Ferrexpo lowers output amid ongoing Russia conflict
Iron-ore miner Ferrexpo said on Monday that it would lower its production volumes, as it continued to be impacted by logistics constraints related to Russia’s invasion of Ukraine.
With Ukraine’s Black Sea ports closed, the London-listed mining company has to divert all its iron-ore pellet sales to European markets through the country’s railway network and the company’s barging operations.
However, Russian air strikes periodically damage the railway network and Ferrexpo said that a recent missile strike in south-west Ukraine had reduced its ability to use its barging operations that serve European customers. These barging operations accounted for 0.8-million tonnes of iron-ore deliveries last year.
The company would thus reduce its production until alternative logistics routes are agreed, damaged infrastructure is reopened and or Ukriane’s Black Sea ports resume activities. The firm would operate between one and three of its four pelletiser lines for pellet production, meeting accessible demand in Europe and seaborne markets.
Ferrexpo is in advanced discussions with additional port operators in central Europe for seaborne exports while the Black Sea ports remain closed.
At the end of May, Ferrexpo had produced 4.4-million tonnes of iron-ore pellets, representing a level 8% below the same point in 2021. The group has realised a combined 0.4-million-tonne increase in iron-ore inventories in the months of March, April and May, which would be reduced as logistics constraints eased over time.
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