Ferrexpo, a company engaged in iron ore extraction with assets in Ukraine, recorded its highest production volume in the first quarter of 2025 since the onset of the full-scale war between Russia and Ukraine. During this period, the total volume of marketable production increased by 20% quarter-on-quarter and by 3% compared to last year, reaching 2.1 million tons. This includes 1.3 million tons of pellets and 0.8 million tons of high-quality iron ore concentrate with a 67% iron content.
This is reported by Business • Media
The decrease in demand for pellets in the first three months of the year led to a 26% reduction compared to the same period last year, while the production of marketable concentrate increased by 3.2 times.
“In the first quarter of 2025, we recorded the highest volume of marketable production since the beginning of the full-scale invasion in February 2022. This was made possible by the increase in the production of high-quality concentrates that we sell to customers in Asia, and the stable operation of our premium pellets,” commented Ferrexpo’s interim CEO Lucio Genovese.
Tax Refund Issues and Production Consequences
However, in March 2025, Ukrainian tax authorities informed Ferrexpo’s Poltava and Yeristivsky mining and processing plants that the VAT refund for January amounting to 512.9 million UAH (approximately 12.5 million USD) would be suspended. As a result, the company was forced to reduce production to one line of pellet production and implement extensive cost-cutting measures across the organization. Such actions are expected to negatively impact the workforce, mining, processing operations, capital investments, and the company’s humanitarian initiatives.
Ferrexpo warned that these consequences would extend to the local economy of Horishni Plavni – a city with a population of 50,000, where the company is the largest employer, as well as to the Poltava region as a whole. This will affect about 3,000 small and local businesses that depend on the company’s activities.
As noted by GMK Center, dollar-denominated inflation has led to an increase in production costs for Ukrainian iron ore producers, specifically by 11% by mid-2024. One of the main challenges remains electricity prices, which account for up to 50% of the cost of concentrate production. Against this backdrop, experts predict a 15% decrease in Ukrainian iron ore exports in 2025, down to 27 million tons.