Ferrexpo mining company with assets in Ukraine hopes for a complete abolition of the seizure of accounts of PrJSC Poltava Mining and Processing Plant (Poltava GOK) in the case of underpayment of royalty for iron ore mining in 2018-2021.
According to the company’s semi-annual report, on February 3, 2022, PGOK and Yeristovo GOK LLC received letters from the Prosecutor General’s Office, in which they were notified of an ongoing investigation into a possible underpayment of royalties for iron ore mining during 2018-2021.
It is noted that the amount of underpayment in the letters is not specified.
As part of the investigation, the PGO requested documents related to the payment of royalties for iron ore and required four representatives of the group’s subsidiaries to appear as witnesses in the case as part of the investigation.
On February 8, 2022, PGOK received a tax audit act, which alleges underpayment of royalties for the extraction of iron ore in the period from April 2017 to June 2021 in the amount of about UAH 1.042 billion (approximately $28.424 million as of December 31, 2022).
The group has submitted its objections to the requirements set out in the tax audit report and it was expected that this case would eventually be heard by the courts of Ukraine. However, due to the current situation in Ukraine, it is not known if and when the tax office will provide a final tax audit report taking into account or dismissal of the objections of PGOK, as well as whether and when there will be a first hearing in relation to the final claim received, and how the aforementioned investigation will be developed further, the report states.