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Ferrexpo limits iron ore production in Ukraine due to logistics problems

Mining industry / Ukraine
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The company said it is adjusting its upstream capacity in line with sales to European and offshore markets that are viable under the circumstances.

Ferrexpo limits iron ore production in Ukraine due to logistics problems

Ukrainian mining company Ferrexpo said on June 13 that it was shutting down production due to overcrowded iron ore warehouses, as well as restrictions on barge operations caused by Russian missile strikes in southwestern Ukraine. p>

Ferrexpo said it plans to operate between one and three of its four pelletizing lines until an alternative export route is found, damaged infrastructure reopens and/or Black Sea ports resume operations.

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The company said its pellet inventories increased by 400,000 tons from early March to late May, equivalent to two weeks of production, but this figure should decrease as logistical restrictions ease over time. In 2021, Ferrexpo delivered about 800,000 tons of iron ore by barge to European customers.

The company said it is adjusting operations in line with sales to European and offshore markets, which are viable under the circumstances.

Recently, sales to European markets have reached historically high levels to meet the increased demand associated with reduced supplies of Russian iron ore to Europe.

The company confirmed that it continues to redirect all of its iron ore pellet sales to European markets via Ukraine's railway network as the country's Black Sea ports remain closed, and said it was in talks with other port operators in Central Europe regarding maritime exports.

“We are reducing our short-term production schedule for the summer months and will look to ramp up production once we have more clarity on logistics going forward,” Ferrexpo CEO Jim North said, adding that the company will prioritize efforts to gradually restore access to maritime transport.

Ferrexpo produced 4.4 million tonnes of iron ore pellets in January-May, down 8% year-over-year, indicating a relatively small decline in output due to Ferrexpo's collective flexibility and due diligence efforts.

ArcelorMittal Kryvyi Rih, Ukraine's largest iron and steel plant, also said that logistics remains a major challenge for the country's mining and steel industry.

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