The Ukrainian Government has initiated steps to nationalise the Poltava mining and processing plant, a key asset of UK-based iron ore producer Ferrexpo.
This action follows allegations of fund misappropriation related to illegal mining activities, reported Reuters.
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Ferrexpo has been under scrutiny due to investigations into its main shareholder, Kostyantyn Zhevago, a Ukrainian businessman and former politician facing sanctions.
The investigations were launched by Ukrainian authorities to combat corruption, a campaign that has intensified since Russia’s invasion in 2022.
Ukraine’s State Bureau of Investigations announced its intention to appeal to the High Anti-Corruption Court, seeking the nationalisation of the Poltava plant’s assets and corporate rights.
The bureau’s investigations have highlighted the misappropriation of more than Hrv370m ($8.86m), leading to the freezing of the plant’s property and corporate rights amid pre-trial investigations.
The bureau has proposed the nationalisation of 541 real estate objects in ownership of the plant and 172 land plots leased to the plant, alongside the transfer of 49.5% of the authorised capital of the Poltava mining and processing plant to the state.
Ferrexpo has responded to these developments, stating: “The company has not received any formal notification of such a claim and is working with its legal advisors to understand the situation.”
Earlier in January, Ferrexpo noted media reports of accusations by the Ukrainian Prosecutor’s Office against senior managers of Ferrexpo Belanovo Mining (FPM) for alleged illegal mining and sale of waste products.
The group maintains that operations are continuing as usual and considers the accusations against FPM to be “without merit”.
Ferrexpo’s Poltava Mine, an operation with more than one billion tonnes (1bt) of JORC-compliant ore reserves, has a remaining mine life of 50 years.
FPM, the company’s subsidiary, manages both the mine and the group’s processing plant.
In 2021, the total volume mined at Poltava was around 80 million tonnes (mt), including 17mt of high-grade iron ore designated for processing. In October 2022, Ferrexpo temporarily halted production in Ukraine due to damage to state-run electrical infrastructure caused by Russian missile strikes.
