Ferrexpo plans to increase production of pellets with 67% iron grade

The British Ferrexpo plc, with assets in Ukraine, in particular, it owns the Poltava and Eristovsky mining and processing plants (PGOK, EGOK), intends to increase the production of pellets of direct reduction of iron (Direct Reduction - DR) with 67% iron in 2021 ... In 2020, the group increased its production of high grade iron ore pellets (65% Fe and above) to 99% of its total production, up from 96% in 2019, according to an annual report published by the company on the London Stock Exchange on Wednesday.

It is noted that in addition to this, the group has also started production of direct reduction (DR) pellets, which have a higher content (67% Fe) and less impurities than other types of iron ore pellets. “DR pellets are expected to represent the future of global steelmaking as steelmakers move towards carbon-free green steel production, with DR pellets being the main source of pure iron used in the process.

The group continues to expand its offer of DR pellets, which can be produced at existing production facilities, with two trial batches in 2020 and four more trial batches planned for 2021, ”the report states.

The group also reportedly continues to use sunflower husk as a biofuel as a substitute for natural gas. This project has been running since 2015 and its use is constantly growing as the group optimizes the use of husk in its pelletizers. In 2020, the group has successfully increased its consumption to 25% of the total energy consumed in the pelletizer (2019: 22%). In 2020, the company increased its processing of crude ore by 4% compared to the previous year - up to 30 million tons after the commissioning of new processing facilities in the second half of 2020. The increase in ore processing is expected to continue in 2021.

The group is also continuing construction of a concentrate warehouse, press filtration and medium and fine grinding projects, which together should provide additional operational flexibility in processing. According to the report, the cost of production in 2020 decreased by 13% - to $ 41.5 /ton from $ 47.8 /ton. The decrease in costs was mainly attributable to falling commodity prices, in particular oil prices, lower electricity prices and the weakening of the hryvnia.

The company's gross debt as of December 31, 2020 was $ 266 million, up from $ 412 million at the end of 2019. Ferrexpo sold pellets and concentrate in 2020, in particular, in Austria for $ 356.461 million (in 2019 - $ 331.964 million), in Germany - for $ 145.311 (in 2019 - for $ 168.875 million), in Japan - for $ 78.786 million ($ 161.186 million) , to China - by $ 908.949 million ($ 347.892 million), to Turkey - by $ 82.514 million ($ 62.717 million), to the USA - by $ 34.236 million (there were no supplies in 2019).