Business news from Ukraine

“Metinvest” increased pellets by 48%, coal concentrate – by 17%

According to the results of work in January-September of this year, “Metinvest” reduced the total production of iron ore concentrate (IRC) by 23% compared to the same period last year – to 7.513 million tons, increased the production of pellets by 48% – to 3.989 million tons, the total output of coke of coal concentrate increased by 17% to 4.318 million tons.

According to a press release from parent company Metinvest B.V. on the results of operations for the third quarter and nine months of 2023 on Wednesday, in the third quarter of 2023 the output of the total SAM increased by 13% compared to the previous quarter – to 2.766 million tons – due to increased production at all three GZK (Northern GZK, InGZK and TsGZK).

The production of commercial iron ore products increased by 3% – up to 2.180 million tons, while almost the entire volume of these products was produced with a high iron content. Due to the change in the order portfolio in favor of pellets, their production increased by 7% – to 1.434 million tons, while the production of commercial concentrate decreased by 5% – to 746 thousand tons.

In the nine months of 2023, the production of total air defense systems decreased by 23% due to the start of full-scale military operations on the territory of Ukraine at the end of February 2022. As a result, the volume of production of commercial iron ore products decreased by 12% – to 6.220 million tons – due to a decrease in the production of commercial concentrate by 49%, to 2.231 million tons. At the same time, the increase in the production of commodity pellets by 48% occurred due to the reorientation of the order portfolio. Almost the entire volume of marketable iron ore products was produced with a high iron content.

In the third quarter of 2023, the group’s coal concentrate production decreased by 19% compared to the previous quarter – to 1.275 million tons. The main factor was a 36% decrease in production volumes at United Coal Company (USA) mines – to 443,000 tons – due to the cessation of production at Carter Roag mines and a decrease in production at some Wellmore mines. The production of coal concentrate in the Pokrovsky Coal Group (Ukraine) decreased by 7% – to 832 thousand tons – due to a decrease in production due to the deterioration of geological conditions.

In the first nine months of 2023, the group’s coal concentrate output increased by 17%, mainly due to an increase in production in the Pokrovsky Coal Group – by 33%, to 2.426 million tons, as well as an improvement in the quality characteristics of Ukrainian coking coal.

Previously, the financial director of the group, Yulia Dankova, explained that as a result of the war, “Metinvest” lost control over two large plants in Mariupol and suspended production in Avdiivka. These and other challenges that the company continues to overcome have forced the business to restructure in order to survive.

So, first of all, the company provided the opportunity for its foreign enterprises to operate separately, since the vertically integrated structure was broken. Before the war, the Mariupol factories supplied semi-finished products to their rolling mills abroad, and coal concentrate went to Ukraine from the USA. Currently, the assets of “Metinvest” in Italy, Great Britain and the USA operate as independent enterprises. Coal mines in the US have reoriented product sales to domestic and export markets, and rolling mills are buying semi-finished products on the open market.

She also stated that now the group’s industrial enterprises are loaded at 65-75% capacity, and GZK – at 35-40%.

As reported, “Metinvest” according to the results of January-March of this year reduced the total production of iron ore concentrate (IRC) by 62% compared to the same period last year – to 2.306 million tons, pellets by 6% – to 1.214 million tons, the total output of coking coal of concentrate increased by 14% to 1.461 million tons. At the same time, the output of total iron ore concentrate more than doubled compared to the previous quarter – up to 2.306 million tons.

In the first half of 2023, the group reduced the production of SAMs by 46% compared to the same period last year – to 4.746 million tons, increased pellets by 37% – to 2.555 million tons, the total output of coking coal concentrate increased by 25%, to 3.043 million tons. The output of marketable iron ore products decreased by 35%, to 4.041 million tons.

According to the results of 2022, “Metinvest” reduced the production of total iron ore concentrate by 66% compared to the previous year – to 10.712 million tons, marketable iron ore products by 55% – to 7.903 million tons, in particular the volume of marketable concentrate – by 60%, to 4.718 million tons , and the volume of commercial pellets – by 45%, up to 3.185 million tons. In 2022, the group’s coal concentrate production decreased by 11% to 4.959 million tons.

