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(Alliance News) - Ferrexpo PLC on Thursday said it continued to navigate the impact of Russia's invasion of Ukraine as it moved towards producing higher grade direct reduction pellets.
The Baar, Switzerland-based commodity trading and mining company with operations in central Ukraine said that iron ore pellet production for the third quarter of 2022 was 839,000 tonnes, a decrease of 68% year on year due to the invasion.
Ferrexpo said it was operating with one out of four pelletiser lines as the war put more constraints on logistics.
Sales decreased by 65% year on year to 1.0 million tonnes in the third quarter of 2022 reflecting the same constraints.
As a result the company pivoted towards higher grade direct reduction pellets. Direct reduction involves the reduction of iron ore into iron using either gas or coal.
Production of these increased by 35% to 263 kilotonnes in the third quarter of 2022, meaning that this product represented 31% of total pellet production during the period compared to just 4% last year.
This result is due to the group's current excess beneficiation capacity and market incentives for the pellet type. Beneficiation is the process that improves the economic value of an ore by removing unwanted minerals.
Ferrexpo said that the safety of the workforce remains its top priority and said it has continued to operate fatality free in 2022. It continues to take measures to "protect the health and safety of its workforce and local communities."
Chief Executive Officer Jim North said: "Having continued to operate throughout the war in Ukraine, which is a credit to our operating and marketing teams, the third quarter of 2022 saw an additional constraint on the Ukrainian railway network with the increase of shipments of grain during the annual harvest season, further to the other demands and constraints facing logistics providers in Ukraine at the present time.
"We continue to operate in accordance with the volume of sales that we can achieve at the present time, and expect to increase production once we have further clarity on logistics corridors. The group continues to adapt to its present circumstances, as demonstrated by our increased focus on producing direct reduction pellets, with this higher grade product typically receiving an additional premium in the market."
Shares in Ferrexpo were trading 3.0% lower at 127.90 pence each in London on Thursday morning.
By Chris Dorrell; chrisdorrell@alliancenews.com
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