Ferrexpo PLC on Wednesday accused Ukraine of breaching its obligations under investment treaties with the UK and Switzerland, saying it has been left with ‘no option’ but to issue a formal legal notification to the government in Kyiv.
The company also reported a narrowes annual loss, as increased production and sales helped offset lower iron ore prices and rising costs.
Shares in Ferrexpo were down 11% to 72.50 pence in London on Wednesday afternoon. The shares remain up 53% over the past 12 months, however,
The Baar, Switzerland-based iron ore pellets producer in Ukraine noted it has 10 civil and criminal cases open against it in Ukraine, calling them ‘wholly without merit’ and riddled with ‘procedural defects and due process violations’.‘
The legal disputes have resulted in the freezing of shares in its Ukrainian subsidiaries, the seizure of bank accounts and railway assets, and the detention of senior management. Ferrexpo claims these actions violate Ukraine’s obligations under the UK-Ukraine and Swiss-Ukraine bilateral investment treaties.
As a result, Ferrexpo has sent a formal notification to Ukraine, demanding negotiations and the reversal of ’unlawful actions‘ against the company.
The dispute overshadowed Ferrexpo’s full-year results, which showed a significant recovery in output. The company reported a pretax loss of $20.4 million, sharply reduced from $68.4 million in 2023, as revenue jumped 43% to $933.3 million from $651.8 million.
Total iron ore pellet output surged 58% to 6.1 million tonnes, while total commercial production rose 66%.
Despite the higher volumes, Ferrexpo said lower iron ore prices and rising production costs eroded profitability, with its C1 cash cost per tonne rising 10% to $83.9 from $76.5 million due to increased electricity import costs and higher input prices.
Chair Lucio Genovese called 2024 a ’year of unprecedented achievement‘, crediting the company’s ability to quickly scale production and diversify sales beyond Europe to the Middle East and Asia.
However, he warned that geopolitical risks, power tariffs, and logistics disruptions continue to pose challenges, and the company could not provide production or cost guidance for 2025.
‘Through another 12 months of operating during a time of war, our people remained determined, culminating in an increase in production and sales to the highest levels since the start of the full-scale invasion in February 2022,’ Genovese said.
‘We are closely watching the diplomatic efforts to bring an end to the war in Ukraine and are encouraged by the progress thus far. We must, however, remain vigilant, even as we hope for a safer and more secure future.’
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