Ukraine launches bid to seize mine owned by London-listed Ferrexpo

A London-listed mining giant is heading for a showdown with Ukraine in an international court over plans to part-nationalise a mine in the war-torn country.

Ferrexpo, a FTSE 250 firm, owns the Poltava mine and processing plant 200 miles south-west of Kyiv. It is the firm’s major asset, making Ferrexpo the world’s third largest exporter of iron pellets.

But the mine and the company’s investors have been caught up in President Volodymyr Zelensky’s crackdown on oligarch Kostyantyn Zhevago, who is being investigated for embezzlement after a bank he owned went bust in 2015.

Ferrexpo was founded by the Soviet Union in 1960. Zhevago took control in 2007 listing it on London’s stock exchange. The billionaire still holds a 49.5 per cent stake worth £182million. 

The rest is owned by asset managers including BlackRock, Fidelity, JP Morgan, HSBC and Legal & General, which look after pensions of British savers.

Kyiv, which wants to recoup money from Zhevago, tried to seize his stake via the London courts in 2023. After that failed it is now trying to take a stake in the mine directly.

Ferrexpo says Ukraine is acting illegally and that the country is set to break the bilateral investment treaty it has with the UK.

In a document seen by this paper it has notified Ukraine that if the part-nationalisation of the mine goes ahead, it will begin international arbitration proceedings. The document says: ‘This month the State Bureau of Investigation ordered the transfer of 49.5 per cent of the corporate rights of Poltava to the National Recovery and Management Agency of Ukraine.

‘Under the Ukraine-UK trade agreement investors have the right to enforce guarantees directly against Ukraine through international arbitration and before an independent tribunal.’

One top ten shareholder, who asked not to be named, told The Mail on Sunday: ‘Ukraine should not be acting like this. I did not expect this behaviour in Europe.’

Lucio Genovese, chairman of Ferrexpo, said: ‘I am shocked. Our investors must be respected. It is nonsensical that Ukraine is overriding principles enshrined in Ukrainian law, and in bilateral investment treaties entered into by Ukraine and the UK.

‘This precedent will create problems in rebuilding Ukraine, particularly if they try to attract American and European firms. The government needs to wise up.’ The investigation into Zhevago concerns the alleged embezzlement of £87million from Bank Finance & Credit, a Ukrainian bank owned by the tycoon that was declared insolvent in 2015.

Last month Zelensky signed a decree imposing sanctions on Zhevago and other Ukrainian oligarchs, accusing them of destroying national security and allying themselves with Russia.

The Ukrainian government was contacted for comment.