Ferrexpo reduced iron ore mining by a third in 2023

MOSCOW. April 18 (Interfax) - Mining company Ferrexpo plc, with assets in Ukraine, focused mining activities at its Poltava and Yeristovo mines in 2023, producing a total of 36 million tonnes of ore compared with 55 million tonnes in 2022, Ukrainian media reported, quoting the company's financial statement.

Processing volumes decreased by 33% during 2023 to 12 million tonnes reflecting reduced logistics availability, from 17 million tonnes in 2022.

In 2022, the Group produced 353,000 tonnes of direct reduction or DR pellets, equivalent to 6% of total output. No DR pellets were produced in 2023, however, sales of 100,000 tonnes from stocks were achieved.

Logistics availability will continue to determine sales and production during 2024. Whilst the Group cannot with any certainty offer production and cost guidance for 2024, there are some opportunities to enhance efficiency, production and sales. In an improving price environment, there is an increase in demand for Ferrexpo pellets.

The company said that in 2023 it signed memorandums of understanding with several steel makers in Europe and Asia for the supply of high-grade DR pellets. DR pellet demand growth is forecast to significantly outpace traditional pellets and therefore one of the company's strategies is to focus on this premium product.

Cost of sales in 2023 totaled $362 million, compared to $582 million in 2022. The decrease predominantly results from the lower pellet production volume, which decreased from 6.1 million tonnes in 2022 to 3.8 million tonnes (-38%).

Total selling and distribution costs decreased to $161 million in 2023 (2022: $236 million), mainly reflecting lower sales via seaborne markets due to the unavailable Black Sea ports in Ukraine, but also due to the overall lower sales volume in 2023.

Ferrexpo owns 100% Yeristovo Mining and Poltava Mining and 99.9% of Belanovo Mining. The businessman Konstantin Zhevago is the majority shareholder.