Ferrexpo, a mining company with its main assets in Ukraine, reduced its capital expenditures (additions to property, plant, and equipment) by a factor of 2.1 in January–June of this year compared to the same period last year—to $13.892 million from $29.457 million.
According to Ferrexpo’s semi-annual report, additions to property, plant, and equipment totaled $63,755 million as of the end of 2025.
It is also noted that during the six-month period ended June 30, 2026, the net book value of disposals of property, plant, and equipment was $5,509 million (as of December 31, 2025 – $181,000; as of June 30, 2025 – $1,218 million). The total amount of depreciation accrued for this period was $12.951 million (as of December 31, 2025—$65.802 million; as of June 30, 2025—$34.418 million).
Assets under construction include capital projects in progress totaling $196.039 million (December 31, 2025 – $197.838 million; June 30, 2025 – $188.150 million) and capitalized costs for surface development work performed prior to the start of production, amounting to $29,280 million (December 31, 2025 – $31,223 million; June 30, 2025 – $31,712 million), relating to portions of ore bodies expected to be brought into operation only in future periods.
In addition, it is clarified that once ore production begins, capitalized stripping costs are reclassified as mining assets, and depreciation begins to accrue.
The carrying value of property, plant, and equipment includes capitalized borrowing costs related to qualifying assets totaling $18.349 million (as of December 31, 2025 – $21.4 million; as of June 30, 2025 – $23.826 million). During the period ended June 30, 2026, or the comparative periods, no borrowing costs were capitalized.
The report explains that the Group’s impairment testing of assets is based on cash flow projections for the remaining estimated useful lives of the Horishneplavnynske-Lavrykivske and Yeristivske fields, which, according to current approved mining plans, are scheduled to end in 2058 and 2048, respectively.
According to the report, the group’s long-term financial model is continuously updated. This process takes into account current operating conditions, which depend to a significant extent on the stability of the power supply, energy prices, the availability of logistics networks, as well as other potential negative factors caused by the war. Due to current restrictions, the production capacity used to forecast cash flows under the base-case scenario is expected to amount to approximately 32% of the pre-war level in fiscal year 2026, rising to about 63% in 2027 and returning to pre-war levels in the second half of 2028.
Regarding key assumptions, the cash flow forecast for the next five years is based on an average index price for iron ore (65% iron content) of $115 per metric ton on a CFR (Northern China) basis. In assessing the expected long-term sales price, the Group takes into account the results of external and internal analyses of supply and demand dynamics in the international market for iron ore pellets and concentrate in the short and long term, as well as specific local supply and demand indicators affecting the Group’s major customers. Due to growing demand for high-quality concentrate and the expected margin calculated based on projected market conditions, the share of concentrate production in the current long-term model has increased significantly.
At the same time, the Group is expected to adjust the mix of iron ore products in its production plan in accordance with future market conditions and taking into account the operational situation in Ukraine at that time. The Group’s main cost items, in particular production and transportation costs, are determined taking into account local inflationary pressures, the dynamics of the hryvnia-to-U.S. dollar exchange rate, short- and long-term trends in energy supply and demand, as well as expected changes in the prices of raw materials related to steel production, which could significantly affect the cost of certain production materials. Regarding the logistics route through Ukraine’s
Black Sea ports, which is currently inaccessible, given the importance of this route both for the parties to the conflict and for global grain shipments, management believes that the situation will improve in 2027, and therefore expects that Ukraine’s Black Sea ports will once again become accessible to the Group for the purpose of selling to certain markets.
Given the increase in the share of concentrate production in the current long-term model, management analyzed whether this might indicate that the assets used to produce pellets and concentrate constitute two separate cash-generating units (CGUs). After a thorough analysis, management concluded that it remains appropriate to test the
Group’s non-current operating assets as a single CGU, given the high level of vertical integration of production at the Group’s main subsidiary—Poltava Mining and Processing Plant—and the absence of largely independent cash flows.
It is also reported that the Group conducts transactions on market terms with entities under the common control of Kostyantyn Zhevago and his related parties. Such transactions are considered part of the Group’s ordinary course of business. During 2025, the group posted a bond in the amount of 5 million UAH (or approximately $120,000) on behalf of a senior executive of one of the group’s subsidiaries in Ukraine. The bail payment was related to court and other legal proceedings initiated by certain government agencies against the Group’s subsidiaries and senior management representatives in Ukraine. In March 2026, the court overturned the bail order, after which the funds were returned to the subsidiary. No such payments were made during the first six months of 2026.
The Group has virtually no debt obligations: as of June 30, 2026, it had a net cash position of $21 million (compared to $47 million as of December 31, 2025). Excluding lease obligations totaling $10 million (December 31, 2025: $11 million), the Group had no outstanding interest-bearing loans or credits as of June 30, 2026, and December 31, 2025.
As of June 30, 2026, Ferrexpo’s long-term corporate credit rating and debt rating, as assigned by Moody’s, was Caa3 with a “negative” outlook. At the Group’s request, Fitch and S&P no longer provide ratings.
As previously reported, Ferrexpo ended the first half of 2026 with a net loss of $14.9 million, which is 13.2 times less than the figure for the first half of 2025; revenue fell 2.3 times to $196 million. The company reduced capital expenditures (CapEx) to $10 million from $28 million in January–June 2025, allocating 88% of these expenditures to projects necessary to maintain operations and only 12% to development projects.
Ferrexpo owns a 100% stake in Yeristivskyi Mining and Processing Plant LLC, 99.9% of Bilanivskyi Mining and Processing Plant LLC, and 100% of the shares in Poltava Mining and Processing Plant PJSC.
FERREXPO, INVESTMENT, IRON ORE, MINING AND PROCESSING PLANT, UKRAINE
