Production of green steel: Ferrexpo expands cooperation with German Salzgitter

Ferrexpo plc, which owns 3 mining and processing plants in Ukraine, and Germany’s Salzgitter have signed a memorandum of understanding to supply high-quality direct reduced iron ore pellets (DR pellets) for low-carbon steel production.

According to the Group’s website, the memorandum provides for the joint development of strategies for the supply of iron ore products and supply chain optimization, as well as the inclusion of Ferrexpo’s products in Salzgitter’s program aimed at decarbonizing and promoting green steel production (SALCOS – Salzgitter Low CO2 Steelmaking).

«Ferrexpo and Salzgitter have been cooperating since 2016. As European steelmakers move towards greener steel production, we are pleased to agree on the terms of our cooperation in the future. Ferrexpo’s DR pellets help to significantly reduce carbon emissions from steel production under the SALCOS program. The agreement with Salzgitter strengthens Ferrexpo’s position as a leading supplier of iron ore products in Europe and will benefit the Ukrainian economy now and in the future, during the post-war recovery period,» said Yaroslavna Blonskaya, Chief Marketing Officer of Ferrexpo.

«We are pleased to continue our long-standing cooperation with Ferrexpo and look forward to intensifying this activity in the context of our transformation program. Ferrexpo is an important partner in the decarbonization of our production processes and supply chains. This agreement will help us reduce carbon emissions in our supply chains and improve the production of environmentally friendly steel,» said Gerd Baresh, CTO of Salzgitter Flachstahl GmbH.

The SALCOS program requires very high quality iron ore pellets, and this Memorandum of Understanding demonstrates Salzgitter’s confidence in the high quality and availability of Ferrexpo’s products, as Ferrexpo’s Ukrainian DR pellets will be used in the hydrogen-based steel transition program.

As part of the MoU, Ferrexpo and Salzgitter Flachstahl GmbH will also seek to identify the most appropriate iron ore delivery strategies for hydrogen-based steelmaking, as well as optimize their supply chains and inventory management.

Salzgitter’s decarbonization program will be technically completed by 2033.

In Q1 2024, Ferrexpo increased its production of iron ore pellets by 2.9 times compared to the previous quarter and doubled its production of iron ore pellets to 1.814 million tons compared to Q1 2023. This is the company’s best quarterly performance since the full-scale invasion of Ukraine, helped by the resumption of exports by ports.

Ferrexpo is an iron ore company with assets in Ukraine that is listed on the London Stock Exchange. It produces and exports high-quality iron ore pellets for steel production. Its production assets are Poltava and Yeristovo Minings (100% owned each). The company is also developing Belanovo Mining.

Salzgitter is a German steel group focused on steel production and processing. The main consumer of the company’s products is the automotive industry. It accounts for more than 65% of steel sales. In the first quarter of 2024, Salzgitter produced 1.7 million tons of steel, up 6% y/y.