REG - Ferrexpo plc - Production Report for 4Q 2023

FerrexpoAnnouncement

11/01/2024 07:00

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RNS Number : 3222Z  Ferrexpo PLC  11 January 2024

 

11 January 2024

 

 

Ferrexpo plc

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

 

Production Report for 4Q 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 fourth quarter and full year to the end of December 2023 ("the
quarter" or "4Q" or "4Q 2023" and "FY2023").

Commenting on the results, Lucio Genovese, Interim Executive Chair, said:
"Throughout the year I have maintained that it is the resilience and
commitment of our workforce that has ensured our assets remain operational.
Once again, due to their steadfast determination that today we are reporting
fourth quarter iron ore production of 677 thousand tonnes, and a total 4.1
million tonnes for the year.

Even with winter setting in, we have been able to operate one, sometimes two,
of our four pellet lines, to match the reduced export capacity available to
us, and continue supplying premium products to our premium customers.
Because our business is adaptive to change, during the quarter we were able to
alter our production mix to match our customers' needs and produce high grade
pellets as well as pellet feed, whilst also treating material from a third
party. In view of the hugely challenging situation that we faced during the
past year, I believe that this is an exceptional performance and I am proud of
our collective achievements.

Reflecting back on 2023, it is with great sadness that 14 of our employees
serving in the Ukrainian Armed Forces have died, bringing the total to 34
since the Russian invasion began in 2022. At present, 754 of our colleagues
are serving in the Ukrainian Armed Forces.

As the end of a second year of the war approaches the way we manage our
business also continues to change. Since the full scale invasion we have
continued to retain the majority of our workforce, despite being forced to
significantly reduce our production.  This has resulted in the business
carrying significant fixed costs. Furthermore, a lack of access to Black Sea
export routes meant that we have incurred higher logistics costs  than in
previous years and were also limited in our ability to service our MENA and
Asian customers..

Ukraine's recent success in opening up Black Sea export corridors has
permitted some to recommence shipping out of certain ports. When the time is
right, Ferrexpo plans to start up an additional pellet line and resume exports
via this route, provided it is safe and cost effective. It is also encouraging
to note that iron ore prices strengthened over 20% during the final quarter,
driven by China's support for the more steel-intensive sectors of its economy,
and have continued to hold up well into the New Year. We also note the early
signs of an uptick in pellet demand in Europe. These factors combined could be
supportive of our large fixed cost base and higher logistics costs. In my
opinion, improved demand and higher prices bode well for the year ahead for
Ferrexpo."

Highlights

·    Ferrexpo is committed to the safety and wellbeing of the workforce
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 December 2023, the Group reported a rolling 12 month
LTIFR of 0.39, below the historic five year trailing average of 0.69. For the
third consecutive year zero fatalities were reported.

·    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 4Q, total iron ore pellet production was 577,140
tonnes from own ore, 54% lower than 3Q due to logistic constraints and lower
market demand in the early part of the quarter.

·    Total pellet and commercial concentrate production for the full year
was 4,151,703 tonnes, 33% lower than the previous year, primarily because the
2022 year included a period of full-production before the full scale invasion
of Ukraine commenced on 24 February 2022.

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

·   Group net cash position, subject to minor final year-end adjustments,
of approximately US$109 million as of 31 December 2023 (31 December 2022:
US$106 million), with minimal lease obligations and no debt.

 

Summary production statistics Q4 2023 and FY2023 (kt)

                                       Grade                4Q 2023  3Q 2023  Change  FY 2023  FY 2022  Change
 Total commercial production                                677      1,349    -50%    4,152    6,177    -33%

(pellets and commercial concentrate)
 Total pellet production                                    627      1,251    -50%    3,845    6,053    -36%
 Direct reduction pellets              67%                  -        -        -       -        353      -
 Ferrexpo premium pellets              65%                  577      1,251    -54%    3,795    5,700    -37%
 Ferrexpo basic pellets                62%                  -        -        -       -        -        -
 Third party pellets from concentrate  65%                  50       -        -       50       -        -
 Commercial concentrate production     67%                  50       98       -49%    307      124      +147%

 

 

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 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:

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 Preliminary Financial Results for the year ended 2023
on 13 March 2024.

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