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Ferrexpo PLC on Monday said commercial production in its second quarter weakened, as the suspension of value added tax refunds meant it had to ‘downscale operations’. The Baar, Switzerland-based miner in Ukraine said total commercial production for its second quarter to March was 1.3 million tonnes, down 40% from 2.1 million achieved in the first quarter. The first quarter result was the highest it has achieved since Russia launched its invasion of Ukraine back in February 2022. Total pellet production fell 39% on-quarter to 821,882 tonnes in the second quarter, from 1.3 million tonnes. It added that at the end of June, 738 of its colleagues are serving in the Armed Forces of Ukraine, the highest figure since the invasion in February 2022. Further, it welcomed back 186 colleagues as veterans, of whom 98 have returned to the workplace. Ferrexpo said that lower iron ore prices and lower production have weighed on margins, exacerbated by higher prices for raw materials such as gas and electricity. ‘Formal written notifications of decisions not to refund VAT from the Ukrainian tax authorities are being received on a monthly basis, typically two months after the reporting month. From January to April 2025 the amount of VAT refunds refused is $31 million,’ Ferrexpo added. ‘Due to the ongoing suspension of VAT refunds and the resulting reduction in financial liquidity, the group has been forced to downscale operations from two to one pelletising line and also to reduce the production of high-grade concentrate.’ The company said it has ‘worked extensively to lower its costs to remain financially viable.’ Interim Executive Chair Lucio Genovese said: ‘This includes placing approximately 37% of employees on reduced working time or on furlough, cuts in procurement of goods and services and a suspension of all non-essential capital expenditure, [corporate social responsibility] and humanitarian spending. ‘In tandem, all efforts and representations are underway with the respective authorities and government bodies in Ukraine and internationally to try to resolve the VAT refund suspension. I am grateful to all our colleagues for their efforts and contributions during this challenging time.’ Ferrexpo shares rose 0.5% to 49.00 pence each on Monday around midday in London. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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