Mining company Ferrexpo issued a production and trading update on Friday, with the firm attempting to provide a clearer picture of its Ukrainian operations.
Ferrexpo said total first-quarter iron ore pellet production came to 2.7m tonnes, in line with the same period in 2021 but 11% below the previous quarter due to “operational and logistical constraints” following Russia’s invasion of Ukraine.

The FTSE 250-listed group said its production continued to comprise entirely of high-grade forms of iron ore, with an iron ore grade of 65% Fe or above.

Sales in the quarter came to 2.6m tonnes, with the company scaling its production activities in order to meet accessible pellet demand.

Ferrexpo noted that logistics pathways to Europe via rail and barge remained open to it, while activities at the Black Sea port of Pivdennyi continued to be suspended as the situation in Ukraine remained “complex”. The company also noted that in accordance with the Government of Ukraine’s request for economic activities to continue, it will continue to produce and transport its products as long as the capability is in place and it remains safe to do so.

Chief executive Jim North said: “The safety of our workforce remains our highest priority. Our operations and local communities are outside the main conflict zones within Ukraine, enabling us to continue our activities, including the delivery of iron ore pellets to customers in Europe via rail and barge, which have historically represented approximately 50% of sales.”

Analysts at Liberum maintained their ‘buy’ rating on the stock despite the “horrific conditions” in the country, as Ferrexpo operations “admirably” continued. Liberum said Ferrexpo’s production levels implied that it has been operating at 70% of capacity during March, with only 100,000 tonnes of inventories built.

“The company reported net-cash of $159.0m at quarter’s end. We expect it will build rapidly, as non-essential capex is likely to be stripped out, and as high-grade pellet prices lift back to very attractive levels,” said Liberum.

As of 0900 BST, Ferrexpo shares had shot up 9.42% at 183.50p.

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