Ferrexpo plc, a mining company with its main assets in Ukraine, produced 2,169,631 tons of pellets in January-June this year, which is 34.2% less than in January-June last year (3,297,441 tons).
According to the company’s press release on Monday, total production of commercial products (pellets and iron ore concentrate) in the first half of 2025 decreased by 9% compared to the first half of 2024, to 3 million 393,135 thousand tons. In particular, the output of marketable concentrate amounted to 1 million 223.504 thousand tons against 429.865 thousand tons, respectively. The company also produced 81,787 thousand tons of DR pellets (in the first half of 2024 – 162,645 thousand tons) and 2 million 87,844 thousand tons of premium pellets (a decrease of 33.4%).
The press release notes that from January to April 2025, the amount of VAT refunds denied amounted to $31 million. Due to the current suspension of VAT refunds and the associated decline in financial liquidity, the group was forced to reduce production from two to one pelletizing line and also to reduce the production of high-quality concentrate. As a result, total commercial production for the second quarter amounted to 1.3 million tons, down 40% from 2.1 million tons in the first quarter.
However, the group demonstrated flexibility and agility by continuing to benefit from strong demand for its concentrate from customers in China, which accounted for more than a third of its product mix in the first two quarters of 2025, the statement said.
Among other things, it has made efforts to reduce its costs in order to remain financially viable. This includes reducing working hours for employees, cutting purchases of goods and services, and suspending all non-essential capital expenditures, overhead costs, and corporate social responsibility expenses.
Commenting on the group’s performance, interim CEO Lucio Genovese noted that the strong momentum at the beginning of the year, which reflects, in particular, increased quarterly production since the full-scale invasion in February 2022, was significantly limited in the second quarter as the company began to feel the impact of tax authorities’ decisions to suspend VAT refunds. As a result, production fell to 1.3 million tons in Q2 2025.
“Despite the weaker iron ore pellet market, we were able to significantly change our production portfolio and take advantage of strong demand in China for our high-quality low-alumina iron ore concentrates. During the first six months of 2025, concentrate sales accounted for 36% of our production portfolio, three times more than in the same period a year ago. In a challenging operating and market environment for iron ore, it is encouraging that we have been able to be so flexible and take advantage of the demand for high-quality concentrates,” said the top manager.
At the same time, he pointed out that lower iron ore prices and reduced production had a negative impact on profitability. The situation was exacerbated by higher prices for raw materials such as gas and electricity. During the second quarter, the group worked hard to reduce its costs in order to remain financially viable.
“This includes reducing working hours or leave for approximately 37% of employees, reducing purchases of goods and services, and suspending all non-essential capital expenditures, CSR, and humanitarian expenditures. At the same time, every effort is being made and measures are being taken with the relevant authorities and government agencies in Ukraine and internationally to try to resolve the issue of the suspension of VAT refunds,” Genovese added.
As reported, Ferrexpo produced 1 million 347,749 thousand tons of pellets in Q1-2025, which is 26% lower than in January-March last year (1 million 813,973 thousand tons). At the same time, total production of commercial products (pellets and iron ore concentrate) in Q1 2025 increased by 3% compared to Q1 2024, to 2 million 125.467 thousand tons. In particular, the output of marketable concentrate amounted to 777,718 thousand tons, compared to 240,516 thousand tons in Q1-2024. The company also produced 81,879 thousand tons of DR pellets (not produced in Q1-2024), 1 million 105.049 thousand tons of premium-grade pellets (a decrease of 36%) and 160.913 thousand tons of other pellets (an increase of 95%).
In 2024, Ferrexpo increased its production of pellets by 58% compared to 2023, to 6 million 70.541 thousand tons from 3 million 845.325 thousand tons. In the fourth quarter of 2024, it produced 1 million 503.373 thousand tons of pellets, which is 18% higher than in the previous quarter (1 million 269.727 thousand tons).
At the same time, total production of marketable products (pellets and iron ore concentrate) in 2024 increased by 66% compared to 2023, to 6 million 889.879 thousand tons from 4 million 152.028 thousand tons. In particular, the output of marketable concentrate reached 819,338 thousand tons compared to 306,703 thousand tons in 2023. The company also produced 489,720 thousand tons of DR pellets, 4 million 984,990 thousand tons of premium pellets, and 595,831 thousand tons of other pellets.
In 2023, Ferrexpo produced 3.845 million tons of pellets, which is 36.5% less than in 2022.
Ferrexpo owns 100% of Yeristovsky GOK LLC, 99.9% of Bilanivsky GOK LLC, and 100% of Poltavsky GOK PJSC.
