Ferrexpo : Annual Report and Accounts

D E T E R M I N E D

Ferrexpo plc

Annual Report & Accounts 2023

Contents

We are determined to protect our people and our assets so that we may continue to operate and contribute positively to Ukrainian society and the economy.

As a leading European supplier of premium iron ore pellets we are enabling the transition to green steel. Our products are important to Ukraine and to customers around the world.

References to Ferrexpo plc

For references to Ferrexpo plc in this report see glossary.

Strategic Report	01
Executive Chair's Statement	02
Chief Financial Officer's Statement	04
Operating during a time of war	06
Our Business
Business Model	08
Value Proposition	10
Strategic Framework	12
KPIs	14
Operational Review	18
Market Review	22
Financial Review	26
Responsible Business Review
Introduction	32
Safety	34
Net Zero Pathway	36
Double Materiality Assessment	38
Life Cycle Assessment	42
TCFD Disclosures	43
Diversity, Equity and Inclusion	60
Governance	62
Non-Financial Information Statement	63
Stakeholder Engagement - Section 172	64
Risk Management	72
Principal Risks	74
Viability Statement	91

Corporate Governance	93
Financial Statements	158
Additional Disclosures	235
Alternative Performance Measures	236
Glossary	238

WE ARE DETERMINED

Look out for our operational Q&As

Throughout the report this year,

you will find Q&As from our colleagues across different areas of our business discussing what it is like operating during a time of war.

Ferrexpo plc Annual Reports & Accounts 2023

	STRATEGIC REPORT	CORPORATE GOVERNANCE	FINANCIAL STATEMENTS	01

Executive		Operating
Chair and CFO		during a time
statements		of war
02		06

Operational			Market
Review			Review
	18		22

Financial Responsible

Review business

26 32

Ferrexpo plc Annual Reports & Accounts 2023

02

Executive Chair's Statement

Ferrexpo has demonstrated a strong performance during a time of war and we should be proud of our achievements.

In the face of extraordinary circumstances, we have continued to produce, export, and preserve cash.

Dear Shareholder

The challenges that Ferrexpo faced in

2023 cannot be understated. After two years of war in Ukraine, our people and our business continue to be severely affected.

Our strategy to move early and right-size our business, so that we are more responsive to ever changing circumstances, is working. During the year, we have worked tirelessly to protect our people, preserve the integrity of our assets, and contribute to local society and the national economy. In the face of such extraordinary circumstances, we have continued to produce and export our products and preserve cash. I believe that the company has performed exceptionally well and despite the challenges we should be proud of our achievements.

War

This announcement covers the financial year 2023, the second year of war since Russia commenced its full-scale invasion of Ukraine in February 2022 and at the time of the publication of this report it is already the third year.

Beyond the challenges in Ukraine, it would appear that the wider world is entering a new era of geopolitical uncertainty. Old conflicts have reignited, new ones are emerging, and autocratic leaders and their nationalist agendas are prevailing in and across many countries and regions.

Against this increasingly volatile and complex backdrop, it is perhaps inevitable, regrettably, that when it comes to Ukraine, a certain level of 'war weariness' is starting to appear.

Weariness, however, is not an option for the people of Ukraine who at no point have lost sight of what is at stake - the very existence of the Ukrainian state. It is my observation that the Ukrainian identity has strengthened over this period, which has bolstered the resilience and commitment of Ukrainians

- who remain as determined as ever.

Reconstruction

Today, even during a time of war, Ukraine is already considering what sort of state it wants to be when the war is over, and how to reconstruct its political system, economy and society as a whole. In December 2023, this thinking took a decisive direction when the EU opened member accession talks with Ukraine. Setting a path for the integration of Ukraine into the EU is the right thing, and one in which Ferrexpo can play a critical role.

As Ukraine embarks on the task of economic reconstruction, government and business must work together to agree on the steps needed to create an investment environment that will help rebuild Ukraine as quickly

as possible and shorten the path to EU membership. This includes upholding the rule of law, creating a level playing field for business and gaining the trust of a new set of investors who see prospects for rapid, sustained growth in the country after the war. It also means rooting out much of the corruption that is endemic in Ukraine.

