ASX-listed Russian coal miner’s proposed $76m fire sale under scrutiny

The $76 million fire sale of the assets of an ASX-listed Russian coal miner could hit a roadblock as federal authorities scrutinise the deal that will return funds to a shareholder sanctioned by the Australian government and described as a “slush fund” for Russian President Vladimir Putin.

Days after losing a legal challenge against Australia’s strict sanctions regime, Tigers Realm Coal announced it would sell its Russian assets – 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 ($76.3 million).

The company plans to return capital from its sale to shareholders, which includes the Russian Direct Investment Fund, which has an 8.41 per cent stake in the company. Putin established the RDIF, Moscow’s sovereign wealth fund, in 2011 to make it easier for foreign firms to co-invest with the Kremlin in Russian companies.

The United States Treasury has said the RDIF is “widely considered a slush fund” for Putin and is “emblematic of Russia’s broader kleptocracy”. 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 Commonwealth is considering all relevant options with regards to compliance following the decision of the Federal Court in Tigers Realm Coal Limited v the Commonwealth of Australia,” a spokeswoman for the Department of Foreign Affairs and Trade said. “We do not comment publicly on compliance matters.”

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The move to sell assets requires approval from shareholders, including billionaire philanthropists Paul Little and Jane Hansen, who own 5.63 per cent of shares, and the company’s non-executive director, Bruce Gray, who holds a controlling 59.89 per cent stake. Little told The Australian Financial Review last month that he was unable to sell his shares in the company.

The company said in a statement to the market: “As a consequence of the considerable and ever-increasing challenges faced by TIG [Tigers Realm Coal] as outlined in numerous ASX releases as well as the CEO’s presentation to the AGM in August 2023, the board of directors of TIG decided that the divestiture of TIG’s coking coal projects is in the best interest of TIG shareholders and represents the most effective way to unlock the inherent value of the coking coal projects for the shareholders.

“The board went through a detailed strategic review and a careful process of identifying a purchaser.”