Ferrexpo reports strong production, warns of difficult operating environment
By Josh White
Date: Monday 07 Apr 2025
(Sharecast News) - Ferrexpo reported its strongest quarterly production since the start of Russia's full-scale invasion of Ukraine in 2022 on Monday, delivering 2.1 million tonnes of total output in the first quarter of 2025, although its shares were sliding as it warned of an increasingly difficult operating environment.
The company said the result included 1.3 million tonnes of iron ore pellets and 0.8 million tonnes of 67% iron concentrate, with the company citing a sharp rise in demand for high-grade concentrate from customers in Asia.
It said iti miner operated two of its four pelletising lines during the quarter, alongside commercial concentrate production.
However, operations had since been scaled back to a single line following the recently announced suspension of VAT refunds in Ukraine, which added financial pressure to Ferrexpo's domestic operations.
Production of the company's higher-margin direct reduction (FDP) pellets continued during the quarter, though volumes declined to 81,000 tonnes.
Ferrexpo said current constraints could impact output levels going forward.
The firm said it maintained a strong safety record, with no workplace fatalities reported for over four years.
It said its rolling 12-month lost time injury frequency rate stood at 0.66 at the end of February, above the five-year trailing average of 0.52.
"For the first quarter of 2025, total commercial production was the highest quarterly rate since the full-scale invasion started in February 2022," said interim executive chair Lucio Genovese.
"This is due to an increase in production of high-grade concentrates, sold to customers in Asia, combined with a stable production of Ferrexpo premium pellets.
"We are pleased that once again we have demonstrated our ability to adapt to changing market conditions , taking advantage of the demand for our concentrates in Asia. "
Genovese noted that the increase in production did not translate into improved earnings, however, due to sustained high input costs, in particular imported electricity and deteriorating iron ore pellet premiums and prices, adding that the operating environment was becoming increasingly challenging.
"In March, the Ukrainian tax authorities notified our two main operating subsidiaries, Ferrexpo Poltava Mining and Ferrexpo Yeristovo Mining of their decision to suspend the refund of VAT for the month of January, for the total amount of UAH 512.9m ($12.5m).
"This suspension of the VAT refund, which is considerable, has resulted in lowering the available liquidity to fund the operations.
"This has forced us to immediately downscale our operations to one pellet line and to implement significant cost cutting measures across the business, affecting the workforce, mining and processing operations, repairs and maintenance, capital expenditure and humanitarian and social funding."
At 0832 BST, shares in Ferrexpo were down 9.93% at 43.1p.
Reporting by Josh White for Sharecast.com.
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