Ferrexpo plc Annual Reports & Accounts 2023

	STRATEGIC REPORT	CORPORATE GOVERNANCE	FINANCIAL STATEMENTS	03

Ferrexpo holds a pivotal position in shaping Ukraine's future. As a UK-based public limited company, we uphold governance standards that instil confidence in international investors, safeguarding their investments. Our commitment extends beyond financial security; we aim to bolster and expand our capabilities to drive growth in the Ukrainian economy.

With a focus on producing premium products essential for steel producers' decarbonisation efforts, especially within Europe, we are poised to facilitate the growth of sustainable trade between Ukraine and the EU. Our dedication to this cause marks our distinctive role in Ukraine's reconstruction. Ferrexpo is uniquely positioned to lead the charge towards a prosperous and sustainable future for Ukraine.

People

Our future hinges upon our people - our steadfast workforce, their families, and the communities we serve. This commitment unequivocally extends to those members of our workforce who are bravely serving in the Armed Forces of Ukraine. We honour their sacrifice and eagerly anticipate their return to the roles we have preserved for them.

Ferrexpo stands out for its unparalleled combination of large-scale and top-tier assets within our industry. However, it is the unwavering dedication of our workforce that truly fuels the productivity of these assets. So, at this point, I'd like to express our heartfelt gratitude to each and every member of our team for their tireless efforts and unwavering determination.

I am deeply saddened that 19 of our colleagues were killed serving in the Armed Forces of Ukraine in 2023, bringing the total to 35 since February 2022. We bow for each of these brave souls. May they rest in peace and be remembered for their extraordinary courage and sacrifice. At the date of this report, 641

of our colleagues are serving in the armed forces, equal to 9% of our total workforce.

Safety and wellbeing

Throughout the year, Ukraine has continued to face regular attacks from Russia, influencing how we ensure the wellbeing of our people, who remain our primary concern. We are committed to ensuring their safety and offering comprehensive physical and psychological support during these challenging times. Examples of this include providing protective clothing for those serving in the armed forces, building bomb shelters for those working in industrial functions, the provision of meals

for those on longer shifts, permitting those in administrative functions to work from home and offering child care in safe bomb shelters. We continue to provide broader assistance through our humanitarian aid programmes, which have provided housing, food and

medicine, funded the donation of equipment, and support programmes and initiatives.

Safety must be thought of in new and broader terms. For example, as the war evolves we are starting to see people return from the armed forces. The rehabilitation of veterans into the workforce is challenging, especially for those with physical and mental injuries. We have helped with physical rehabilitation, including prosthetics, and emotional trauma. This extends to support for family members too. It is our role to foresee and adapt to these changes, so that we can continue to keep our people as safe as possible and support their wellbeing.

Skills

The enlisting of such a large amount of our Ukrainian workforce, particularly those with technical skills, has had an inevitable impact on our human and operational capacity. The workforce that remained on site have proven remarkably agile and flexible, ensuring the continuity of all activities. Our training centres have risen to the challenge to help people develop new skills, including internally displaced people joining our workforce, and for others learning to upskill and cross-skill, to provide the optimum flexibility across our workforce.

The determination of our employees has proven invaluable in overcoming some disruptions to vital infrastructure, an inevitable eventuality of Russia's regular attacks on Ukraine. While we did suffer some downtime as a result of damage to electricity transformers, roads and bridges, our speedy repairs, sometimes working with various authorities has meant that operational disruptions were mostly short lived.

Assets and logistics

Thanks to the resilience of our employees the Company's assets remain intact and operational. Together, we have continued to seek to preserve Ferrexpo's underlying value as well as the Company's significance for the Ukrainian economy.

During the year, we continued to invest in our assets, such as the construction and commissioning of the press filtration complex, to improve the quality of our products. Resources have been devoted to undertaking desktop reviews and engineering analysis. By completing these studies at a time of considerable constraint, we will not only

be in a far better position to recommission production in the future, but also have more clarity when we reinitiate upgrade and expansion projects. We will continue with this advanced preparatory work into 2024.

Limitations on our logistics corridors have again constrained our ability to export, which forced us to limit production levels. We have been able to operate one, sometimes two, of our four pellet lines to match the reduced export capacity available to us.

The lack of access to Black Sea export routes, in particular, sharply reduced opportunities to export product volumes to the Middle East and Asia, however, this has started to ease since early 2024.

Thanks

There were some Board changes during the year. Ann-Christin Andersen and Graeme Dacomb resigned from the Board and I would like to express my thanks to both. I would also like to extend my thanks to Jim North who stepped down as CEO in April 2023.

