Ferrexpo, a Swiss-headquartered iron ore company, has warned of potentially devastating economic consequences following the Ukrainian tax authorities' decision to suspend monthly VAT refunds totaling approximately US$12.5 million.
The company reports that this decision will force it to reduce production to just 25% of full capacity, triggering a cascade of critical impacts. These include potential job losses for thousands of employees, a significant decrease in tax revenues, halted investments, and reduced procurement of goods and services across Ukrainian industries.
The suspension appears linked to personal sanctions against Kostiantyn Zhevago, though Ferrexpo emphasizes that these sanctions should not compromise the company's operations, especially given that international investors hold the majority of voting shares.
For context, Ferrexpo has been a critical economic contributor during wartime, generating over US$2 billion in economic value since Russia's invasion. This includes maintaining a workforce of 8,000 employees, paying over US$150 million in salaries, and contributing more than US$300 million in taxes and royalties.
The potential economic disruption is particularly acute in Horishni Plavni, a city of 50,000 people where every household depends directly or indirectly on Ferrexpo's operations. The company warns that the VAT refund suspension threatens not just its business, but the entire socioeconomic fabric of the region.
Ferrexpo's leadership is urgently calling on Ukrainian financial authorities to restore VAT refunds and prevent what they describe as potentially catastrophic economic and social consequences.
