Government urged to ‘enforce’ sanctions on Australian coalminer still operating in Russia

An ASX-listed company mining coal in northern Russia may soon privatise its operations after it was suspected of breaching Australia’s Russia sanctions regime, imposed as a result of the war in Ukraine.


– ASX-listed Tigers Realm was warned it may be in breach of Australia’s sanction laws. 
– The company has been developing its business in Russia for over a decade.
– Transparency advocates are calling for Australia to avoid granting a sanctions permit to the company.

Calls are growing for the Australian government to review the activities of an Australian publicly listed coalminer still operating in Russia more than a year after the country’s invasion of Ukraine.

Tigers Realm Coal, which has been operating in Russia for more than a decade, was warned in April by the Department of Foreign Affairs and Trade (DFAT) that it could be in breach of Australian sanctions.

There is now a call — from Transparency International Australia and Ukraine, the Australian Centre for International Justice and their Ukrainian partners at Razom We Stand — urging Foreign Minister Penny Wong to avoid granting a permit that would allow the company to continue sanctioned activities.

In a letter seen by SBS Russian, representatives of the four organisations have called for a review of Tigers Realm’s activities.

“In its ASX announcement, Tigers Realm mentioned that they might be seeking a permit. Our letter calls upon the Australian Sanctions Office and the minister to not grant that permit,” said Melissa Chen, a senior lawyer at the Australian Centre for International Justice.

“A permit must not be granted unless it’s in the national interest to do so. Given Australia’s publicly strong stance in terms of its sanctions against Russia, the granting of such a permit would not and could not meet this national interest test.”

Who is Tigers Realm?

Tigers Realm’s mining of coal in the Chukotka autonomous region has continued largely uninterrupted despite Moscow’s annexation of Crimea, the downing of MH17 by pro-Russian separatists in Donbas, and most recently, Russia’s full-scale invasion of Ukraine.

Established in 2010 and listed on the Australian Securities Exchange (ASX) as a junior mining and exploration company a year later, Tigers Realm initially disclosed assets in Colombia, Indonesia, Spain and Russia.

In a 2019 interview with Australian journalist Alan Kohler, the company’s CEO, Dmitry Gavrilin, said that over time the company focused on its Chukotka operations because “other projects have not proved to be economically viable or feasible in terms of geology and other factors”.

The company holds two exploration licences in Russia and has plans to become “a significant supplier of high-quality coking coal to the seaborne market”.

The company has been mining coal since 2017 on one of the two exploration sites and has been selling it to Asian markets.

“We are a de facto Russian company. We need a listing in Australia because there is traditionally a lot of investor interest in the coal industry there,” Peter Balka, the Australian mining businessman who was then Tigers Realm’s chief operating officer, explained in an interview with a Russian media outlet in 2016.

Coal and sanctions

Immediately following the invasion of Ukraine in February 2022, a number of countries imposed trade sanctions on Russia.

The Australian government condemned the invasion and introduced a wide number of sanctions against certain individuals and entities, while also banning the import and export of a number of goods to and from Russia, including coal.

Tigers Realm continued its mining operations and reported an increase in its annual sales revenue from $104 million in 2021 to $186 million in 2022, reflected in its annual report.

However, in 2022, as stated in the annual report, “the usual markets were not open to Tigers Realm” and the company concentrated mostly on trade with China.

In his address at the annual general meeting in May 2022, Tigers Realm chairman Craig Wiggill praised management and the board for their focus on the continued and safe operation of the mine and port.

Management has found ways to adapt to the previously uncontemplated challenges to running a successful business in Russia.

Craig Wiggill, Chairman of Tigers Realm

In April, more than a year after the war in Ukraine began, the company released a statement that DFAT had provided it with an indicative assessment that its operations may be in breach of Australia’s sanctions laws, a claim it denied.

In response, Tigers Realm announced that it would consider potential privatisation and delisting from the ASX at meetings in June and July.

Alternatively, as advised by DFAT, the company may apply for a permit to continue sanctioned activities.

Information gap

According to Ms Chen, privatisation alone would not mean that Tigers Realm will be able to avoid the application of Australia’s sanctions laws.

“It doesn’t matter if it’s a private or public company. As long as they are incorporated in Australia and perform certain activity which is prohibited under Australia’s sanctions laws, then they should still be subject to those laws,” she said.

She pointed out that one of the shareholders of Tigers Realm is a company named RDIF Investment Management LLC.

As of mid-June 2023, this company holds 7.93 per cent of the total shares of Tigers Realm.

Questions arise as to whether this company is the same as or closely related to the Russian Direct Investment Fund (RDIF), owned by the Russian government.

