcement under Australia’s sanctions framework which could lay the foundations for further investigations.

Clancy Moore, CEO of Transparency International Australia, made the following comments:

“Between 2018 and 2022, it appears Tigers Realm Coal’s subsidiaries paid $22.6 million in taxes and fees to the Russian government. Despite Russian coal being listed as a sanctioned good in 2022, the company continues to mine, transport and sell coal helping line the pockets of the Putin regime.”

“Contravening Australia’s sanctions laws is a serious criminal offence with penalties including up to ten years in prison and large fines.”

Lara Khider, Senior Lawyer with the Australian Centre for International Justice, echoed these concerns and called for stronger enforcement mechanisms:

“The enforcement of sanctions is critical to supporting Australia’s foreign policy and to safeguarding against threats to peace and security. In response to sanctions contraventions, we urge Australian agencies to take decisive and targeted action to ensure the efficacy of Australia’s sanctions regime. ”

Timeline of events:

  • In April 2023, Tigers Realm Coal disagreed with DFAT’s Indicative Assessment that its mining operations were likely to be prohibited under Australia’s sanctions laws, instead stating that they were considering applying for a permit and outlining an intention to privatise the company.
  • On 21 June 2023, the Australian Centre for International Justice, Transparency International Australia and Ukraine, and Razom We Stand publicly urged the government to refuse to grant a sanctions permit to Tigers Realm, arguing that this would not be in Australia’s national interest and could undermine the broader objectives of Australia’s sanctions regime against Russia.
  • On 22 June 2023, Tigers Realm filed an application in the Federal Court, seeking declarations that Australia’s sanctions laws do not apply to its coal mining activities in Russia.
  • On 4 July 2023, Tigers Realm made an ASX announcement, stating that its potential privatisation and delisting from the ASX were being suspended.
  • On 4 March 2024, the hearing in relation to Tigers Realm’s court action commenced.
  • On 9 April 2024, the Federal Court dismissed Tigers Realm’s application, finding that the activities of the company’s subsidiaries in producing and transporting coal for import into third countries from Russia are captured by Australia’s sanctions laws. The Court also ordered that Tigers Realm pay the Commonwealth’s costs.