The company announced that total commercial production decreased by 40.4% to 1.27 million tons during this period.
Ferrexpo management cited the suspension of VAT refunds by Ukrainian tax authorities as one of the main reasons for the sharp decline in production. In the period January-April 2025, rejected VAT refunds totaled USD 31 million. This strained the company's financial liquidity and forced it to reduce its operations to two pelletizing lines and reduce production of high-quality commercial concentrate.
Lucio Genovese, Interim Chief Executive Officer of Ferrexpo, stated:
"The strong momentum at the beginning of the year, including our best quarterly production since the full-scale occupation in February 2022, was significantly curtailed in the second quarter as we began to experience the full impact of the Ukrainian tax authorities' decisions to suspend VAT refunds to our Ukrainian subsidiaries. In the second quarter, due to the financial impact of the discontinuation of VAT refunds, we were only able to achieve commercial production of 1.3 million tons, 40% lower compared to the previous quarter. Despite a weaker iron ore pellet market, we were able to significantly change our production mix and benefit from strong demand for our high-grade low alumina iron ore concentrates in China. In the first six months of 2025, concentrate sales tripled compared to the same period a year ago, representing 36% of our production mix. We capitalized on the demand for high quality concentrate products by being agile in a challenging operating environment and iron ore market."
Ferrexpo's total commercial production for the second quarter of 2025 was 1,267,668 tons, compared to 2,125,467 tons in the first quarter, a 40.4% decrease. During the same period, total pellet production decreased to 821,882 tons, compared to 1,347,749 tons in the previous quarter, a decrease of 39%.
Ferrexpo's premium pellet production was also 821,882 tons in Q2, a 35.1% decrease compared to 1,265,962 tons in Q1. On the other hand, commercial concentrate production decreased to 445,786 tons, a 42.7% decrease compared to Q1.
Total commercial production in the first six months of the year was 3,393,135 tons, compared to 3,727,336 tons in the same period last year, a decrease of 9%. Total pellet production decreased to 2,169,631 tons in the first half, compared to 3,297,441 tons in the same period in 2024, reflecting a 34.2% decrease.
Premium pellet production amounted to 2,087,844 tons in the 6-month period, a decrease of 33.4% compared to 3,134,796 tons a year earlier. In contrast, commercial concentrate production increased by 184.6% from 429,865 tons to 1,223,504 tons.
The company also reported that it has implemented cost reduction measures to maintain its financial sustainability, including reduced employee working hours or unpaid leave, supply cuts and the suspension of all non-core capital expenditures and overheads.
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