Ferrexpo, a mining company with assets in Ukraine, has appointed Stuart Brown, formerly of De Beers, as an independent non-executive director to its board of directors.
According to the company’s information on Monday, Brown took office on October 22.
Ferrexpo also reports that Graeme Dacomb, who has been a member of the board of directors since May 2020, will resign from the board at the end of this year. It is clarified that Dacomb is currently the chairman of the audit committee, and Brown will take over from January 1, 2024, which will provide the necessary time for an orderly transfer of functions. Brown is also appointed as a member of the Audit Committee upon his appointment to the Board of Directors.
The press release states that Brown is an experienced mining executive with extensive board-level experience. He previously held the positions of CFO and CEO at De Beers and its various subsidiaries. Most recently, he served as President and CEO of Mountain Region Diamonds Inc. listed on the Toronto Stock Exchange and CEO of Firestone Diamonds Plc, formerly listed on the AIM of the London Stock Exchange.
It is also reported that after Brown’s appointment, the number of independent directors will increase to five, two of whom are women. After Dacombe’s resignation at the end of this year, the number of independent directors will be reduced to four.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns a 100% stake in Yeristovo Mining, 99.9% in Bilanivsky GOK and 100% in Poltava Mining.
Mining company Ferrexpo plc with assets in Ukraine produced 3.218 million tons of pellets in January-September this year, down 42.9% year-on-year (5.637 million tons).
According to the company’s announcement on Thursday, pellet production in the third quarter of 2023 increased by 17% to 1.251 million tons compared to the previous quarter.
In 2023, only pellets with an iron content of 65% were produced.
At the same time, the total production of marketable products (pellets and iron ore concentrate) for 9 months of this year amounted to 3.475 million tons. Including the production of commercial concentrate in January-September 2023 amounted to 257 thousand tons.
As reported, in 2022, Ferrexpo produced 6.053 million tons of pellets, which is 46% less than in 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 50% to 417 thousand tons by September-December 2022.
In 2022, production of premium pellets with 65% iron content amounted to 5.7 million tonnes (down 47%), including 417 thousand tonnes in the fourth quarter (down 28% quarter-on-quarter and 86% year-on-year). Last year’s production of direct reduced iron pellets (DRI, 67% iron) amounted to 353 thousand tons (down 18% by 2021), which were not produced in the fourth quarter of 2022.
No pellets with 62% iron content were produced in 2022.
At the same time, the 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 quarter – by 49%, and by Q4 2021 – by 85%, to 457 thousand tons. In particular, the production of salable concentrate last year decreased by 47% to 124 thousand tons, including 40 thousand tons in the fourth quarter of 2022 (down 38% quarter-on-quarter and up 3% year-on-year).
Total annual sales in 2022 amounted to 6.2 million tons, down 46% compared to 2021.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Yeristovo Mining, 99.9% of Bilanivsky GOK and 100% of Poltava Mining.
Under the procedural guidance of the Specialized Environmental Prosecutor’s Office of the Prosecutor General’s Office, the chairman of the board of a mining and processing plant belonging to a group of companies owned by a member of the Parliament of the VII and VIII convocations was served with a notice of suspicion.
The press release does not specify the name of the plant, but photos and videos show the symbols of the Ferrexpo mining company, which includes Poltava Mining and Processing Plant (PGOK).
The chairman of the board is charged with illegal mining and abuse of power committed by a group of persons by prior conspiracy (part 2 of Article 28, part 4 of Article 240, part 2 of Article 364-1 of the Criminal Code of Ukraine).
According to the investigation, the chairman of the board, having entered into a criminal conspiracy with other unidentified officials of the mining and processing plant, set up an illegal scheme for the use of minerals for the purpose of enrichment.
Under the leadership of the suspect, the company, having a license to extract only iron ore, illegally processed and sold other minerals obtained in the process of mining. These rocks are supposed to be stored in specially designated storage facilities. They were processed and crushed into three different fractions, which were sold to business entities.
Between 2015 and 2021, more than 20 million cubic meters of minerals were illegally mined, which is about 164 thousand railcars. The amount of damage caused is over UAH 157 billion. This money can be used to purchase at least four new Patriot systems.
