REG - Ferrexpo plc - Production Report for 3Q 2023

FerrexpoAnnouncement

05/10/2023 07:00

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RNS Number : 7242O  Ferrexpo PLC  05 October 2023

 

 

 

5 October 2023

 

Ferrexpo plc

("Ferrexpo" or the "Company" or the "Group")

 

Production Report for 3Q 2023

 

Ferrexpo plc (LSE: FXPO), producer of premium iron ore pellets for the
transition to lower carbon and green steel, is pleased to report production
results for the third quarter to the end of September 2023 ("the quarter" or
"3Q" or "3Q 2023").

Commenting on the results, Lucio Genovese, Interim Executive Chair, said: "It
is pleasing to report that our performance during the quarter exceeded our
expectations and that we were able to operate up to two of our four pellet
lines.  Our strategy to move early and right-size our business, so that we
are more responsive to ever changing circumstances, is working.  Contrary to
the prevailing market pessimism, iron ore prices strengthened over the
quarter; a supportive factor given the higher logistics costs we are
experiencing. Despite the challenging rail logistics and sea ports capacity
available, we have continued to export premium products and service the needs
of our premium European customers. This achievement is once again, testament
to the resilience and commitment of our workforce, who are operating in
exceptionally challenging circumstances.

We have noted over the last few months how various initiatives focused on
Ukraine's post-war reconstruction are gaining momentum. This is especially the
case for the iron ore and steel sector. Several ideas are under discussion
among leaders across the value chain, with broad support of international
finance institutions, trade bodies and governments and multi-laterals.  While
the future holds much potential, today during a time of war, it is not
possible to understate how challenging it is to operate our business.  This
is especially the case as we head into the winter season, when energy
infrastructure is vulnerable to disruption.  We have deliberately focused on
building pellet production during 3Q to mitigate risks in the months ahead.

It is with great sadness that I must announce that 33 of our employees serving
in the Ukrainian Armed Forces have died. Each of these brave soldiers has
their own story, over half of them had partners, half of them children. They
all had careers at Ferrexpo, including as electricians, mechanics, drill rig
operators and pit supervisors.

At present, 739 members of our workforce are currently serving in the
Ukrainian Armed Forces, 50 have been demobilised and returned as veterans, 30
of whom have returned to work. We continue to provide support for all these
courageous employees and their families through our humanitarian programme
that also extends further afield, including aid to the Kherson Region
following the blowing up of the Nova Kakhovka Dam.

Highlights

·    The safety and wellbeing of the workforce is the highest priority,
and the Group continues to take extensive measures to protect all employees,
their families, and local communities.

·    Ferrexpo continues to produce, transport and sell its products
despite a challenging environment in Ukraine.

·    At the end of September 2023, the Group reported a rolling 12 month
LTIFR of 0.27, below the historic five year trailing average of 0.69.

·    The Group has successfully operated between one and two pelletising
lines (out of four) during the quarter, alternating product quality depending
on demand from customers and available logistics routes.

·    With variable, yet stable production at different times from each of
the two pelletiser lines in 3Q, total iron ore pellet production was 1,251
million tonnes, 17% higher than 2Q.

·    The focus on production of higher grade pellets continued during the
period, all grading 65% Fe or above.

·    For the remainder of the year, the Group intends to operate between
one and two pelletising lines, assuming no further material changes to the
operating environment and logistics availability in Ukraine.

·    Certain legal challenges against the Group and certain senior
management personnel of Ferrexpo Poltava Mining ("FPM") continue to progress
through the Ukrainian courts. In a recent court hearing concerning claims
regarding the sale of waste products by FPM, which the Group continues to
believe are without merit, the Chair of the FPM Management Board was detained
with bail set at a very high amount. An appeal has been lodged against this
decision and the Group will provide an update to the market as and when
appropriate.

 

Summary production statistics Q3 2023 and 9M 2023

                                    Fe Grade             3Q 2023  2Q 2023  Change  1Q 2023  9M 2023
                                                         (kt)     (kt)
(kt)    (kt)
 Total commercial production                             1,349    1,172    +15%    954      3,475

(pellets and commercial concentrate)

 Total pellet production                                 1,251    1,066    +17%    901      3,218
 Pellet production comprised of:
 o Direct Reduction Pellets         67%                  0        0        -       0        -
 o Ferrexpo Premium Pellets         65%                  1,251    1,066    +17%    901      3,218
 o Ferrexpo Basic Pellets           62%                  0        0        -       0        -

 Commercial concentrate production  67%                  98       106      -8%     54       257

 

 

 

Contact:

For further information, please contact:

 Ferrexpo:
 Nick Bias        n.bias@ferrexpo.ch (mailto:r.simmons@ferrexpo.ch)           +44 (0)207 389 8305 / +44 (0)7733 177 831
 Tavistock:
 Jos Simson       ferrexpo@tavistock.co.uk (mailto:ferrexpo@tavistock.co.uk)  +44 (0)207 920 3150 / +44 (0)7899 870 450

 Gareth Tredway

 
About Ferrexpo:
Ferrexpo is a Swiss headquartered iron ore company with assets in Ukraine and a premium listing on the London Stock Exchange in the FTSE 250 index (ticker FXPO). The Group produces high grade iron ore pellets, which are a premium product for the global steel industry and enable reduced carbon emissions and increased productivity for steelmakers when the Group's iron ore pellets are converted into steel, compared to more commonly traded forms of iron ore. Ferrexpo's operations have been supplying the global steel industry for over 50 years. Before Russia's invasion of Ukraine in February 2022, the Group was the world's third largest exporter of pellets to the global steel industry. The Group has a global customer base comprising of premium steel mills around the world, which includes steel mills in Austria, Germany, Japan, South Korea, Taiwan, China, Slovakia, the Czech Republic, Turkey, Vietnam and America. For further information, please visit
www.ferrexpo.com (http://www.ferrexpo.com)
.

 

Notes:

**Due to the ongoing war in Ukraine, and the multiple challenges that this
places on production, it is not considered appropriate at the current time to
compare quarterly and half yearly production numbers to same period last year,
i.e. 3Q 2023 to 3Q 2022 and 9M 2023 to 9M 2022, because the circumstances in
which they are produced are different. Even withstanding seasonal anomalies,
it is believed that at the present time, investors and other readers will have
a better understanding of how the Company is performing if the latest
quarterly and half yearly production is compared to the previous period (i.e.
3Q 2023 to 2Q 2023).  Hence, since 2Q 2023 it has been decided to present
production reports in this time format and until further notice.

Please note that numbers may not add up due to rounding and all numbers
contained herein may be subject to change.

The Company will report fourth quarter and full year production results for
the 12 months ended 31 December 2023 on 11 January 2024.

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