LONDON – Iron-ore pellet producer Ferrexpo announced a record dividend on Wednesday as earnings jumped on stronger demand from the steel industry.

The London-listed firm, the third largest exporter of pellets, said 2017 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 47% to $551-million.

The dividend for 2017 totalled 16.5c a share, up from 6.6c a year earlier, including a final and special dividend.

"This year we paid 16.5c, partly as compensation when we had the lower dividend over the last two years because of very low iron-ore prices," CEO Chris Mawe told Reuters.

He said the company was targeting a shareholder payout of 13.2c or $80-million in 2018.

Ferrexpo, based in Switzerland with assets in Ukraine, sells highly processed iron-ore in the form of pellets. These saw stronger demand in 2017 from steel makers aiming to reduce pollution.

The company said it expected this trend to continue in 2018.

Ferrexpo benefited from a 22% rise in the price of high-quality iron-ore in 2017, while the lower quality iron ore category inched up just 3%.

Production of pellets in 2017 fell 7% to 10.4-million tonnes due to planned higher maintenance, the company said in January.

Net debt was cut by 32% to $403-million. The company expects it to fall to $250-million by the end of the year, Mawe said.

Ferrexpo will focus growth plans on expanding its existing mines, or "brownfields" development rather than acquisitions, Mawe said.

"There are further opportunities for brownfields expansion and that is where we will be focusing our capital expenditure," he said.

In 2017, Ferrexpo resumed a project to expand output at its concentrator that is expected to be completed by 2020 and will increase the production of pellet concentrate by 1.5-million tonnes.

The project will cost about $65 million to complete, it said.

But Liberum and Investec analysts kept their "sell" ratings on Ferrexpo shares, citing risks from a slow down in steel markets, a resumption in output at Brazil's huge Samarco iron-ore mine and potentially limited production growth at Ferrexpo due to maintenance.

Ferrexpo's shares in London, which have nearly doubled in value in the last year, were down 3% to 292p at 10:12 GMT.