The issue of choosing a measure of restraint against the suspect and seizing his property for further compensation is being decided. Other persons involved in the crime are being identified in order to bring them to justice.
The pre-trial investigation in the criminal proceedings is carried out by the Main Investigation Department of the National Police of Ukraine with the operational support of the Strategic Investigations Department of the National Police of Ukraine and in cooperation with the State Service of Geology and Subsoil of Ukraine.
The press release reminds that according to Article 62 of the Constitution of Ukraine, a person is presumed innocent of committing a crime and shall not be subjected to criminal punishment until his or her guilt is proved in accordance with the law and established by a court verdict.
As reported in Ferrexpo’s semi-annual report, the company continues to monitor and analyze the situation with the accusations of the company’s management by the State Bureau of Investigation (SBI) of mining without a permit and subsequent sale.
On January 10, 2023, the SBI conducted several searches in connection with an investigation into alleged illegal mining. The National Police of Ukraine also investigated the same case and conducted searches and took samples in the dumps on January 17.
“The position of the Mining and Processing Plant is that the minerals in question are not a separate mineral resource, but are waste products obtained as a result of crushing iron ore during the technical process of producing iron ore pellets,” the report stated.
In addition, it is reported that on June 29, 2023, the SBI served suspicions on three representatives of the top management of the Mining and Processing Plant and the head of one of its divisions on suspicion of selling crushed stone without a permit. The employees were detained by the SBI and later released after posting bail totaling UAH 122 million, which was approved by the court.
The report explains that crushed stone sales were controlled by the State Service of Geology and Subsoil of Ukraine for many years and were stopped by the group in September 2021.
“It is the position of the Group that based on the existing mining license, the Group complies with the relevant legislation. The Group continues to monitor and analyze the situation regarding the suspicions announced by the SBI,” the company’s report summarized.
Earlier, the State Bureau of Investigation issued a press release claiming that the plant’s executives had illegally seized almost UAH 400 million from the extraction and sale of minerals of national importance without the appropriate permits.
“SBI officers, in cooperation with the SBU and the Prosecutor General’s Office, served suspicion notices to the management of the PJSC: the management of the plant’s board, heads of departments through which the company’s financial transactions were carried out, and the management of the gasket company through which the fraud was carried out,” law enforcement officials said in a statement.
According to them, “the cash from the sale was withdrawn through conversion centers and distributed among the members of the criminal group.”
The SBI indicated that 15 searches were conducted in the offices and residences of top managers of the company, gasket companies and companies in the transit and conversion sector.
Ferrexpo is an iron ore company with assets in Ukraine, owning a 100% stake in Yeristovo Mining, 99.9% in Bilanivsky Mining and 100% in Poltava Mining.
Ferrexpo, a mining company with assets in Ukraine, reduced its capital investments by 43.1% to $58 million in January-June this year, compared to $102 million in the first half of last year.
According to the company’s semi-annual report on Wednesday, capex for the first half of 2023 includes $27 million for maintenance and modernization capex and expansion capex of $31 million across the group.
It is noted that given the operational and logistical constraints due to Russia’s invasion of Ukraine, the group has maintained its levels of sustaining capex investment and is seeking to reduce investment in expansion capex projects, particularly those expected to generate returns in the medium to long term.
Overall in H1-2023, this included $17 million in capitalized stripping works to support future production growth; $7 million in expansion commitments, including the press filter complex; and $2 million in the development of the Belanovsky mine.
Due to the war, the group has suspended significant funding for Wave 1 Expansion projects (Wave 1 Expansion – a combination of mining, concentrating and pelletizing investment projects that will produce an additional 3 million tons of pellets), intending to resume investment once the hostilities and/or risks to the group have ceased.
In addition, the group continues to maintain its net cash position and balance its operational and financial targets. It is clarified that the group’s net cash position has improved from $106 million as at December 31, 2022 to $131 million as at June 30, 2023.
The group has no confirmed debt facilities or unconfirmed trade finance facilities, there are insignificant group debt facilities. The group’s gross debt balance at June 30, 2023 was $4 million compared to $7 million at December 31, 2022.