“Metinvest” consists of mining and metallurgical enterprises located in Ukraine, Europe and the USA.

The main shareholders of “Metinvest” are “SCM” group (71.24%) and “Smart-holding” (23.76%), which jointly manage the company.

“Metinvest Holding” LLC is the managing company of the “Metinvest” group.

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Due to blockage of sea ports, Ferrexpo was able to supply pellets only to Europe and Turkey

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.

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Mining company Ferrexpo cuts output of pellets by 67% in Q1

Mining company Ferrexpo plc with assets in Ukraine produced 901,000 tons of pellets in January-March this year, down 67% from the same period last year.
According to the company’s stock exchange statement on Thursday, the production of pellets in the first quarter of 2023 increased 2.16 times compared with the fourth quarter of 2022 (in October-December last year – 417 thousand tons).
In 2023, only pellets with iron content of 65% were produced.
The total production of commercial products (pellets and iron ore concentrate) for the first quarter of this year decreased by 65% by the first quarter of 2022, but increased 2,1 times to 954 thousand tons by the fourth quarter of 2022. Including commercial concentrate output in January-March 2023 amounted to 53 thousand tons (+32% compared to the previous quarter).
The press release explains that the increase in pellet output in the first quarter of this year was due to the improved power supply, which allowed to restart the second pelletizing line at the end of February 2023. At the same time, the decrease in the group’s production compared to last year is due to operational and logistical constraints since the start of Russia’s full-scale military invasion in February last year.
The company continues to focus on high iron content products.
The Group intends to continue to operate one to two pellet lines in the next quarter, as in the first quarter of 2023, provided there are no further significant changes in the operating environment and logistics availability in Ukraine.
Total iron ore sales were 0.85 million tonnes during January-March 2023 with shipments to European customers by rail and barge.
Ferrexpo CEO Jim North commented that pellet production of 0.9 million tons during the first quarter of 2023 represents a significant increase over the previous quarter and reflects the easing of operational constraints experienced late last year.
“As noted in our recent full year results announcement, we are now able to operate our second pelletizing line (of four) and our logistics networks are able to provide sales volumes to customers in line with this level of demand. Going forward, we aim to balance production volumes with a conservative approach to maintain group balance and liquidity metrics, ensuring stable deliveries to our long-term customers,” North was quoted in the press release.
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% from 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 on the same period last year).
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 a 100% stake in Yeristovsky GOK LLC and a 99.9% stake in Belanovsky GOK LLC. Before the September 2022 court ruling, Ferrexpo also owned 100% of Poltava GOK PJSC.

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Central Mining and Processing Plant cuts output of marketable pellets by 3%

