Ferrexpo’s priorities are to position for growth and further optimise its operations while ensuring disciplined governance. Ferrexpo’s strategy is to produce and export high-quality pellets to premium steel mills around the world that produce sophisticated steel products. It aims to be a low-cost efficient producer of iron ore pellets with a reliable logistics infrastructure.
A global player in the steel industry
Since Ferrexpo listed in 2007 its focus has been on improving the quality of the iron ore pellets it produces (now a high grade 65%+), transforming facilities for a broadened portfolio outlook, and growing its customer base with Tier 1 steel producers. “We now have a first-class sales book and have become a global player in the raw materials supplying the steel industry in Asia, the Middle East, Europe, and the US”, explains Interim CEO & Executive Director, Jim North. “We've continued that quality journey in the last couple of years, and been broadening into the DR market, which is where we see a large proportion of our growth in production going in the future. We've been doing trial cargoes since 2018, and in 2020, we sold a substantial amount, just over 300,000 tonnes of material, into the DR market, and we would see a larger proportion of our sales portfolio moving that way going forward”.
“We've been planning how we want to grow our business with a high-quality, long-life resource in Ukraine. One of the challenges we have with that resource is the amount of options, but what is the actual highest value-add path forward?", asks North. “We’ve been working on answering that and we've now started executing. We're into the detailed design and execution of our growth programme. We've informed the market we intend to double our production over time. We can incrementally grow the business by expanding our brownfield activities. Two years ago, we started the development of our third open-pit mine, Belanovo. We’ve started stripping activities and are gradually expanding. We are timing this to come online when we'll need a more high-grade material as we expand our concentrator and pelletiser footprint”.
Ferrexpo has four pellestiser lines with investments planned in each line followed by incremental expansion of concentrated production with more crushing and grinding equipment. “We’ll be growing out production slowly over the next 10 to 12 years”, confirms North. “I think that's the best strategy for us and it de-risks the business. We know we live and work in a cyclical industry; the commodity prices vary considerably year on year, so we’ve chosen a conservative but very solid program for expansion”.
Decarbonisation is gathering pace so the DR market is the key to future growth for Ferrexpo. “There’s a lot of talk about green steel”, says North. “If we want a green steel industry, blast furnace technology either needs to substantially change or will eventually be phased out. Traditionally, our standard pellets feed the blast furnace market. For a green steel product, you need to move away from the traditional technologies that use coke and filament gas for fuel, and towards electric arc furnaces and the DR processes. As we work on our growth programme we're modifying our technology to allow us to produce a higher-grade, ultimately carbon-neutral pellet needed for the green steel process”.
Digital transformation supporting sustainability and safety
Ferrexpo is on the journey towards decarbonising its mining fleet by implementing mine electrification, transitioning to renewable energy sources for electricity, and making the move away from using natural gas in its pelletisers with hydrogen the most likely solution. “Automation will also play a role in the future”, adds North. “It delivers efficiency and lowers cost inputs. So, if you're thinking about the carbon journey, with lower inputs into your process you're generally going to use less carbon too”.
Ferrexpo is continuing its fleet autonomy journey with Epiroc. “We first began automating our drills back in 2017”, recalls North. “We currently have three semi-autonomous drills being operated via a tele-remote process from our mining control room. The driller now can come to work, sit in front of a computer screen with a joystick, almost like a Sony PlayStation, and get to operate the drill from the office. This removes our drillers from the mining hazards of the pit. They don’t work in a high-vibration environment. There's no dust. And you're removing people from that person/machine interface, which is removing the potential for accidents to occur”.
North also notes the spike in productivity when shift changes are minimised with continuous operation. “We've been running continually since 2017, and the intention is to move to full-autonomous drilling as we expand the business. Once we're comfortable with the technology and our workforces have adopted fully, we'll move to the point where one driller can operate two or three drills at one time”.
Ferrexpo implemented drone surveys in 2019 at its seond mine in Ukraine called Yeristovo, and is now in a position to roll out the process at its original mine, Poltava. “What took three surveyors two weeks to do, we can get done now in around two days using drones”, reveals North. “Some of our surveyors have trained to become drone pilots; taking place positions and feeding that digital information back to the office to convert into a data file and load into our planning systems. It’s dramatically improved the efficiency with which we can do surveying and mapping of the mine and, obviously improves the accuracy, because you're taking that chance for human error out of the equation. And we’re also improving safety by taking workers out of the hazards of the person/machine interface in the mine”.
Autonomous evolution of the mining workplace
North highlights the misconception around autonomy. “People think we're driving it because we want to reduce roles and the number of people deployed in the process”, he says. “Generally, that’s not the case. Pushing processes to be more efficient can result in less people involved, but not significantly. Mostly what we see happen is the role, instead of sitting in a truck drill or dozer, transitions into a technician supporting the processes required. For example, the communications networks that actually run all this technology are extensive and need to be maintained. That creates new roles that didn't actually exist before”.
Ferrexpo is partnering with ASI Mining, an American robotics company with decades of experience working with the likes of Ford and Toyota that were also part of the team delivering autonomous solutions for NASA’s rovers. “Working with ASI has allowed us to deploy an OEM-agnostic autonomous solution, so we can work with any truck across our operations”, explains North. “ASI can also help us make that truck autonomous truck. Caterpillars, Hitachis, Komatsus, Liebherrs… ASI can deliver the solution to get them to interact and work together and we don’t need to change out the entire fleet”.
Partnering for success
Part of Ferrexpo’s CSR programme involves developing local suppliers and supporting the communities it operates in. Allied to its local reach, a global focus on producing high-quality iron ore pellets requires leading tech partners like ASI (who bring skills to the site and help train local workers building the in-house skillset) and major OEMs like Komatsu. “Metso has been key to our development”, adds North. “They offer process technology for both our power lines and our concentrators. And we've recently signed a deal for Weir to provide high-pressure grinding rolls; the HPGR units, which we're going to use to expand our concentrator capacity and improve our crushing and grinding capability.” Allied to these key partners, Sumitec provides high-quality metal cutting tools, machine accessories and engineering equipment to meet the demands and challenges of the market and Outliers deliver mining optimisation and consulting services to improve mine performance efficiency.
“We, as an organisation, need to think about what COVID's taught us”, believes North. “If you think about health and safety and the well-being of people, we've been quite fortunate that we haven't been heavily impacted. I think it's taught us a lot about thinking outside the box. What are the issues you might not have in your risk register that could play out and impact your business? It's taught us to think more broadly in terms of impact”.
With the increased move online via remote working and tech adoption, cybersecurity is critical. “Moving forward, to understand how we can protect the business with its data online while using online tools to communicate, we need to develop systems to protect ourselves from external sources”, pledges North, who notes the same care must be taken to avoid attacks on the environment with the push towards carbon neutrality. “Ferrexpo is well placed to increase production in a way that can produce the green steel of the future”.