Ferrexpo, the London-listed iron ore producer with major operations in Ukraine, reported a steep 40% drop in second-quarter production after a suspension of value-added tax (VAT) refunds crippled its liquidity and forced the company to scale back operations.
In a statement on Monday, Ferrexpo revealed that total commercial production fell to 1.3 million tonnes for the quarter ending June, down from 2.1 million tonnes in Q1. The company attributed the decline to a $31 million VAT refund freeze by Ukrainian authorities, covering the period from January to April.
The company’s Poltava Mining unit, already under pressure from potential bankruptcy proceedings, has responded by placing approximately 37% of its workforce on reduced hours or furlough and cutting back on procurement of goods and services required for production.
Ferrexpo said the halt in VAT payments is linked to personal sanctions on its largest shareholder, Kostiantyn Zhevago, who was arrested in 2022 on embezzlement charges. Although the company itself is not under sanctions, the indirect impact has been severe, hampering its ability to operate in Ukraine’s strained financial environment.
The miner warned that these constraints could continue to impact output unless the financial pressure eases.
