Ferrexpo cuts production by more than half: what happened
6 May 11:44
Ferrexpo Group, one of Ukraine’s leading exporters of iron ore, is under severe financial pressure due to the suspension of the state’s VAT refund mechanism. The debt to the group’s enterprises has already exceeded $25 million, and the company’s operations have suffered a large-scale reduction. Ferrexpo’s CFO Nikolai Kladiev told LIGA.net in an interview, "Komersant Ukrainian" reports
The main reason for the termination of the value added tax refund is sanctions against Konstantin Zhevago, whom the government considers to be the beneficiary of Poltava and Yeristovo GOKs. However, Ferrexpo insists: Zhevago is not the legal owner of these assets, according to the group’s structure and corporate law. The company insists that these sanctions are personal to Mr. Zhevago and have not been imposed directly on the company.
The company has notified the state authorities of the possibility of applying to international arbitration. According to Kladiev, this step was taken in response to the violation of the state’s obligations to refund VAT guaranteed by Ukrainian law.
Production suspension
Since late March, Ferrexpo has been forced to suspend two of its three pelletizing lines. This more than halved production volumes. This resulted in lower salaries for employees, cuts to social programs and lower tax revenues to local budgets.
“We are cutting our production by more than half because we do not have enough working capital due to unreimbursed taxes,” said Kladiev.
In addition, investment projects planned to modernize production were temporarily suspended. These include infrastructure projects at Yerystovsky GOK and equipment upgrades at Poltava Plant.
Ferrexpo’s legal structure: who really owns the assets
Konstantin Zhevago became the owner of Poltava Mining in 2002 when he purchased it from VS Energy of Russians Evgeny Giner, Alexander Babakov and Ukrainian Mikhail Voevodin.
Today, Poltava, Yeristovo and Bilanovo GOKs are owned by Swiss Ferrexpo AG, which, in turn, is owned by British Ferrexpo plc.
And the main owner of Ferrexpo plc is Luxembourg-based Fevamotinico S.a.r.l. Zhevago is the beneficiary of this company. Among the investors of Ferrexpo plc are also such entities as BlackRock, BNP Paribas, JPMorgan, Saxo Bank, etc.
What we know about Ferrexpo
Ferrexpo is one of the key companies in the mining and metals sector specializing in the production of iron ore pellets. It is Swiss-registered, but its main assets – including Poltava, Yeristovo and Bilanovo mining and processing plants – are located in Ukraine.
History and ownership structure
Ferrexpo was established in the Soviet era as Poltava Mining. In 2007, it was listed on the London Stock Exchange. The company’s main shareholder is Konstantin Zhevago, who owns more than half of its shares. He is currently under investigation and was detained in France in 2022 on charges of economic crimes in Ukraine.
The company’s activities
Ferrexpo is one of the world’s leading exporters of iron ore pellets. It has been supplying raw materials for steel production to European countries for more than half a century. However, the company has recently faced serious challenges, including financial losses amid the war, declining ore prices and the difficult economic situation in Ukraine.
In February 2025, the Ukrainian authorities announced plans to partially nationalize Poltava Mining, Ferrexpo’s largest asset. The plan is to transfer a 49.5% stake to the state. The reason was suspicions of financial irregularities and environmental damage. The total amount of the state’s claims against the company is over UAH 150 billion. Ferrexpo denies the allegations.
Read also: A double blow for Ferrexpo: a lawsuit for UAH 157 billion and a drop in shares
Sanctions against Konstantin Zhevago: what you need to know about them
Kostyantyn Zhevago is one of the most famous representatives of Ukrainian business, the owner of Ferrexpo Group and a former member of the Verkhovna Rada. In 2025, a new round of political and economic confrontation erupted around Zhevago.
NSDC sanctions
In February 2025, the National Security and Defense Council of Ukraine put Zhevago on the sanctions list. The imposition of sanctions was explained by “systemic interaction with the economy of the aggressor country” and “risks to national security.” The sanctions are indefinite and include a full range of restrictions: asset freeze, ban on any trade and financial transactions, and freezing of corporate rights.
The authorities’ argumentation
The authorities are convinced that, despite declarations of patriotism, Zhevago’s business has had close ties to Russia and pro-Russian structures in the past. The arguments include the activities of the Ferrexpo group in the “pre-occupation” period, as well as contacts with a number of Russian traders and banks. The NSDC also refers to a criminal case on the withdrawal of more than $100 million from the bankrupt Finance and Credit bank, which was owned by Zhevago. In this case, the investigation is confident that the funds were withdrawn through fictitious loans, and their return to the state remains a big question mark.
Zhevago’s reaction
The businessman has harshly criticized the Ukrainian authorities. He claims to have fallen victim to political pressure and a “planned attack” on a successful business. Zhevago claims that:
- has no active assets in Russia;
- has never cooperated with the occupation structures;
- since the beginning of the war, he has been helping the armed forces of Ukraine and has been under Russian sanctions.
He also drew attention to the fact that Ferrexpo is a public company listed on the London Stock Exchange, where 75% of the shares are held by international investors – the largest Western banks and funds. According to him, the actions of the National Security and Defense Council affect not only him, but also Ukraine’s investment reputation.
Zhevago may try to challenge the sanctions in courts, including international ones. However, it is unclear how quickly and how effectively such mechanisms will work.
The sanctions against Zhevago are part of a broader campaign by the Ukrainian government to “rehabilitate” the economy by getting rid of businesses suspected of collaborating with the enemy or operating in a non-transparent manner. This coincides with the tightening of control over big business, especially after scandals with other oligarchs.
