Metinvest launches a conveyor system at Northern Iron Ore

Northern Iron Ore, an iron ore mining subsidiary of Metinvest (METINV), launched the first stage of a deep-quarry crusher and conveyor system at one of its two open pit mines on July 16. The launched facility, consisting of an iron ore crusher and a system of conveyors, has an annual transporting capacity of 20 mmt of raw iron ore to the pit edge, at this stage, the company announced at the project’s opening presentation. The launch of the system – which has received more than USD 200 mln since 2010 – is aimed at cutting production costs, with annual savings estimated by Metinvest at UAH 840 mln (USD 34 mln).

Northern Iron Ore is currently implementing the second stage of the deep-quarry crusher and conveyor system, worth USD 40 mln, with 70% of the necessary equipment already purchased, the company said. The second stage will add another 20 mmt of transportation capacity, thus the enabling the enterprise to transport not only iron ore to the pit edge, but also rock stripping. The company intends to launch the second stage in early 2017.

Roman Topolyuk: Metinvest’s focus on reducing operating costs in its iron ore mining is strategically important in times when iron ore prices have dipped to breakeven levels just half a year ago. Another important achievement of the launched project is that it will ensure the balanced development of the iron ore pit mine, which would enable avoiding production losses at some future point, or above-average investment into stripping work. The investment cash outlays – that have yet to be spent by Metinvest – in order to finance the second stage of the project will be minimal, as this stage has been mostly already funded. The system’s launch adds to Metinvest’s resilient market position and supports our positive view on the company’s Eurobonds.