KYIV, Aug 5 - A Ukraine court ruled that a titanium and magnesium plant 49% owned by Ukrainian tycoon Dmytro Firtash should return to full state ownership, Reuters reported citing anti-corruption prosecutors (SAP).

The prosecutor's office, which had requested the transfer, said Firtash did not fulfil obligations to modernize the plant, but instead moved funds from the plant to offshore companies.

"Today, the court of first (low) instance fully satisfied the SAP claim and, by its decision, returned the Zaporizhia Titanium and Magnesium Plant to the state ownership," SAP said in a statement late on Wednesday.

Firtash's company said it would appeal the verdict.

Firtash faces sanctions, including an asset freeze, by Ukraine's security and defense council, which accuses him of selling titanium products that allegedly end up being used by Russian military enterprises. Firtash has denied the accusations. read more

Firtash acquired a 49% stake in the plant through his companies in 2013, thanks to a decision by the government of Ukraine's pro-Russian President Viktor Yanukovych, who was ousted in 2014. Firtash's managers controlled the plant even though the state had a 51% stake.

The plant is the only Ukraine-based maker of titanium sponge, an intermediate product for titanium alloys used in industries including aircraft and shipbuilding.

Making titanium products is a core business in Firtash's Group DF, which includes titanium mining and enrichment, and the production of titanium dioxide, titanium slag, sponge ingots and slabs.

"We consider this decision biased and unfair and will appeal against it," Group DF said in a comment to Reuters.

Ukraine-Russia relations collapsed after Russia's annexation of the Crimea peninsula in 2014 and support for separatist forces in the eastern Donbass region in a conflict that Kyiv says has killed 14,000 people.

Firtash made a fortune selling Russian gas to the Kyiv government. He has been indicted on U.S. bribery and racketeering charges, which he has denied. He has fought extradition from Vienna, where he has been since 2014. (rt/ez)