Ukraine’s Ferrexpo reopens production line as power supplies improve

Ukraine’s Ferrexpo, one of the world’s biggest producers of iron ore pellets, said today that improvements in power supplies in the war-torn country meant it had reopened one of its production lines.

Russian targeting of Ukraine’s energy grid with missile strikes has caused widespread disruption and transport logistics have also been complicated by the war.

The London-listed company is one of the biggest employers in central Ukraine, with around 10,000 staff, and three mines there, Poltava, Yeristovo and Belanovo.  Amid the disruption of the conflict, output has fallen. Ferrexpo said in October that pellet production in the third quarter fell by 68%.

Alongside use of stockpiles, the restoration of production announced today means Ferrexpo will be able to meet the requirements of existing customer contracts. At full capacity, it has four pellet production lines.

While the company pointed out that there would be “continued instability” with the state-owned electricity network, the news boosts Ferrexpo’s ability to supply the global steel industry with an essential material. Its pellets are high grade, meaning they contain around 65% iron content, more than the 58% to 62% industry average, making steel production more efficient and reducing carbon emissions.

Ferrexpo said it produced 0.3 million tonnes of pellets in the fourth quarter to date. Output in the third quarter was 0.8 million tonnes. Its shares rose 3p to 164p, a gain of almost 2%.