Mining company Ferrexpo plc with assets in Ukraine in January-June this year produced 1.967 million tons of pellets, which is 2.3 times less than in the same period last year (4.797 million tons).
The company said Thursday that pellet production in the second quarter of 2023 was up 18 percent from the previous quarter, but down 48.9 percent from the second quarter of 2022 to 1.066 million tons.
In 2023, only pellets with 65% iron content were produced.
At the same time, the total production of commercial products (pellets and iron ore concentrate) in the first half of this year decreased 2.27 times to 2.126 million tons compared to the first half of 2022. Including the output of commercial concentrate in January-June 2023 amounted to 160 thousand tons (19 thousand tons in January-June 2022).
The press release explains that Ferrexpo continues to produce, transport and sell its products under war conditions, with associated energy and logistical constraints. Meanwhile, the group has successfully operated two pellet production lines, the second of which was re-commissioned earlier this year.
The emphasis in production is on producing pellets with a higher iron content of 65% Fe or higher. Sales continued to be exported by rail and barge to Central and Eastern Europe and the Black Sea. Sales for the quarter totaled 1.2 million tons, up 45% from the previous quarter and 2.1 million tons in the first half of 2023.
The Group intends to continue using one to two pellet lines through the end of the year, as it did in the first half of the year, provided there are no further significant changes in the operating environment and logistics availability in Ukraine.
Acting Executive Chairman Lucio Genovese noted in his commentary that despite incessant shelling and multiple challenges, the company has been able to adapt its business. In particular, a second pellet line returned to production in the first half of 2023, increasing flexibility and the ability to rebuild production. However, logistics remain limited.
“Although we now have the ability to produce more, we do not currently have enough alternative Black Sea ports to export more,” Genovese stated.
He also reported that “during the first six months, we continued to maintain a strong cash position while funding our capital commitments.”
“We continue to evaluate alternative supply routes in the near term, and we are looking to the post-war future, developing plans to restore capacity so that we can return to full production levels and play our part in rebuilding Ukraine,” the top manager summarized.
As reported, Ferrexpo produced 6.053 million tons of pellets in 2022, down 46% from 2021. At the same time, pellet production in the fourth quarter of 2022 decreased by 86% compared to the fourth quarter of 2021, and by September-December 2022 decreased by 50% to 417,000 tons.
Production of premium pellets with 65% iron content in 2022 was 5.7 million tonnes (down 47%), including 417 thousand tonnes in the fourth quarter (down 28% quarter-on-quarter and 86% year-on-year). Direct reduction of iron pellets (DRI, 67% iron) output last year was 353 thousand tonnes (down 18% q-o-q), which was not produced in Q4-2022.
No pellets with 62% iron content were produced in 2022.
At the same time, total production of commercial products (pellets and iron ore concentrate) in 2022 decreased by 46% to 6.177 million tons, in the fourth quarter, compared to the third, by 49%, and by Q4-2021 – by 85%, to 457 thousand tons. Last year’s output of marketable concentrate fell by 47% to 124 kt, including 40 kt in Q4-2022 (down 38% q-o-q and up 3% q-o-q).
Total annual sales in 2022 were 6.2 million tons, down 46% from 2021.
Poltava GOK has four pellet production lines.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Yeristovsky GOK LLC, 99.9% of Belanovsky GOK LLC and 100% of Poltava GOK PJSC.