RDIF and its CEO Kirill Dmitriev have been sanctioned by the Australian government.

Tigers Realm secured funding from the Russian government’s RDIF  back in 2014, and according to the company’s website, the fund’s representatives have served on its board.

Ms Chen explained that there is a real “information gap” in terms of what Australia is doing to enforce its sanction laws.

“The Australian Sanctions Office does not release much information about what precisely they are doing to actually enforce the sanctions laws.”

Because so little information is released, we don’t know if they have looked at that and if they have, they clearly have not taken any actions.

Melissa Chen, Senior Lawyer, Australian Centre for International Justice

This view is shared by Ilya Shumanov, ex-director general of Transparency International Russia.

In March 2023, the Russian government designated Transparency International as an “undesirable organisation”.

As a result, Transparency International Russia’s governing body decided to begin the process of liquidation. Mr Shumanov now leads Arctida, a non-profit making investigations into Russia’s Arctic region.

Mr Shumanov agrees that Australian authorities should start an investigation into the sanctions breach, pointing out that Australian legislation lacks clear guidance.

“The US, the UK and the EU have specific rules — the so-called 50 per cent rule — that determines who is considered the owner or controller of a company or entity for the purpose of imposing sanctions. In the US, for example, if a company is owned or controlled by sanctioned individuals or entities by 50 per cent or more, that company itself becomes subject to sanctions.

“As I understand, the Australian regulators have not issued any guidance or instructions on this specific point.”

In a statement provided to SBS Russian, a spokesperson for the Department of Foreign Affairs and Trade said that it would not be appropriate for it to comment on ongoing legal and regulatory matters.

“The Australian Sanctions Office within the Department of Foreign Affairs and Trade works closely with other Australian Government co-regulators including Defence Export Controls, Australian Border Force and Australian Federal Police to respond to sanctions contraventions,” the statement said.

‘It’s all about the money’

Anna Otke, President of the Chukotka Association of Indigenous Peoples, and Dmitry Gavrilin, CEO of Beringugolinvest LLC (a subsidiary of Tigers Realm Coal), sign a cooperation agreement. Anadyr, November 2018. Photo by Elena Evtyukhova.

Josh Creaser is the spokesperson for Move Beyond Coal, a community movement working across Australia to stop coal expansion and phase out coal by 2030.

He believes, “Russia’s invasion of Ukraine caused the price of coal to soar, and Australian miners cashed in. Tigers Realm has taken war profiteering from coal to shocking new lows”.

In Mr Creaser’s opinion, “This Australian company has deliberately sought to conduct coal mining ventures that help fund Russia’s war and is now attempting to wash its hands by seeking to privatise, evade sanctions and avoid being held accountable for its role in funding Russia’s bloody war on Ukraine.”

Tim Buckley, director of Climate Energy Finance, said he is “not surprised” to see a mining company continue its business in Russia despite its invasion of Ukraine.

“It’s all about the money. In the coal industry in a good year, you can make a fortune,” he said.

China doesn’t want to be dependent on Australia’s coal. We are 55 per cent of the world’s coking coal export. Therefore, China will happily buy from Russia.

Tim Buckley, director, Climate Energy Finance

Altar, a local Indigenous community, resides close to Tigers Realm mining and exploration sites. In 2021, after lengthy legal battles  with the region’s government over rights to its ancestral land, the legal entity of the community filed for liquidation.

Tigers Realm Coal employees are participants of the VI Congress of Indigenous Peoples of Chukotka. Anadyr, March 2021.
Presentation of Dmitry Gavrilin, CEO of Beringugolinvest LLC (a subsidiary of Tigers Realm Coal), at the VI Congress of Indigenous Peoples of Chukotka. Anadyr, March 2021.

‘Laws are meaningless unless enforced’

Ms Chen said the Australian Sanctions Office must strive to enforce its sanctions, otherwise, their effectiveness will be diminished.

“These sanctions are meaningless unless there are robust enforcement measures in place. If you have these sanctions on your books without actually taking action to make sure that assets are frozen and individuals and entities are investigated for breaching certain laws, then those laws will have no effect,” she added.

Clancy Moore, CEO of Transparency International Australia, echoed these sentiments.

The war in Ukraine has significantly increased the corruption and money laundering risks for Australian companies doing business in Russia.

Clancy Moore, CEO, Transparency International Australia

“The lack of enforceable sanctions has only increased these risks for a company like Tigers Realm,” Mr Moore believes.

“Any company engaging with Russian entities, including those that have been sanctioned, raises a giant red flag for money laundering authorities and may be enriching the Putin regime,” Mr Moore claimed.

Representatives of Tigers Realm have not responded to SBS Russian’s request for comment.