Extracting iron ore from the heart of Ukraine, Ferrexpo Plc produces high-quality pellets for the global steel industry, with its headquarters in Baar, Switzerland. Operating in the mining sector – specifically iron ore production – the company plays a key role in supplying raw materials to steelmakers worldwide, ranking as the third-largest exporter of iron ore pellets.
Ferrexpo’s revenue primarily comes from mining, processing, and selling iron ore pellets, which are used to make steel with lower carbon emissions compared to other iron ore forms. It operates three mines and a processing plant near Kremenchuk in Ukraine, producing pellets with high iron content – around 65% – that fetch premium prices. These pellets are sold to steel mills in Europe, Asia, and the Middle East, with major markets including Austria, Germany, China, and Japan. The company also manages logistics, operating a fleet of vessels on the Rhine and Danube waterways and an ocean-going ship for top-off services, ensuring efficient delivery to customers. In 2024, Ferrexpo reported revenues of £933.3 million, up 43% from £651.8 million in 2023, driven by a 58% surge in pellet output to 6.1 million tonnes, though its pre-tax loss narrowed to £20.4 million from £68.4 million due to lower iron ore prices and rising costs.
Despite operational resilience, Ferrexpo faces significant challenges. A civil claim filed in Ukraine against its subsidiary, Ferrexpo Poltava Mining, seeks £3.76 billion in damages, alleging illegal subsoil extraction and environmental harm – claims the company strongly denies, asserting compliance with its mining licences. This dispute, alongside other legal actions, has led to frozen shares, seized bank accounts, and detained management, prompting Ferrexpo to issue a formal legal notice to Ukraine in 2025 for breaching UK and Swiss investment treaties. Additionally, reports in early May 2025 of potential nationalisation of its Poltava operations by Ukrainian authorities caused a 12% share price drop, reflecting the geopolitical risks of operating in a war-torn region.
Employing 10,000 people, mostly in Ukraine, Ferrexpo remains committed to supporting its workforce and local communities amid ongoing conflict. Its focus on high-grade pellets aligns with global demand for greener steel production, but legal battles, rising costs, and regional instability pose substantial hurdles.
Mining is a difficult way of generating good returns at the best of times. This is especially the case in a company that is based in flashpoint of the changing geopolitical order. You could wake up one day and your holding is worthless. That enough is reason to avoid and definitely not a stock requiring further work from Wonder Stocks.
