Frozen VAT and a Failed Cash Call: Ferrexpo’s Triple Crisis Deepens

London Stock Exchange suspends Ferrexpo trading as liquidity crisis deepens, with cash reserves expected to run out by August 2026 due to blocked $90.3M VAT refund and failed equity raise.

The London Stock Exchange will suspend trading in Ferrexpo shares from 7:30am tomorrow, marking a dramatic escalation in the Ukrainian iron ore producer’s financial distress. The company’s liquidity is now so stretched that it expects to run out of cash by the end of August 2026.

At the heart of the crisis lies a blocked $90.3 million value-added tax refund from the Ukrainian tax authority. Since early 2025, the authorities have refused to release the funds, citing personal sanctions against Kostiantyn Zhevago, the billionaire who controls 49.32% of Ferrexpo through his holding company Fevamotinico Sarl. The company argues vehemently that sanctions imposed on an individual should not be applied to a publicly listed entity where institutional investors — including major banks, pension funds, and sovereign wealth funds — hold the majority of voting rights.

The standoff has forced Ferrexpo to slash production to just 25% of pre-war capacity. Output in the first quarter of 2026 tumbled 72% year-on-year to barely 593,000 tonnes, with nationwide attacks on Ukraine’s power grid having largely paralysed operations until late February.

Management had hoped to raise at least $100 million through an emergency equity injection, enough to keep the business running for 18 months. But the conditions demanded by prospective institutional backers could not be met by the 30 April deadline, scuppering the deal. Without that capital, Ferrexpo cannot file a 2025 annual report on a going-concern basis, triggering the automatic suspension.

The company has already sold its transport vessel, the Iron Destiny, for $7.7 million to raise cash. Even with that proceeds, available funds will only stretch to around the end of August — assuming iron ore prices and operating costs remain stable, and that the insolvency administrator appointed at the Ferrexpo Poltava Mining site does not further restrict operations.

The legal troubles of Zhevago, who fled Ukraine in 2019, add another layer of uncertainty. On 28 April, a Kyiv court authorised fresh investigations into allegations that he embezzled approximately $113 million through his former bank. France recently rejected his extradition. For Ferrexpo, the direct consequence is that the tax authority continues to withhold refunds, effectively starving the company of working capital.

The company is trying to distance itself from its largest shareholder, pointing to the presence of investors such as BlackRock. But the Ukrainian government’s stance has not softened. Ferrexpo feels unfairly treated, and the market has taken a brutal view: the shares have lost 56% of their value this year alone.

Whether Fevamotinico will support the planned capital increase at the annual general meeting remains an open question. Ferrexpo says it is in talks with Zhevago’s vehicle, but with the tax refunds frozen, any financing solution remains precarious. Trading will cease entirely from 1 May, with no date set for a return to the market.