I had the pleasure over eight years to observe the tremendous positive impact Jim had on modernising and expanding Ferrexpo. Jim is both a pragmatic realist and a visionary, and he possesses the rare balance of being technically brilliant and a skilful diplomat. The war impeded his objectives to grow Ferrexpo towards an annual net-zero production of

24 million tonnes, but he has left us a road map that we will resume when the time is right.

Following Jim's departure I assumed responsibility as interim Executive Chair, leading the business with an experienced Executive management team whom in

2024 will celebrate working at Ferrexpo for a collective 100 years, and in the industry for 150 years. As I said in last year's report when I was Non-executive Chair, strong governance is essential now more than ever, and whilst my interim role as an Executive Chair is admittedly a combined role, we do not believe now is the right time to make any significant management changes.

Finally, I wish to thank each and every one of our employees as well as our local communities for the bravery and resolve they have continued to show in the face of such fierce adversity and express my gratitude to all those associated with Ferrexpo for their contribution and continued support over the past 12 months.

Lucio Genovese

Executive Chair, Ferrexpo plc

Ferrexpo plc Annual Reports & Accounts 2023

04

Chief Financial Officer's Statement

The challenges of the last year have accelerated our learning and adoption to make us more agile and responsive to ever changing circumstances.

The cohesion shown by our employees across the business demonstrates a team that is unified and working together to overcome any challenges that they face.

Dear Stakeholders,

As we reflect on 2023, another year blighted by Russia's ongoing invasion of Ukraine,

I am proud that we are able to report operating and financial results that reflect the determination of our people in these difficult times. The cohesion shown by our employees across the various departments of the business demonstrates a team that is unified and working together to overcome any challenge they face. This fortitude has made us stronger and allows us to understand what our people and operations are capable of.

While the challenges of the past year have been formidable, they have also accelerated our learning and adaptation, making us more agile and responsive to the ever evolving situation on the ground.

As we started 2023, we once again faced significant uncertainties surrounding the energy supply in the winter months, given previous attacks on the electricity grid and other infrastructure. This compelled us to manage our working capital and stocks effectively to mitigate the potential risk of blackouts while ensuring we could fulfil our obligations to customers.

Pleasingly, the team's cohesiveness, coupled with our proactive planning ahead of time meant we were able to manage through this uncertain start to the year.

As we headed for the second quarter, and bolstered by a strong liquidity position, we seized market opportunities and restarted an additional pelletiser, thereby increasing our production capability and flexibility.

With stable production from the first pellet line, and an initial contribution from the second pellet line, total iron ore pellet production for the first half was almost 2 million tonnes, a 57% increase compared to the second half of 2022.

Unfortunately, any expectations for further growth in production and sales in the second half of the year were thwarted by the continued inability to use the Black Sea for exports, which would have justified us further expanding capacity for exports to the Middle East and Asia.

Despite these setbacks, we adjusted our operational plans swiftly, leveraging alternative routes into Europe and other Black Sea ports, to maintain sales levels while reducing production to align with market conditions.

As a result, we ended the year producing at the logistics capacity available to us at 4.2 million tonnes of pellet and concentrate production.

Ferrexpo plc Annual Reports & Accounts 2023

	STRATEGIC REPORT	CORPORATE GOVERNANCE	FINANCIAL STATEMENTS	05

In terms of budgeting, we encountered some surprises, notably in logistics challenges and costs, however iron ore prices were strong in the final quarter helping to offset these costs. Indeed, for the year as a whole our unit costs reduced. All in all, thanks to years of investment prior to the war, our quality assets and premium product range continues to ensure our net cash position.

WE ARE DETERMINED

Look out for our Q&As with colleagues

Throughout this year's report, colleagues from different functions across the business share their insights to explain what it is like working during a time of war.

See the pages below for their stories:

It was important that throughout 2023, we maintained a prudent approach to cash allocation, focusing on key operational and capital projects essential for sustaining our business amid volatile wartime conditions.

The Group operates in an evolving political, fiscal and legal environment in Ukraine and the risks associated with this heightened further in 2023 and early 2024. As result, the Group has recognised provisions totalling US$128 million, including US$124 million for one specific ongoing legal dispute. See details in Note 2 Basis of preparation and Note 30 Commitments, contingencies and legal disputes to the Consolidated Financial Statements in respect of the possible impact on the Group's business activities.

