1. On production, prices and investments
  2. On the main shareholder and court cases
  3. On the company's problems

Ferrexpo Group owns Poltava and Yeristovo Mining and Processing Plants (GZKs) in Ukraine, which extract iron ore and process it into iron ore pellets. This raw material is used to make steel using coke-free technology, which has a lower environmental impact. As a result, pellets are in constant high demand.

The company's shares have been listed on the London Stock Exchange since 2007. Ferrexpo's largest shareholder is Kostyantyn Zhevago, a disgraced Ukrainian oligarch. Criminal proceedings involving him were registered before the start of the great war. Today, Zhevago is in France, which has refused to extradite him to Ukrainian law enforcement agencies.

In 2021, a record year for iron ore companies, Ferrexpo produced and exported 12 million tonnes of pellets. According to the company's financial report, revenue was $2.52 billion and net profit was $871 million.

The war significantly reduced the company's ability to generate revenue. Power outages, logistics, employee departures and mobilisation, a drop in the global price of iron ore concentrate and criminal proceedings over a troubled shareholder have significantly reduced the mining company's potential. Since 2021, production has fallen threefold.

In an interview with, Wolfram Kuoni, one of Ferrexpo's directors, spoke about the negative factors affecting the business and the problems caused by the Ukrainian authorities.

On production, prices and investments In 2022, Ferrexpo almost halved its output. What are the results for 2023? Production and financial.

Wolfram Kuoni: In January, we published our production results for the Q4 and the whole of 2023. Indeed, in 2022, we reduced pellet production from 12 million to 6.18 million tonnes. In 2023, we produced 4.15 million tonnes of pellets and commercial concentrate.

What is the reason for the further reduction in production volumes?

It is a matter of logistics. About half of our products were shipped via the Black Sea ports to Asian markets. In 2022, we were forced to reduce shipments because the Black Sea passage was blocked.

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Valentina Polishchuk/

In 2023, we were also unable to export our products via the Black Sea. Accordingly, we reduced production even further. Most of our products went through the ports on the Danube.

As far as we hear from agricultural exporters, the situation in the Black Sea improved in the second half of 2023. Do you see any positive developments in this area?

We are talking about three main ports (Pivdennyi, Odesa, Chornomorsk – ed.). These ports were mostly used for grain exports. We know that in the last quarter of 2023, they were used to ship iron ore raw materials.

One of our customers, the Turkish steel company Erdemir, is located across the Black Sea from us. But for security reasons, we would not like to talk much about this situation.

2021 was a record year for iron ore prices. Could you comment on what has changed since then? What are the price trends for your products and what influences the price?

There was also a good price for iron ore in 2022. Our products cost $230 per tonne of pellets. 2023 was more or less stable. In Q4, the situation was quite good.

We are optimistic about 2024. At the beginning of the year, demand in China was on the rise. It is not so much about construction as about other sectors: shipbuilding, machine industry. In addition, we see that demand from India is growing. Previously, there were talks of 4-5 years for the economy of this country to reach high capacity. But we are still seeing very rapid growth.

Energy also plays an important role in our business – the green transition, which encourages the use of lower-emission technological processes. The so-called pellet premium is very important to us. In 2023, it was $45 per tonne. For DRI pellets (Direct Reduced Iron – a raw material for coke-free steel production – Ed.), the premium was $57 per tonne.

What is the price of iron ore pellets now?

Ore with 65% iron content on CFR China terms (at the port of destination – ed.) is $120-130 per tonne. Plus, a $25 premium. In other words, our products now cost $140-145 per tonne.

How much have you paid in rent payments in recent years?

In 2022, rent payments amounted to 1.8 billion hryvnias ($45.9 million), and the total amount of taxes paid was 6.3 billion hryvnias ($160.5 million). For 2023, I cannot disclose the amount of taxes and fees paid before the publication of the reports. In total, we have paid taxes in excess of $1.3 billion over the 15 years of our listing on the London Stock Exchange.

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Valentina Polishchuk/

You recently announced the completion of an investment project to build a concentrate stockyard. Why do you need a new $40 million ore concentrate stockyard, given the fact that production is declining?