Metinvest’s subsidiary Central Mining and Processing Integrated Works, located in Krivoy Rog, Dnipropetrovsk Region, reduced the output of its marketable pellets by about 3% year-on-year to 2 million tons in January-November this year.
“Owing to coordinated actions, the combine’s team achieved 100% of production and processing targets. In the first 11 months of this year alone, miners mined more than 9 million tons of crude ore, concentrators produced more than 3 million tons of concentrate, and pelletizers produced nearly 2 million tons of high quality pellets,” the company says.
At the same time, it is said that this year was a period of trials, which the company’s team managed to cope with with with dignity. Despite the war, logistical problems and economic challenges, the company remains one of the best in Ukraine’s mining industry.
Thus, in 2022, TsGOK continued producing high-quality products – concentrate with iron content of 70% and above, and pellets with iron content of 67.5%. This influenced the fact that the company remained with orders in a difficult period and was able to work, fulfilling its obligations to customers and providing jobs for its employees.
Central Mining and Processing Plant’s staff continues to upgrade the production facilities in the plant’s shops. Specialists have overhauled pelletizing plant equipment and roasting machine OK-324. At the crushing plant, one of the largest units – the coarse crusher – and the conveyor transport were overhauled. The renewed equipment is ready to accept up to 4.5 million additional tons of iron ore.
In order to support the heavy-weight transport in the mining and transport shops of the combine during the year the heavy-weight dump trucks were repaired by their own hands. To ensure safe and efficient operation of railway transport, tracks were repaired.
This year the humanitarian mission was added to the industrial tasks of the Central Mining and Processing Division. In March the humanitarian hub started its work at the Works within the framework of the project “Saving Lives”, implemented by Metinvest Group in coordination with Rinat Akhmetov’s Foundation. During this time the workers-volunteers of the Works have put together 135 thousand food packages for the IDPs, the representatives of the privileged categories, the families of the mobilized and the veterans of the Works.
An active volunteer movement is carried out by the TsGOK’s youth, who collect humanitarian aid, support in the search of accommodation, render targeted assistance to the labour veterans and pensioners of the enterprise and hold entertainment events for children from the families of internally displaced persons.
“The staff of the Central Mining and Processing Plant is an example of indestructibility and reliability. This year our specialists have shown that they can support each other and our common cause. Today we understand how important the work of the enterprise is for the economy of Ukraine and how important it is to be human and friendly outside the production. Our team is a big family where the workers are heroes in their place. I’m grateful to each specialist for his work in this difficult time and I am sure that the new year of the plant will be productive”, – General Director of Central Mining Dmitry Shevchik is convinced, who is quoted by the press service.
As Ukrainian News earlier reported, in 11M22 Central Mining decreased the output of marketable pellets by 0.4% YoY to 2.054 million tons and iron ore concentrate by 2.8% to 4.376 million tons.
Central Mining is one of the five largest mining producers in Ukraine. It specializes in the mining and production of iron ore raw materials – concentrates and pellets.
Central Mining is part of Metinvest Group, whose major shareholders are System Capital Management (SKM, Donetsk) (71.24%) and Smart-Holding Group (23.76%).
The management company of the Metinvest group is Metinvest Holding LLC.

PIVNICHNY MINING RAISES UP PELLET OUTPUT BY 20% IN 2021

Pivnichny (Northern) Mining and Processing Plant (Kryvy Rih, Dnipropetrovsk region), part of Metinvest Group, increased production of commercial pellets in 2021, according to recent data, by 20.2% compared to 2020, to 6.35 million tonnes.
As the company told Interfax-Ukraine, in December production of pellets amounted to 550,000 tonnes.
At the same time, output of iron ore concentrate last year increased by 5.2%, to 13.4 million tonnes, including 1.13 million tonnes produced in December.
In 2020, the plant reduced production of commercial pellets by 32.6% compared to 2019, to 5.28 million tonnes, and production of iron ore concentrate increased by 4%, to 12.739 million tonnes.
Pivnichny Mining and Processing Plant is part of Metinvest Group, the main shareholders of which are PrJSC System Capital Management (SCM, Donetsk, 71.24%) and Smart-Holding (23.76%).
Metinvest Group’s management company is Metinvest Holding LLC

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PRODUCTION OF PELLETS GOES DOWN BY 0.5% IN JAN-OCT

Central Mining and Processing Plant (Kryvy Rih, Dnipropetrovsk region), part of Metinvest Group, in January-October this year, reduced production of commercial pellets, according to recent data, by 0.5% y-o-y, to 1.850 million tonnes.
As the enterprise told Interfax-Ukraine, in October production of pellets amounted to 110,210 tonnes.
Over ten months, Central Mining reduced production of iron ore concentrate by 2.9%, to 3.959 million tonnes, including 433,163 tonnes produced in October.
At the same time, the agency source noted that in recent months, the lag in production this year has been decreasing in comparison with the previous year. So, in particular, the relative level of backlog of production of commercial pellets in nine months of this year was 2.5% y-o-y, and concentrate – 3%.
As Yuriy Ryzhenkov, CEO of Metinvest, recently announced, in 2020 the company received the first high-quality pellets at Central Mining – DRI-class pellets. The next step is Pivnichny (Northern) Mining and Processing Plant.

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