Ferrexpo plc, a mining company with assets in Ukraine, produced 3.845 million tonnes of pellets in 2023, down 36.5% from 6.053 million tonnes in 2022, due to the fact that 2022 included a period of full-scale production before the Russian invasion of Ukraine.
According to the company’s announcement on Thursday, pellet production in the fourth quarter of 2023 fell by half compared to the previous quarter to 0.627 million tons, but this is 50.4% more than in the fourth quarter of 2022.
It is noted that in 2023, only premium pellets with an iron content of 65% were produced, while direct reduced iron pellets (DRI, 67% iron) and pellets with an iron content of 62% were not produced.
In addition, it is specified that the total production volume includes 50 thousand pellets produced in the fourth quarter from third-party concentrate.
“Even with the onset of winter, we were able to operate one and sometimes two of our four pellet production lines to meet our reduced export capacity and continue to supply premium products to our premium customers,” Interim Executive Chairman Lucio Genovese said in the release.
Speaking about the past year, the company notes the deaths of 14 employees who served in the Armed Forces of Ukraine, which increased the total number of employees killed since the beginning of the Russian invasion in 2022 to 34. It is specified that 754 of our employees are currently serving in the Armed Forces of Ukraine.
It is indicated that the company continues to retain most of its employees, despite the fact that it was forced to significantly reduce production. This, together with rising logistics costs in the absence of access to Black Sea export routes, has led to a decline in profitability.
However, the report notes that Ukraine’s recent success in opening Black Sea export corridors has made it possible to resume shipping from certain ports.
“When the time is right, Ferrexpo plans to launch an additional pellet production line and resume exports via this route, provided it is safe and cost-effective,” the release said.
In addition, it is noted that iron ore prices rose by more than 20% in the fourth quarter, thanks to China’s support for more steel-intensive sectors of its economy, and continued to hold at this level until the New Year.
“We are also seeing the first signs of a pick-up in pellet demand in Europe. Together, these factors can support our large fixed cost base and higher logistics costs. In my view, the improved demand and higher prices bode well for Ferrexpo for the year ahead,” Genovese concluded.
It is noted that the group’s net cash position, including minor adjustments, at the end of the year was approximately $109 million compared to $106 million a year earlier, with minimal lease obligations and no debt.
Ferrexpo owns 100% of Yeristovo Mining, 99.9% of Bilanivsky GOK and 100% of Poltava Mining.
In the first half of 2023, Ferréxpo cut its net profit threefold to $27.01 million, while revenue fell 2.8 times to $334.01 million, and its EBITDA fell 7.6 times to $63.64 million.
Northern Mining and Processing Plant (Pivdennyi GOK, Kryvyi Rih, Dnipro region), part of Metinvest Group, has upgraded its pellet production to improve its quality by increasing the share of iron in the product.
According to the company’s information on Monday, a modernization project was implemented at the pellet production shop No. 2 of Northern GOK using the LURGI 552V roasting machine.
It is specified that thanks to the introduction of the innovation, the specialists managed to establish the production of homogeneous pellets with an iron content of 65% or more. This opened up prospects for the company to maintain a competitive position in the European iron ore market.
The press service notes that before the outbreak of the full-scale war, Yenakiieve Iron Ore Enrichment was largely focused on supplying iron ore to Metinvest Group’s Ukrainian steelmaking companies. However, with the temporary loss of control over its Mariupol plants and the blockade of the Black Sea ports, the plant was forced to look for alternative markets for its commercial products. European steel mills were a promising prospect. Northern GOK’s technologists applied operational improvements in the concentrate and pellet production chain to ensure that Northern GOK’s iron ore meets the requirements of European steelmakers.
To improve the quality of products, the LURGI 552V roasting machine underwent a large-scale overhaul to modernize the raw pellet screen. The special design of the equipment made it impossible for products larger than the standard to enter the roasting machine. As a result, the output quality of unfluxed pellets has improved.
Made from premium A1 grade concentrate, they have the required diameter of 10 to 18 mm and an iron content of 65+%, which meets the requirements of European consumers. In addition, the modernization of the equipment allows the company to reduce the cost of natural gas and electricity, as well as to reduce the amount of concentrate used for pellets by reducing the amount of rejects.
As Andrey Skachkov, CEO of Northern GOK, explained, the company’s specialists have been working to improve the pelletizing process since 2019. Operational improvement measures were taken to reduce natural gas consumption in 2021-2022, and the first stage of the modernization of the automatic process control system (APCS) was implemented in early 2023.
“The quality of pellets was also improved by the launch of a technological process for the production of concentrate with an iron content of 68% at the ore processing plant (MPP) No. 1. All of this allowed us to reorient our production for the European market despite the war, providing our employees with jobs in these turbulent times. At present, iron ore produced at Severstal is being ordered by steelmakers in Slovakia, Poland, Romania and Serbia,” the top manager said, as quoted by the press service.
“Metinvest is a vertically integrated group of steel and mining companies. The group’s enterprises are located mainly in Donetsk, Luhansk, Zaporizhzhia and Dnipro regions.
Metinvest’s major shareholders are SCM Group (71.25%) and Smart Holding (23.75%), which jointly manage the company.
Metinvest Holding LLC is the management company of Metinvest Group.
Mining company Ferrexpo with assets in Ukraine, after suspending production since early October at its facilities in the Poltava region due to restrictions on electricity supply due to the shelling of the energy infrastructure by the Russian occupiers, is resuming operations of one pellet production line.
“After suspending its operations in October 2022, the group is now receiving enough electricity to restart one pellet production line. This will allow the group, along with its existing stockpiled products, to fulfill existing contracts with customers,” the company stated in a stock exchange statement Wednesday.
It explains that the company produced about 0.3 million tons of pellets in October-November as a result of disruptions and continued volatility in power supply in the fourth quarter of 2022. Overall pellet production in 2022 is expected to be about 5.9 to 6 million tons (down almost half by 2021 – IF-U).
“Despite the group’s production disruptions, shipments to customers in the fourth quarter of 2022 continued at about 250,000 tons per month,” the press release noted.
As reported, pellet production for the first nine months of 2022 was 5.637 million tons, down 31% from the same period last year.
Ferrexpo in 2021 increased total pellet production by 0.02% over 2020 to 11.220 million tons. The company also produced 234,000 tons of saleable concentrate with 67% iron content (up 28%) in 2021.
Poltava GOK has four pellet production lines.
Ferrexpo is an iron ore company with assets in Ukraine.
Ferrexpo owns 100% of LLC “Yeristovsky GOK” and 99.9% of LLC “Belanovsky GOK”. Before the September 2022 court ruling, Ferrexpo also owned 100% of Poltava GOK PJSC.
The UK-based Ferrexpo Plc, which controls Poltava Mining and Yeristovo Mining in Ukraine, intends to reconstruct the integral property complex of the pellet production shop at Poltava Mining.
According to the documentation at the disposal of Interfax-Ukraine, it is planned to reconstruct the integral property complex of the pellet production shop in the building of the filtration and averaging building for concentrate No. 1, A and 2, B.
The timing of the reconstruction and the amount of funds for the project are not made public.
Ferrexpo is an iron ore company with assets in Ukraine. Fevamotinico S.a.r.l., controlled by Kostiantyn Zhevaho, owns 50% of Ferrexpo, BlackRock holds 6.74% in it.
Ferrexpo owns 100% of the shares of Poltava Mining, 100% of Yeristovo Mining and 99.9% of Belanovo Mining.
