Ferrexpo's $100 Million Gamble: Can a Capital Raise Save It From Insolvency and a State Seizure?

London-listed iron ore miner Ferrexpo faces liquidity crunch by August 2026, with blocked VAT refunds, output down 72%, and insolvency proceedings looming.

The irony is striking. Ferrexpo, the London-listed iron ore miner whose shares have been frozen since 1 May, has just been swept into a new Ukraine reconstruction ETF — the UKRN fund from HANetf. The index behind the ETF deliberately lowered liquidity requirements to include Ukrainian companies. Tom Bailey, head of research at HANetf, admits the decision was mechanical, based purely on methodology. For Ferrexpo’s long-suffering shareholders, that inclusion offers cold comfort while the stock trades at the last price of 28.58 pence.

Behind the ETF headline lies a far more precarious reality. The miner is locked in a cash crisis that threatens to force it out of business by the end of August 2026. Its audited accounts for 2025 are overdue, its London trading has been suspended, and a planned capital raising of at least $100 million has yet to close despite institutional interest of more than that sum.

That funding gap stems directly from a blocked Ukrainian VAT refund dispute. Since March 2025, Ukrainian authorities have refused to pay out value-added tax claims to Ferrexpo, citing personal sanctions against the company’s former majority owner, Kostiantyn Zhevago. The group counters that the sanctions do not apply to its subsidiaries. By late March, the total net receivable stood at $90.3 million, of which $78.9 million had been submitted for repayment. Tax officials rejected $69.4 million.

Without those funds, the company’s cash position has shrunk to around $20 million as of 17 April, with only about $17 million freely accessible outside the MBaer Merchant Bank. The management now warns that liquidity will run dry by around the end of August 2026 unless new capital arrives.

A capital increase is seen as the only lifeline. Institutional investors have signaled interest for more than $100 million, but the terms cannot be closed in the required timeframe, according to the company. The largest shareholder, Fevamotinico, has offered to participate pro rata, but that alone does not resolve the timing problem. Without a clean audit opinion based on a going-concern assumption, the 2025 accounts remain stuck, and the London listing stays suspended.

The operating environment is deteriorating fast. Russian strikes on Ukraine’s energy grid pushed first-quarter iron ore output down by 72% from the same period last year. Production has restarted after a temporary halt, but volumes remain a fraction of the pre-war level. Ferrexpo has slashed costs across payroll, maintenance, investment, and social programmes. The group now runs at roughly a quarter of its earlier capacity.

Legal threats are piling up from multiple directions. A Ukrainian court has opened insolvency proceedings against Ferrexpo Poltava Mining, the key subsidiary, and appointed an administrator. The company is appealing but admits the appeal does not automatically halt the process. The dispute stems from a contested guarantee claim worth 4.727 billion hryvnia.

Separately, state prosecutors are demanding that nearly 50% of the mining business be transferred into state hands as part of an embezzlement case. Ferrexpo says it is reviewing the situation with legal advisers.

The combination of a frozen VAT claim, a pending insolvency case, and the risk of partial nationalisation means the company is fighting on three fronts with a rapidly thinning cash buffer. The ETF inclusion may raise eyebrows, but it provides no relief. What Ferrexpo really needs is a $100 million injection — and an August deadline that is growing shorter by the day.