By Simon Johanson and Sumeyya Ilanbey
A mining company backed by billionaire philanthropists Paul Little and Jane Hansen has lost a legal challenge against Australia’s strict sanctions regime that may force it to stop digging up coal in far-eastern Russia and transporting it to Asia.
Lawyers for Tigers Realm Coal, a little-known ASX-listed miner, were unsuccessful in convincing Justice Geoffrey Kennett in the Federal Court on Tuesday that Commonwealth sanctions on importing, purchasing and transporting Russian coal did not apply to their client.
Tigers Realm Coal, which operates in Russia, has lost its bid to avoid sanctions over Russian coal. Credit: Tigers Realm
Despite multiple other businesses exiting Russia after Vladimir Putin launched a disastrous war against Ukraine two years ago, Tigers Realm is still mining and transporting coking coal in sub-zero temperatures from its Russian deposits through its subsidiaries to Asia. All its mining operations occur in Russia, with none of the coal landing in Australia.
In the past year, it reaped a net profit of $46 million.
The company was warned by Department of Foreign Affairs and Trade in a non-binding finding in March last year that it was likely breaching the Autonomous Sanctions Act, but Tigers Realm launched legal action in June in the hope of having the finding overturned.
Its lawyers argued that as the miner was only “transporting” the coal within Russia, it didn’t fall within the sanctions.
But Justice Kennett said the word “transports” in the sanctions regulation had its ordinary meaning and applied to Tigers Realm’s operations.
“The activities of the Russian subsidiaries involve actions which constitute ‘sanctioned imports’,” he found.
The miner’s company secretary, David Forsyth, said after hearing of Tuesday’s decision that the company did not know at this stage how the judgement would impact its business.
“The company will have a meeting a bit later this evening and go through all the ramifications,” Forsyth said. “I’m sorry, I’m just not able to comment at this time.”
Early last month, Tigers Realm told investors that if the Federal Court didn’t find in its favour, it would need to urgently consider what steps were required to ensure compliance with the sanctions, including the possibility of ceasing operations.
Mining entrepreneur Owen Hegarty and Tony Manini listed Tigers Realm Coal on the Australian Stock Exchange in 2010. After listing, its shares traded at 54¢. Now, it has a market capitalisation of $65.3 million and its shares fetch less than 1¢ a share at around 0.05¢ each.
The founder of market darling Sirtex Medical, Bruce Gray, is a controlling shareholder in the company with a 59.89 per cent interest. Russian private equity firm Baring Vostok Mining Holding has a large 18.2 per cent stake, and Namarong Investments, which lists logistics billionaire Paul Little and his wife University of Melbourne chancellor Jane Hansen as directors, owns 5.63 per cent.
Australia’s tough sanctions regime has already snared Russian aluminium producer Rusal, a minority owner in a Queensland alumina refinery with mining giant Rio Tinto. Earlier this year, Rusal lost a lawsuit against Rio after the miner froze supply of bauxite and alumina to the Russian company to comply with Australia’s sanctions regime.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.