Ukrainian iron ore group to list in UK

Ukrainian iron ore group to list in UK

May 23, 2007 Filed Under: Iron Ore Mining, Mining Stocks  

A 32-year-old Ukrainian oligarch is planning to launch his $2bn (£1.01bn) iron ore mining group on London’s main market next month. The flotation will be the first full UK listing for a company from the former Soviet republic.

Konstantin Zhevago plans to raise around $500bn by selling a quarter of his holding in Ferrexpo, a mining company he acquired in stages during the privatisation of state-owned assets following the break-up of the former Soviet Union.

Ferrexpo controls the world’s fourth-largest iron ore reserves and the biggest deposits in Europe at its Poltava mine. It is a major supplier of pelletised iron ore to steel mills throughout central and eastern Europe, with access to Ukraine’s Black Sea ports.

The company produced 8.6m tonnes of iron ore in 2006 and hopes to increase its output to 16m tonnes within seven years. It sells around 15pc of its output to China.

Zhevago, who owns a string of businesses in the Ukraine, including the country’s 10th largest bank, pharmaceutical, trucking and salami manufacturing companies, was elected to Ukraine’s parliament in 1998 at the age of 23. He had already been finance director of the country’s Finance & Credit bank at just 19 years of age.

Although he plans to maintain a 75pc holding in Ferrexpo, Zhevago is expected to adopt a hands-off role at the mining group. Ahead of the planned London listing, the company has worked hard to burnish its corporate governance credentials.

The company is headed by former BHP Billiton executive Michael Oppenheimer. He said that since 2006 Ferrexpo had been run as “a western company”. Michael Abrahams, deputy chairman of Prudential until 2000, is chairman.

“I wouldn’t say that when I arrived in 2005 I found a thoroughly professional governance machine,” Oppenheimer said. “But Zhevago understands the need for good compliance.”

The world market for iron ore is dominated by Rio Tinto and BHP Billiton in Australia, where strong demand from China has recently caused bottlenecks at the country’s ports, and CVRD in Brazil.

JP Morgan Cazenove is Ferrexpo’s sponsor and joint bookrunner with Deutsche Bank.

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