Ferrexpo’s Path to Recovery Faces Significant Headwinds

Ferrexpo’s primary operating subsidiary, Poltava Mining, restarted its iron ore pellet production on March 9, concluding a suspension that began in January. While this operational restart provides a glimmer of hope, the company remains entangled in a complex web of regulatory obstacles and a severely constrained national export environment.

Ukraine’s Export Crisis Deepens

The market for Ukrainian iron ore is under extreme pressure. National export volumes collapsed by 40.9% year-on-year in the first two months of 2026, falling to a total of 3.31 million tonnes. This sharp decline exacerbates an already weak trend from the previous year, which saw 2025 exports drop by 8%.

This deteriorating export landscape forms a challenging backdrop for Ferrexpo, even as its physical production resumes.

Financial Stranglehold from Frozen Funds

A Ukrainian parliamentary working group convened on March 13 to examine the company’s profound difficulties. Central to these problems are blocked value-added tax (VAT) refunds exceeding 3 billion Ukrainian hryvnia (UAH). These funds are frozen due to sanctions imposed on the majority shareholder, Kostyantyn Zhevago.

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Further straining the company’s finances are unresolved foreign exchange issues. According to the National Bank of Ukraine, more than $500 million in export revenue has yet to be repatriated. These financial constraints severely limit the group’s flexibility at a time when ongoing operational costs are rising. Beyond these fiscal hurdles, the region’s heavy industry also contends with high and volatile electricity prices, complicating financial planning.

Energy Security: The Critical Operational Unknown

The stability of Ukraine’s power grid emerges as the decisive factor for the coming months. The system is currently running at a deficit of approximately 1 gigawatt (GW), requiring imports to meet around 12% of daily consumption.

A critical question now looms: Will government plans to restore an additional 2 GW of generating capacity by the end of May be sufficient? The answer will determine whether Poltava Mining can sustain its energy-intensive pellet production without further interruptions.

The Road Ahead

Although production has recommenced, Ferrexpo’s long-term stability hinges on resolving deep-seated administrative and fiscal blockages. The coming weeks will reveal whether parliamentary mediation can succeed in restoring the company’s financial maneuverability within this difficult industrial and macroeconomic climate.