It gives us opportunities. The implementation of this project has given us the opportunity to be more flexible regardless of the current production volumes – two, three or four pellet production lines. 

The situation is as follows: we have four pelletizing lines. Sections of beneficiation plants are operating simultaneously, processing ore into concentrate to make pellets. The number of operating sections depends on our needs and production plans. The absence of an intermediate stockyard between concentrate and pellets did not allow us to accurately balance the active capacities of these plants. 

Therefore, in certain periods, when the equipment of the crushing and beneficiation plant or pelletizing plant underwent maintenance/repairs, we had both a shortage of concentrate and a surplus of concentrate. Eventually, it became necessary to either shut down the concentration sections or look for additional concentrate. Now, if on some days or hours we have too much ore concentrate for the plant, we can report it to the stockyard to be processed into pellets in the future.

In addition to the stockyard itself, the project includes a concentrate load-out facility with the necessary sampling system for quality control. And in recent years, we have been actively using this site to ship concentrate as a commercial product.

What is the current situation with Belanovo Mining? Are there any problems with land allocation for it? When can it be launched?

In terms of land allocation, Belanovo Mining currently has the right to use about 1,000 hectares under lease or ownership agreements. The rest of the land is currently at different stages of registration.

The Belanovo deposit is very important for the company's strategic development – to increase production from 12 million tonnes (volume in 2021 – ed.) to 24 million tonnes of pellets per year. After all, more than half of the required amount of ore for processing will be supplied from the Belanovo deposit. We are confident that we can achieve these targets after Ukraine wins the war. 

According to Ferrexpo's mining development plans, we planned to reach the Belanovo deposit's ore body in the fourth quarter of 2023. But the situation changed drastically in 2022, so we are now taking the steps necessary to maintain the special permit for the Belanovo deposit. We are also implementing infrastructure projects necessary for the deposit's development. At the moment, we do not conduct any mining operations at the deposit.

On the main shareholder and court cases

Kostyantyn Zhevago is currently in France, which last November refused to extradite him to Ukraine. What does he plan to do in the future? Does he have any plans to return to Ukraine? How does he see the future of his business in Ukraine?

I have to disappoint you somewhat. It is better to discuss Mr. Zhevago's personal plans with him.

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Valentina Polishchuk/

Regarding Zhevago's involvement in the operations of Ferrexpo, I have to say that as General Director of the company, he has been a very successful and strong leader. Since its listing on the London Stock Exchange in 2007, Ferrexpo has invested $3.5 billion in its Ukrainian assets.

As one of the company's shareholders, Mr. Zhevago and all of us, believe that Ferrexpo will continue to be a top-class global company with best practices. This includes highly qualified Ukrainian staff, international financing. And thanks to our listing on the main board of the London Stock Exchange, we have access to international financial markets.

Besides Zhevago, we have other shareholders, investors, customers, and suppliers of equipment and materials. Everyone outside Ukraine understands this situation. In Ukraine, for some reason, there is a direct correlation: "Ferrexpo is Zhevago, Zhevago is Ferrexpo". But this is no longer the case.

Therefore, it would be desirable that in case of any questions to Kostyantyn Zhevago, Ukrainian authorities would resolve them personally with him, and not hold Ferrexpo hostage.

That is, Ferrexpo now has problems with the Ukrainian authorities?

Yes, I can say so.

What is the reason for the decline in the value of Ferrexpo shares on the London Stock Exchange since the beginning of the year? Was this influenced by the publication of production results that are decreasing?

Yes. The war caused a curtailment in production. Another reason was that the average price of iron ore in 2023 dropped by 11% compared to 2022.

Of course, our statement (of February 20 – ed.) that the payment of dividends was stopped due to a case related to a debt of 4.7 billion hryvnias also played a role.

Regarding the decision to cancel the payment of dividends. I will try to formulate the reason as simply as possible. In 2004-2010, Zhevago's Finance and Credit Bank issued loans to Zhevago's companies, the guarantor of which was Poltava Mining with Ferrexpo. Now the right to claim debt obligations has been received by the unknown Maxi Capital Group. And it won a lawsuit against Poltava Mining to recover $125 million. Is this a valid statement?