Looking ahead to the start of the new year, we remain cautiously optimistic.

In particular, logistics costs have improved, providing us with a favourable environment to capitalise on market opportunities.

As we navigate the complexities of operating in a dynamic geopolitical landscape, our focus remains on building resilience, optimising our assets, and enhancing operational flexibility. Our high quality assets have been instrumental in providing stability amidst uncertainty, underscoring the importance

of prudent investments made in the past.

In conclusion, while the road ahead will no doubt continue to present its share of challenges, we are confident in our ability to navigate through uncertainty and are prepared to continue delivering the embedded value

in our quality assets to our shareholders. We appreciate your continued support and trust as we navigate these uncertain times.

Nikolay Kladiev

Chief Financial Officer, Ferrexpo plc

Culture

page 15

Facilities

page 17

Procurement page 21

Sales page 25

Internal reporting

page 29

Translation page 31

CSR

page 35

Processing

page 37

HR

page 41

Administration

page 61

Logistics

page 67

Transport

page 68

Communications

page 71

1. Source: Independent research provided by CRU.

Q&A

Ferrexpo plc Annual Reports & Accounts 2023

06

Operating during a time of war

The full-scale invasion of Ukraine commenced on 24 February 2022. With all our production based in Ukraine, our workforce and operations are affected by the ongoing war. In this section we explain how the war is affecting our people and how we are managing the business at this time.

Remembering those we have lost

Tragically, 19 colleagues were killed serving in the armed forces during 2023, bringing the total to 35 since February 2022.

2023

People

The safety and wellbeing of our people is paramount, especially during a time of war. At the end of 2023 our Ukrainian workforce comprised 6,432 employees and 933 contractors. In addition, 641 colleagues are currently serving in the Armed Forces of Ukraine, whom we support on

an ongoing basis with safety equipment, clothing and other essentials throughout the time that they are in the military.

As the war progresses, the availability of people and skills is becoming more complex. More members of our workforce are being conscripted to join the armed forces. Ferrexpo employees are attractive candidates because they possess the technical and mechanical skills that the army needs, the very skills that are critical to our production processes.

During 2023, more than 700 employees resigned or left our business. Although our operations are over 250 kilometres from the front lines, many have chosen to leave the region and move to the far west of Ukraine or abroad. This is in addition to the 900 or so that left in 2022.

The business continues to carry a large workforce while operating at a reduced capacity. This means that to date there has been the sufficient amount of people to continue operations. As the business continues to restore idled capacity, many employees are back to a full working week, with some already working overtime. We are also recruiting more people, including younger and older people, and more women. At our Ferrexpo Technical Expertise Centre, multiple initiatives have been established

to upskill, cross-skill and reskill employees, including fast tracking vocational training and qualifications programmes.

In 2023, 67 colleagues were demobilised from the armed forces, 46 of whom have returned to work. During the year, we expanded our support for veterans to include physical rehabilitation and psychological support. Veterans unable to return to their previous functions due to factors such as noise and vibration, are offered the opportunity to train and qualify for other more suitable roles.

Yuriy Bilenko, age 38 Serhii Buhuev, age 42 Oleksiy Bulba, age 45 Serhiy Chemkayev, age 44 Maksym Chystyakov, age 24 Volodymyr Holub, age 54 Oleksiy Khanilevych, age 24 Rostyslav Ledovskyy, age 25 Dmytro Lysachenko, age 28 Roman Lytvynenko, age 31 Vitaliy Med, age 40

Ihor Novohatniy, age 39 Volodymyr Pavlenko, age 43 Petro Perovskiy, age 25 Andrii Petrenko, age 49 Serhii Pizniy, age 34 Oleksandr Smyrnov, age 32 Vladyslav Solomko, age 33 Oleksandr Terlenko, age 48

2022

Dmytro Belikov, age 32 Oleksiy Bridnya, age 33 Andriy Chernya, age 37 Oleksandr Chugainov, age 54 Guy Dudka, age 52

Andriy Dukanych, age 33 Serhiy Kharlamov, age 57 Serhii Kondyk, age 31 Denys Koshovyy, age 31 Oleksiy Nazimov, age 25 Kostyantyn Orchikov, age 30 Oleksandr Scherbakov, age 28 Denys Svyrydov, age 50 Yaroslav Taran, age 50 Oleksiy Yatskov, age 36 Anatoliy Zakupets, age 37

Slava Ukraini.