In addition, it is stated that the group has regularly received VAT refunds during the first half of the 2023 financial year, including overdue balances. Meanwhile, at the end of June-2023, VAT receivables from tax authorities amounted to $47.111 million, compared to $88.762 million at the end of 2022 and $107.552 million at the end of June-2022.
“The overdue VAT balance of $47.149 million at the end of December 31, 2022 was fully collected in January 2023.However, future refunds depend on the situation in Ukraine and how the country is going to cope with state budget constraints as a result of the ongoing war,” the report said.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Poltava GOK PJSC, 100% of Yeristovskiy GOK LLC and 99.9% of Belanovskiy GOK LLC.
Mining company Ferrexpo with assets in Ukraine in January-June this year due to the blockage of sea ports by Russia was able to supply pellets only to European countries and Turkey.
According to the semi-annual report of the company on Wednesday, Ferrexpo in the first half of the year-2023 all 100% of the realized products supplied to Europe, including Turkey, while in January-June-2022 this share was 92%, in the first half of the year-2022 – 79%.
Earlier it was noted that in H1-2022 the company increased the share of sales to Europe, including Turkey to 79% (in IH-2021 – 60%), Northeast Asia – to 5% (8%). Deliveries to the Middle East and North Africa were absent at that period (2%), as well as to North America (2%). Meanwhile, sales to Southeast Asia (SEA), including China, fell to 16% from 29%.
According to the report, the group was mainly limited to exports to Europe either by rail or inland waterways via the Danube River in the current year. It produced 1.967 million tons of pellets, operating one to two of four pelletizing lines, each capable of producing about 3 to 3.5 million tons of pellets per year, depending on the product types produced.
As at the end of July, the group operates one pelletizing line to reduce existing product inventories.
C1 production cost in H1-2023 was $71/tonne, down from H1-2022 ($85/tonne) due to the hryvnia devaluation in H2-2022 and lower prices for some consumables and the positive effect of energy savings. At the same time, iron ore prices in H1-2023 on the global market decreased by 5%, the outlook for the third quarter is slightly worse due to weak demand in Asia and increased iron ore supplies from Brazil and Australia.
Total selling and distribution costs in H1 2023 were $74 million (H1-22 – $147 million), mainly due to lower shipping volumes in the period due to the closure of Ukraine’s Black Sea ports in February 2022 and higher alternative freight costs that followed access to European customers. C3 freight rates declined 26% year-on-year to average $20/tonne in 1H 2023 as a result of lower global energy prices and lack of demand from Brazilian miners.
It is also stated that previously the group’s maritime logistics routes represented the cheapest and most efficient way to deliver products to customers. However, due to the Russian invasion of Ukraine, the group has had to adapt and establish new logistics corridors and relationships with logistics service providers and port operators. These routes rely heavily on rail, where capacity is limited and demand is high, including from businesses and industries, and transportation by barge is also limited and costly.
“The Group continues to explore its logistics options and has made progress in reducing transportation time and improving efficiency where possible,” the report said.
It also reminds that rail tariffs in July-2022 increased by 70% for 20 types of cargo, even when the group uses its own railcars.
During the first six months of 2023, the average monthly iron ore price remained in the range of $100 – $200/tonne, royalties for iron ore mining are charged to the group at a rate of 5% in this period.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Poltava GOK PJSC, 100% of Yeristovskiy GOK LLC and 99.9% of Belanovskiy GOK LLC.
The British multinational asset management company Schroders Plc (London) has reduced its voting stake in Ferrexpo plc, which controls Poltava and Yeristovo Mining and Processing Plants (PGOK and Yenakiieve Mining) in Ukraine, to less than 5%.
According to Ferrexpo’s stock exchange announcement on Monday, the 5% threshold was lowered on July 14 this year.
It is specified that Schroders Plc’s voting stake is currently 29 million 590.980 thousand, or 4.947189% of the total number of votes in the company, while previously it was 5.453490%.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Yeristovo Mining, 99.9% of Bilanivsky GOK and 100% of Poltava Mining.
Schroders plc is a British multinational asset management company founded in 1804 and based in London. The company employs over 5000 people worldwide in 32 offices in Europe, America, Asia, Africa and the Middle East.
