Cost times tranquility
A Swiss mining corporation, Ferrexpo, reaps benefits from a tranquil Ukraine
Gotta love peace! But more than that, the folks in the region and a Swiss firm listed in London, our buddy Ferrexpo, will thrive with peace in Ukraine. This mining edifice, operating in Ukraine, is one that would prosper mightily from an end to the war conflicts.
Collaborating with Swen Lorenz, the brains behind Undervalued Shares, BÖRSE ONLINE unearths this gem. Ferrexpo is among the whopping largest manufacturers of iron ore pellets, an essential ingredient supporting the production of top-notch steel and reducing CO2 emissions in steelmaking. Located in a battleground, this firm, like all others, has been impacted by the war drama, boasting iron ore mines and production facilities in Ukraine.
Pre-war, Ferrexpo peppered out a whopping 12 million tons yearly. The war halved its production to 3.3 million tons in the first half of 2024.
Profiting despite adversity
Lost export capabilities and pricier energy prices couldn't snatch this company's grit and profitability. Playing it cool on the debt front, Ferrexpo boasted a manageable $100 million in cash reserves last seen. The stock price peaked at roughly five euros in 2021. Following the war outburst, the stock took a nose dive, plummeting to 50 cents in September 2024, due to winter energy concerns. The stroke of worry escalated when the Ukraine's electricity generation slashed over 50% due to Russian attacks, making Ferrexpo import 80% of its electricity needs from other European sources. Colder days might have energy bottlenecks, leaving us guessing if imports can cover the entire demand. The rapid stock rise displaying the potential comeback showed up post-Donald Trump's victory, creating hopes for the war's swift resolution. The stock soared past 40% within weeks and essentially doubled from its low. If the war ends favorably and the mines and production facilities situated on Ukrainian-controlled territory remain intact, this beneficial situation presents a tremendous bargain opportunity. (...)
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Bonus Insights:
- Ferrexpo experienced a production drop of 26% year-over-year for Q1 2025, operating just one pellet line throughout the period.
- Escalating production costs, increased energy tariffs, and the suspension of value-added tax (VAT) refunds on exports have taken a toll on cash flow.
- The global iron ore market is grappling with reduced demand and slashed prices in the primary consumer market, China.
In the midst of adversity, Ferrexpo, a Swiss mining corporation and one of the world's largest iron ore pellet manufacturers, maintains profitability, thanks in part to its manageable cash reserves and essential iron ore production in Ukraine. With a definitive ending to the ongoing war conflict, Ferrexpo stands to benefit significantly from increased business opportunities and reduced production costs in the finance sector, making this an attractive investment opportunity.
While Ferrexpo struggles with reduced export capabilities and pricier energy prices, the potential for recovery is evident as the stock already started to rebound following the May 2025 elections, highlighting the company's resilience and investment potential in the business sector. Hence, keeping a close eye on Ferrexpo's progress could possibly result in substantial returns for investors in the future.