Ferrexpo plc Annual Reports & Accounts 2023

	STRATEGIC REPORT	CORPORATE GOVERNANCE	FINANCIAL STATEMENTS	07

Humanitarian support

US$25M

Local communities

During the early stages of the war, it was clear that the local communities where we operate needed humanitarian support. Although many people left, displaced people fleeing the war in the eastern regions passed through, and in some instances, settled in the Poltava region. In early 2022 the Ferrexpo Humanitarian Fund was established, which combined with associated CSR funding at the date of this report has donated US$25 million to foster over 100 individual programmes and initiatives.

As the war protracts, the needs of society are changing. In the early stages of the war, the immediate focus was to help house and feed people. This situation has settled now. Indeed, of the many new people that settled in the region,

102 have taken employment at Ferrexpo.

The focus of humanitarian support has evolved. Presently, we are committed to supporting our colleagues actively serving in the armed forces, as well as aiding in the rehabilitation of veterans. Additionally, contributions are directed towards addressing critical national emergencies, such as providing assistance to the residents of

the Kherson region in the aftermath of the Nova Kakhovka Dam explosion.

In Horishni Plavni, the town centred on our operations, we continue to offer community support through commitments to cultural and social programmes, education and medical facilities, and infrastructure. This support also includes programmes and initiatives that support sports, social clubs and arts, along with physical and mental health.

Operations and logistics

Our operations are large in scale. The process flow is relatively simple: mining, processing and beneficiation, with considerable built-

in production flexibility at each stage.

During 2023, reduced logistics availability forced us to reduce production to a roughly a third of our full capacity.

In addition to people, our operations rely on many inputs, including, energy, chemicals and equipment. Since the start of the full- scale invasion, we have learnt to adapt to ever-changing conditions. This can mean finding new suppliers as our traditional suppliers have suffered from the war, or where logistics routes are no longer available.

Before the full-scale invasion, Ferrexpo transported its products using its own fleet of rail wagons and barges to customers in Europe, or via rail to Ukrainian Black Sea ports for onward transportation by ship, primarily from the Group's joint venture facilities at the Port of Pivdennyi. Access to Ukrainian Black Sea ports was severely restricted in 2023, with only a handful of vessels leaving with cargoes of iron ore towards the end of the year.

In response, the Group sales strategy focused on premium European customers that could be reached by rail or a combination of rail and river barge using the Company's owned barge fleet company First-DDSG Logistics. Another export route was later developed by rail to the Ukrainian border, and onward transportation by barge through inland waterways to

a Black Sea port in another country.

The business learnt to be nimble and adapt to the many challenges it faced in 2023. Altering mining and processing to produce different products to meet customer needs, sourcing supplies of critical inputs, managing inventories to reduced logistics capacity, and finding alternative routes to supply customers.

The determination of the workforce, the flexibility of our operations, and our premium products sold to premium customers are our strengths, and explain how we are continuing to operate during a time of war.

Ferrexpo plc Annual Reports & Accounts 2023

08

Our Business Model

Ferrexpo is a vertically integrated, pure-play iron ore pellet producer and supplier

What we do

MINING		PROCESSING		TRANSPORTATION
		AND LOGISTICS

The competitive advantages that help us to create value

QUALITY

ASSETS

Our world-class,long-life deposits hold 5.7 billion tonnes of JORC-compliant mineral resources.

Contiguous open pit mines use modern equipment and have an industry-leading safety performance.

50years

Mineral Reserves

LOW-COST

PRODUCTION

Our ore processing metallurgical beneficiation and pelletiser plants produce a variety of pellets at a competitive cost.

Established and efficient large-scale plants with built-in operational flexibility to supply evolving customer needs.

12MT

Annual capacity from four pelletising lines

GLOBAL

DISTRIBUTION

Owned transport equipment and logistics infrastructure, including rail, ports, river and ocean vessels.

Flexible handling and shorter delivery times to Europe and MENA than global peers.

3rd

Largest exporter of pellets globally (pre-war)

REINVESTMENT INTO PEOPLE, TECHNOLOGY INNOVATION AND R&D

Ferrexpo plc Annual Reports & Accounts 2023