While current production levels are constrained by bottlenecks in the beneficiation plant, Swiss-headquartered Ferrexpo on Friday said that it was “making good progress” towards debottlenecking and expanding the concentrator by 2020, which would allow for the production of 12-million tonnes of pellets a year by 2021.

The investment to expand concentrate production stands at $100-million.

The iron-ore company, with assets in Ukraine, is currently also considering a series of projects which will allow for the expansion of pellet capacity to 20-million tonnes a year. This includes further development of the group's beneficiating capacity, expansion of the group's pelletising capacity and debottlenecking of logistics infrastructure including rail and port.

Ferrexpo reported interim financial results for the six months ended June 30, on Friday, with nonexecutive chairperson Steve Lucas reporting earnings before interest, taxes, depreciation and amortisation of $372-million, up by almost 60% year-on-year, and a profit after tax of $270-million, up 78% year-on-year.

“During the period, we continued to benefit from strong pricing for our high-grade iron-ore pellets, which helped deliver healthy cash flows. This enabled us to allocate capital to further reduce debt, increase organic investment in our assets to drive medium-term growth and declare a record interim dividend to shareholders,” he commented.

Compared with the same period in 2018, pellet production was up 5%, sales volumes increased 4%, and revenue increased by 28%.

The first six months of the year were “notable” for the large increases in prices for all grades of iron-ore, the company said. The benchmark 62%-grade iron-ore fines price increased by $45/t from January 1 to June 30. The 65%-grade iron-ore fines price increased by $41/t to $129/t during the same period.

Total pellet production during the half-year period rose 5% to 5.4-million tonnes. Production in the first half of 2018 was impacted by a planned 65-day pellet refurbishment.

The fourth and final pellet line refurbishment is scheduled to take place during the third quarter of 2019, and as such, Ferrexpo maintains its 2019 full-year production guidance of 10.6-million tonnes, in line with that of 2018.

During the period, Ferrexpo continued to focus on improving the quality of its output and increased the proportion of high-grade 65% grade pellets to 96% of total output.

Further, despite current steel demand being muted in some regions, the miner said that it had the ability to deploy tonnage to other markets to offset any regional weakness, with overall pricing expected to remain attractive compared to historic levels.

During the six months, steel profit margins in Europe, China and north-east Asia continued to fall from those in the third quarter of 2018, and to date in 2019, steel mill margins have been under pressure owing to higher raw material costs and weaker end-user demand.

The period also saw Ferrexpo strong cash flow generation fund capital investment of $114-million and dividend payments of $78-million, while reducing net debt by $57-million to $282-million.

Ferrexpo declared an ordinary interim dividend of $0.066 a share.