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.
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.
Ferrexpo CEO Jim North has unexpectedly decided to leave the company after leading it for three years, beginning in 2020.
According to a stock exchange report Tuesday, Jim North announced he is stepping down as CEO and executive director of the company after nine years with the group to pursue other opportunities.
It clarifies that North will step down as CEO after an orderly management transition process beginning June 30, 2023. Ferrexpo announced North’s appointment as acting CEO on May 18, 2020.
North will leave the company’s board of directors following the conclusion of its annual general meeting on May 25, 2023, and will also step down as a director of various group subsidiaries.
“As a result, Resolution No. 10 of the upcoming annual general meeting (which represents a resolution to re-elect Mr. North as a director of the company) will be withdrawn and will not be voted on by shareholders at the annual general meeting,” the press release states.
It is also reported that Lucio Genovese, chairman of the board, will serve as interim executive chairman and will assume leadership of the group beginning July 1, 2023.
In addition, the Board of Directors announced the appointment of Ferrexpo Chief Financial Officer (CFO) Nikolai Kladiev as executive director of the company, effective at the conclusion of the upcoming annual general meeting of shareholders. Kladiev joined Ferrexpo in 2005 and has been a member of the group’s executive committee since 2007. He was appointed CFO of the group in July 2021.
Lucio Genovese thanked North for his significant contributions to Ferrexpo over the past nine years and for his role in guiding and shaping the group’s strategy since he became chief executive in 2020. “Jim was appointed as CEO at a time when we were focused on accelerating growth, leading Ferrexpo’s decarbonization plans and further cultural development within the business. However, given the situation in Ukraine with the ongoing war and uncertain outlook, we have had to slow down our growth programs, and the CEO’s focus inevitably shifts to ensuring business continuity and operational sustainability,” Genovese said.
Earlier, Fiona MacAulay, a non-executive director of Ferrexpo plc, a British mining company with assets in Ukraine, announced her intention to leave the group after the 2023 annual general meeting in connection with her appointment as a non-executive director of Dowlais Group Plc, which has become a public company. Fiona MacAulay is currently a senior independent director and a non-executive director of the company.
Even earlier, Ferrexpo’s independent non-executive director, Ann-Christin Andersen, declined to run for the company’s next board in May 2023. “Independent non-executive director Ann-Christin Andersen has notified the board that she will not run for re-election at the company’s next annual general meeting in May 2023,” Ferrexpo’s annual report reported.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Yeristovsky GOK LLC, 100% of Poltava GOK PJSC and 99.9% of Belanovsky GOK LLC.
Fiona MacAulay, a non-executive director of British mining company Ferrexpo plc with assets in Ukraine, due to her appointment as also a non-executive director of Dowlais Group Plc, which became a public company, will leave the group after the 2023 annual shareholders meeting scheduled for May 2.
“Pursuant to Listing Rule 9.6.14R(2), Ferrexpo plc (LSE: FXPO) makes the following notice with respect to Fiona McAuley, senior independent director and non-executive director of the company. In connection with her current appointment as a non-executive director of Dowlais Group Plc, Ms. McAuley has informed the company that Dowlais Group Plc has become a publicly listed company on the London Stock Exchange effective April 20, 2023,” Ferrexpo stated in an announcement on the London Stock Exchange Thursday.
As stated in Ferrexpo’s 2023 annual general meeting notice, Fiona McAuley will step down as non-executive chairman and chairman of the compensation committee following the 2023 annual general meeting scheduled for May 2, 2023.
Earlier, Ferrexpo’s independent non-executive director, Ann-Christin Andersen, declined to run for the company’s next board of directors in May 2023.
“Independent non-executive director Ann-Christin Andersen has notified the board that she will not run for re-election at the company’s next annual general meeting in May 2023,” Ferrexpo’s annual report reported.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of Yeristovsky GOK LLC and 99.9% of Belanovsky GOK LLC. Before the court ruling in September 2022, Ferrexpo also owned 100% of Poltava Mining and Processing Division PJSC.
