Ferrexpo iron ore output slumps 40% on Ukraine tax woes

Ukraine-focused miner Ferrexpo FXPO reported a 40% sequential fall in its second-quarter iron ore production on Monday, as a suspension of its value-added tax refunds in the country squeezed liquidity and forced it to reduce operations.

The company, whose Poltava Mining unit is facing potential bankruptcy proceedings, said it had placed about 37% of its employees on reduced working time or furlough, and cut procurement of goods for production to remain financially viable.

Ukrainian tax authorities have suspended $31 million in VAT refunds from January to April, the company said.

Ferrexpo had previously said the VAT refund suspension was due to the imposition of personal sanctions on Kostiantyn Zhevago, its largest controlling shareholder, who was arrested in 2022 on charges of embezzlement.

The London-listed company reported total commercial iron ore production of 1.3 million tonnes for the three months ended June, compared with 2.1 million tonnes in the previous quarter.