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Last checked at 
22 Dec 2014 07:00
22 December 2014
Ferrexpo plc
("Ferrexpo", the "Group" or the "Company")
Production Update
Ferrexpo plc ("Ferrexpo", the "Company" or the "Group") today announces that its total pellet production for the 11 months ended 30 November 2014 increased by 3% to 10.2 million tonnes (11M 2013: 9.9 million tonnes). This production was not impacted by the recent difficulties in Ukraine.
In December 2014, total pellet production is expected to fall below plan by approximately 140 thousand tonnes as a result of reduced power availability during the peak demand hours of the day. This is due to lower domestic coal production and low stocks at coal fired power stations. Ferrexpo is currently holding pellet stocks and the Group's December shipments are expected to be unaffected.
The Ukrainian authorities are introducing measures to mitigate this situation including looking to import coal and electricity as well as allowing corporates to directly import electricity or generate it through tolling during the peak demand hours of the day.
Should the situation remain unchanged, however, Ferrexpo expects that the capacity of its processing facilities will remain at around current levels in 1Q 2015, after which it is expected to improve in 2Q 2015 when peak power demand reduces following the winter months. The Group is also actively managing the situation to minimise the impact of power reductions in co-operation with electricity generators and suppliers.
In 1Q 2015, in the event of continued power constraints, Ferrexpo will increase output of 65% Fe premium pellets and prioritise delivery under long term contracts. Spot sales will be at lower levels.
Ferrexpo notes that since 1 January 2014 the Ukrainian hryvnia has depreciated from UAH8.0 per US dollar to UAH15.0 per US dollar as of 30 November 2014 and to UAH15.8 per US dollar at the current time. This has further reduced Ferrexpo's C1 cash cost of production, which was on average US$44 per tonne in November. Ferrexpo's liquidity in Ukraine is currently being held stable to ensure operations are shielded as far as possible from further disruptions and are now sufficient to fund approximately two months of operating and capital expenditures at current exchange rates.
For further information contact:
Ferrexpo: | |
Ingrid McMahon | +44 207 389 8304 |
Maitland: | |
Peter Ogden | +44 207 379 5151 or +44 7793 858 211 |
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