Let's find out everything gradually. In 2015, there were $177 million in the accounts of Ferrexpo companies in Finance and Credit Bank. In the process of liquidation of the bank, the company filed an application for recognition of creditors' claims for this amount. But the "Finance and Credit" bank satisfied our demand for only $19 million. The reason is, according to the court, that Poltava Mining acted as a guarantor for loans from third parties, in view of which funds were lawfully debited from the accounts of Poltava Mining in August 2015.

However, during the consideration of this case, the courts concluded that it was impossible to establish the fact of conclusion of these surety agreements. We have never seen these surety agreements.

Now Maxi Capital Group appears on the scene and declares that it has bought these loans from the bank and the right of claim under the contracts that ensure their fulfilment. Accordingly, this company wants to receive funds from us to repay the "debt" on loans of third parties, which Poltava Mining allegedly repaid in August 2015 and this fact is established by court decisions.

So, Ferrexpo is faced with a situation where we incur losses twice. The first time was when in 2015 Finance and Credit Bank wrote off funds in the amount of $177 million from Poltava Mining. The second time was when the court in 2024 ordered to recover $125 million from Poltava Mining in favour of Maxi Capital Group.

By the way, the panel of judges of the Eastern Economic Court of Appeal, which considered the case and ultimately made a decision in favour of Maxi Capital Group, was formed an hour and 16 minutes before the court hearing at which this decision was made. Do you know how a judge is appointed for a particular case?

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Ferrexpo press service)

According to the law – by appointing a court by an automated system.

That's right. So, at 9:41 a.m., new judges were appointed to this case, and at 11:00 a.m. we had already lost. Is it reasonable to assume that judges read thousands of case pages from 24 volumes in just over one hour? Simply amazing work efficiency.

Who did you lose to in court?

"Maxi Capital Group" is a shell company (in the register, the beneficiary is Vasyl Kotynkevych from a village in the Vinnytsia region. – ed.). We don't know for sure who it belongs to.

What Is the status of other Ferrexpo related court tracks? In particular, the case of underpayment of rent for ore mining by the company in the amount of 2.2 billion hryvnias ($56.1 million)?

As for the rent, the amount of the claim has already decreased to about 1 billion hryvnias ($25.5 million). However, the Economic Security Bureau (ESBU) and the tax authority continue to insist, in our opinion, on an erroneous approach to calculating this tax. They believe that the basis for calculating the amount of rent should not be crushed ore, but concentrate. However, the courts believe otherwise. 

Back in 2017, we won a dispute against the tax authority regarding tax advice. And the court decision clearly states that Poltava Mining must pay rent on crushed ore. 

ArcelorMittal Kryvyi Rih (AMKR) went through a similar situation. And they won the case in the Supreme Court in 2022. Now we have appealed against the tax notification-decision on the rent and the case is being considered by the administrative court. 

We are very concerned that despite the ongoing tax dispute and established court decisions, law enforcement agencies open criminal proceedings in parallel. Their goal was to increase pressure on the company and on local management. In particular, bank accounts were seized at Poltava Mining, which almost led to the suspension of the company's activities. You probably know that in November last year, the head of Poltava Mining, Viktor Lotous, was served with a notice of suspicion and a measure of restraint in the form of a bail  of a huge amount – 800 million hryvnias ($20.4 million). We are now appealing this bail amount in the Court of Appeal.

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Valentina Polishchuk/

The situation is the same with crushed stone raw materials. Viktor Lotous was accused of "organizing a criminal group" that illegally mined and sold non-fractional screenings, a by-product of the extraction and beneficiation of iron ore. At the same time, two bodies are simultaneously investigating the same episode – the SBI and the National Police. In one case, Viktor Lotous was granted bail in the amount of 60 million hryvnias ($1.5 million), and in the other – 1 billion hryvnias ($25.5 million). He even served 38 days in a pre-trial detention centre.

The situation is similar. Initially, there was an administrative check on compliance with the licensing conditions for the extraction of minerals. Despite the fact that the company complied with the order and stopped the sale of non-fractional screenings, law enforcement agencies initiated criminal proceedings and locked the person in a pre-trial detention centre. That is, it is the same method that is used in all cases.

