The Ukrainian subsidiary Poltava Mining (FPM) of London-listed Ferrexpo said a civil claim for Hr 157 billion ($3.78 billion) was filed against it over illegal mining in Ukraine and the sale of waste products.
The company's shares dropped 21% to 81.9 cents, hitting their lowest point since November.
"Initial accusations on the illegal sale of waste products have transformed into accusations that FPM is illegally mining and selling subsoil, which is said to have caused damage to the environment," Ferrexpo said in a statement on Feb. 4.
The company denied the allegations, declaring its intentions to defend its position in the Ukrainian courts. The lawsuit does not affect the company's operations, the statement said.
"FPM mines and extracts iron ore according to its mining license. The iron ore is then processed to produce iron ore pellets. As a result of these processes, any waste that is leftover is stockpiled in accordance with best mining practices and in compliance with environmental standards,” the company said.
In August 2024, the CEO and three other top managers of Poltava Mining were suspected of conducting illegal mining of minerals of national importance over a six-year period.
Ukrainian police accused the company of legalizing more than 885 tons of crushed stone products worth more than Hr 33.5 million ($806,656), despite the fact that it was licensed only to extract iron ore.
Ferrexpo owns 100% of Poltava Mining (FPM). A 50% stake in Ferrexpo is owned by Fevamotinico S.a.r.l., which is controlled by businessman Kostyantyn Zhevago, charged with embezzlement, and 6.74% by BlackRock, an American international investment company.
Dominic Culverwell
