Ferrexpo plc, a mining company with major assets in Ukraine, produced 1 million 347.749 thousand tons of pellets in January-March this year, down 26% year-on-year (1 million 813.973 thousand tons).
According to the company’s press release on Monday, the total production of marketable products (pellets and iron ore concentrate) in 1Q2025 increased by 3% compared to 1Q2024 to 2 million 125.467 thousand tons. In particular, the production of iron ore concentrate amounted to 777,718 thousand tons compared to 240,516 thousand tons in 1Q2024. The company also produced 81,879 thousand tons of DR pellets (not produced in Q1-2014), 1 million 105,049 thousand tons of premium pellets (down 36%) and 160,913 thousand tons of other pellets (up 95%).
The press release notes that during the quarter, the group operated two pelletizing lines (out of four) in addition to producing commercial concentrate, however, due to the recently announced suspension of VAT refunds, operations were reduced to one line.
Commenting on the group’s performance, Lucio Genovese, interim CEO, stated that in the first quarter of 2025, total commercial production was the highest quarterly figure since the start of the full-scale invasion in February 2022. This is due to increased production of high-grade concentrates sold to customers in Asia, combined with stable production of premium products. We
“The increase in production, however, did not translate into improved earnings due to persistently high production costs, in particular imported electricity, and deteriorating premiums and prices for iron ore pellets. The environment in which we operate is becoming increasingly challenging. In March, the Ukrainian tax authorities announced their decision to suspend VAT refunds for January 2025 to our two main operating subsidiaries, PGOK and Yenakiieve Iron Ore Enrichment, in the total amount of UAH 512.9 million (approximately $12.5 million). This suspension of VAT refunds, which is significant, resulted in a decrease in available liquidity to finance operations. This has forced us to immediately reduce our operations to one pellet production line and implement significant cost-cutting measures across the business, impacting labor, mining and processing, repair and maintenance, capital expenditures, and humanitarian and social funding,” Genovese emphasized.
According to him, this will have a broader impact on the economic and social fabric of the 50,000-strong city of Horishni Plavni, where the company is the main employer, and the Poltava region and the 3,000 small and local businesses that depend on Ferrexpo. It will also have an impact on the national economy through reduced taxes and fees, payments to suppliers, including energy suppliers, UZ and ports.
“We continue to appeal to the Ukrainian government and other stakeholders to restore VAT refunds so that we can maintain our business at higher operating levels, support our workforce and the integrity of our operations,” the top manager emphasized.
As reported earlier, Ferrexpo increased pellet production by 58% in 2024 compared to 2023, up to 6 million 70.541 thousand tons from 3 million 845.325 thousand tons. In the fourth quarter of 2024, the company produced 1 million 503.373 thousand tons of pellets, up 18% quarter-on-quarter (1 million 269.727 thousand tons).
At the same time, the 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 production of salable concentrate amounted to 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 a 100% stake in Yeristovo Mining, 99.9% in Bilanivsky GOK and 100% in Poltava Mining.