That is, the company sold this crushed stone? 

No, we sold non-fractional screenings, which is a waste product of iron ore processing. We have not had any mining other than ferruginous quartzite, for which we have a permit. The law enforcement agencies consider this screening to be crushed stone and claim that we had no right to sell it.

But even so, we stopped selling back in 2021. And the benefit received from the sale was much less than the amount of damage that the investigators are talking about. We've been selling this screening since the company's inception and have never had any complaints before. It is impossible to mine ore without extracting the accompanying material, the waste rock in which the ore is located.

What about the case of the claim of four companies from the VS Energy group to cancel the sale of Poltava Mining to your company in 2002?

Fortunately, this case is closed. We won it in the Grand Chamber of the Supreme Court, the decision of which is final and not subject to appeal.

Reference from
In 2002, companies orbiting the VS Energy group of Russians Evgeny Giner, Alexander Babakov and Ukrainian Mikhail Voevodin – Gilson Investments, Calefort Developments, Emsworth Assets and Trimcroft Service – sold 40.19% of the shares of Poltava Mining (FPM) to Zhevago's structures. After the issue and buying of shares from minority shareholders under the squeeze-out procedure, Ferrexpo became the sole shareholder of the FPM. In 2005, offshore companies went to court with a demand to invalidate the sale and purchase agreement. The dispute lasted 10 years and was put on hold after the Supreme Court and the Supreme Economic Court ruled in favour of Ferrexpo. However, at the end of 2020, VS Energy offshores again challenged the sale of Poltava Mining. All four companies from the VS Energy group that filed claims were simultaneously liquidated in February 2024.

I would like to add about the court cases against us. They have three characteristic features. The first is a combination of administrative cases and criminal proceedings.

The second is that companies that have claims against Ferrexpo are not transparent. It is not known who they belong to, who is behind them, who benefits from it? For example, all four companies that filed claims were simultaneously liquidated in February 2024.

And thirdly, unfortunately, there is no separation of the company and one of the shareholders of the company. This is contrary to both Ukrainian legislation and international rules. For example, unique in a negative sense is the case when the company's assets become collateral for an individual, albeit related to the company.

Look (shows the ownership structure of Ferrexpo. – ed.), Mr. Zhevago's family owns 49.3% of the company's shares. All other shares are distributed among different owners. In particular, 6.74% of the shares belong to American investment fund BlackRock.

On the company's problems

What about the accounts of Poltava Mining? Are they blocked? How do you make current payments, pay salaries, taxes?

Some accounts are blocked, but we can pay taxes and wages.

Even if you didn't decide not to pay dividends, how would you get the money abroad? This is now prohibited by the National Bank's Resolution No.18 of February 2022.

Yes – now it is impossible due to martial law.

A year ago, in an interview, you said that the main problems of the enterprise are mobilization, logistics and power outages. Can you update this list of problems?

Electricity supply is the least of the problems now. The worst situation with this was in the fourth quarter of 2022. From the point of view of logistics, we are confident that we will soon be able to use our terminal in the port of Pivdennyi.

As for the staff, 35 employees have died at the front so far. Currently, there are 641 employees in the ranks of the Armed Forces. 81 employees were demobilized due to injuries and other reasons. Of these, 52 have already returned to the company and resumed working.

In addition, 900 Ferrexpo employees left the region in 2022 and another 700 in 2023. They went abroad and left the company. The situation is complicated. We invest a lot in working with veterans.

"Some people think that Ferrexpo is Zhevago. This is not true." Ferrexpo head on company's struggles
Wolfram Kuoni (Photo: Valentina Polishchuk/

In addition, maintaining the mental health of our employees is an important area of work. Both those who returned from the front and those who live and work at our operations. You understand that everyone is under a lot of stress.

But now there is another problem. An additional stress is the policy of government bodies that put pressure on our employees and our company. Instead of supporting Ferrexpo.

I often meet and talk with foreign investors, our clients, and diplomats. They do not understand why we face such problems. In a situation where the security forces exert such pressure on the company, their desire to support resistance for the sake of the economic stability of the company and the whole of Ukraine gradually decreases.