Ferrexpo, a prominent iron ore producer based in Ukraine, has announced significant financial losses for the first half of 2026, marking an exceptionally challenging period for the company. The firm reported pre-tax losses of $11 million (£8.3 million), a notable improvement from the staggering $186.9 million (£141.3 million) loss recorded during the same period last year. However, revenues plummeted by over 50% to $196.4 million (£148.5 million), reflecting the severe operational and financial pressures the company has faced due to the ongoing conflict in Ukraine.
The company recently secured a $100 million (£76 million) emergency fundraising effort, which was crucial for maintaining daily operations and preventing a cash shortfall by the end of October. This fundraising was approved by investors just days before the announcement of the financial results, highlighting the urgent need for liquidity in light of the company’s dwindling cash reserves, which fell to approximately $30 million (£22.7 million) by the end of June.
Interim Executive Chairman Lucio Genovese described the first half of 2026 as a period marked by significant operational, financial, and legal challenges, exacerbated by the war in Ukraine. The company had to temporarily suspend operations due to extensive attacks on Ukraine’s electricity infrastructure, which severely impacted production capabilities. Despite these challenges, Ferrexpo managed to restart limited production by bringing one of its pellet lines back online, although total commercial production for the first half was down 40% compared to the previous six months.
The continued withholding of VAT refunds by Ukrainian tax authorities has been a significant financial burden for Ferrexpo, with a net VAT receivable balance of $82.7 million as of June 30. This situation has forced the company to downscale operations and implement stringent cost-cutting measures, including reducing employee working hours and suspending non-essential expenditures. The company has also faced logistical constraints and increased operational costs due to the ongoing conflict.
Despite these hurdles, Ferrexpo remains committed to supporting its workforce and the communities in which it operates. The company has reported zero workplace fatalities for over five years, a notable achievement given the wartime conditions. However, the human cost of the conflict is evident, with 67 employees reported killed since the onset of the full-scale invasion.
Looking ahead, Ferrexpo acknowledges the significant challenges that remain, particularly regarding the ongoing suspension of VAT refunds and the broader impacts of the war. The recent equity raise is seen as a vital step towards strengthening the company’s financial position and providing the resilience needed to navigate the current operating environment. Ferrexpo continues to play a crucial role in the global steel industry, producing high-grade iron ore products that contribute to lower-carbon steelmaking, and is poised for recovery when conditions improve.
