Miner Ferrexpo sees iron ore output plummet after Ukraine suspends VAT refunds
The mining company delivered 1.3 million tonnes of iron ore during the quarter ending March, compared to 2.1 million in the previous quarter, which was the highest amount since Russia's full-scale invasion of Ukraine in February 2022.
Meanwhile, the Swiss-headquartered group's pellet output plunged by 39 per cent from more than 1.3 million tonnes to 821,882 tonnes.
Ferrexpo has been forced to downsize its operations to one pelletising line and to reduce the production of high-grade concentrate due to the halting of VAT refunds and their negative impact on liquidity levels.
The suspension follows sanctions imposed by President Volodomyr Zelensky on the oligarch Kostiantyn Zhevago, who controls a 49.5 per cent stake in Ferrexpo and was once dubbed 'Europe's youngest self-made billionaire'.
Zhevago has been accused of embezzling funds from Finance & Credit Bank, which collapsed in 2015. He has denied all allegations.
Ukraine's government attempted, but failed, to seize his stake in Ferrexpo's Poltava mine through the courts in 2023.
In March, the Daily Mail reported that Ferrexpo would initiate international arbitration proceedings if Ukraine part-nationalised the site, which is Ferrexpo's largest iron ore mine.
'All efforts and representations are underway with the respective authorities and government bodies in Ukraine and internationally to try to resolve the VAT refund suspension,' said Lucio Genovese, interim executive chair of Ferrexpo.
Ferrexpo noted on Monday that demand for its high-grade low-alumina concentrate from customers in China continued to be strong.
The group's annual production volumes remain far below pre-2022 volumes due to the conflict in Ukraine disrupting export operations and many employees serving in the country's armed forces.
Mark Crouch, market analyst for eToro, said: 'Ferrexpo has long been navigating treacherous terrain, but the war in Ukraine has brought unprecedented disruption.'
However, he added: 'It's worth remembering that Ferrexpo has weathered severe downturns before.
'The company's shares have traded at significantly lower levels during prior crises, such as the 2008 financial meltdown and the 2015 commodities rout.
'For long-term investors with a high-risk appetite, this may be seen not as a crisis, but as yet another turbulent chapter in Ferrexpo's volatile history.'
Ferrexpo shares were 0.7 per cent higher at 49.1p on late Monday afternoon, taking their losses to around 55 per cent since the year began.
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