Ferrexpo shares tank on Ukraine mine nationalisation plans

(Sharecast News) - Ferrexpo shares tanked on Thursday after Ukrainian officials said they planned to nationalise the company's Poltava mining and processing plant amid allegations of illegal mining and fund misappropriation. The move is part of ongoing investigations into iron ore pellet producer Ferrexpo and main shareholder, Kostyantyn Zhevago. Shares in the company were down by 28% in afternoon trade on the London Stock Exchange.

Ukraine's State Bureau of Investigations (SBI) is preparing to appeal to the High Anti-Corruption Court. The appeal seeks nationalisation due to findings that plant management allegedly misappropriated over 370 million hryvnias.

Zhevago continues to deny these allegations amid ongoing legal proceedings.

The lawsuit seeks to transfer 49.5% of Poltava Mining and its assets to state ownership, including 541 properties, 172 land plots, and more than 2,300 railway cars with tracks.

Half of Ferrexpo's shares belong to Zhevago, who was arrested in absentia in July 2024 on embezzlement charges of HRY 1.4bn in a case involving Finance and Credit Bank.

Ukraine's National Security and Defense Council (NSDC) recently announced sanctions and criminal proceedings against a number of Ukrainian businessmen and former high-ranking officials, including Zhevago.

Ferrexpo shares plummeted 40% on February 4 when Poltava Mining was also hit by a civil claim for HRY 157bn over illegal mining in Ukraine and the sale of waste products.

"Initial accusations on the illegal sale of waste products have transformed into accusations that FPM is illegally mining and selling subsoil, which is said to have caused damage to the environment," Ferrexpo said in a statement at the time.

"FPM rejects these allegations in their entirety on the basis that there was no illegal extraction of the subsoil. FPM mines and extracts iron ore according to its mining licence."

Ferrexpo, which exports the pellets to steel makers, added that based on information received by the group and with advice from Ukrainian legal counsel, the accusations and claim "are without merit and FPM intends to vigorously defend its position in the Ukrainian courts".

Earlier, in September 2024, the SBI sent a case to court against seven Poltava Mining officials for illegal mining and sale of minerals worth HRY 370m.

Sharecast has contacted the SBI and Ferrexpo for comment.

Reporting by Frank Prenesti for Sharecast.com