Miner Ferrexpo declares bumper payout

Ferrexpo, the London-listed miner controlled by a Ukrainian billionaire, has declared a bumper dividend payment on the back of rising prices for its key commodity.

The price of steelmaking ingredient iron ore has increased by more than 75 per cent over the past year, reaching levels not seen since 2010, on the back of strong demand from China.

In light of “continued healthy prices” and its “transition” to a net cash position, Ferrexpo on Wednesday declared a “further” special interim dividend of 39.6 cents a share, and said more could follow.

“The board will consider, as appropriate, whether or not to propose a final dividend in respect of 2020, which if proposed will be put to the group’s AGM in May 2021,” it said.

The mining industry has emerged as one of the biggest sources of income for investors across Europe during Covid-19 as raw material prices have soared owing to strong demand from China. Rio Tinto and BHP Group both declared record dividends because of rising iron ore prices.

News of the bumper dividend payment came as Ferrexpo, which is majority owned by billionaire businessman Kostyantin Zhevago, reported a pre-tax profit of $754m in the year to December, up from $501m a year earlier, on revenue of $1.7bn.

The company swung from a net debt position of $281m to net cash of $4m as it cashed in on strong demand for its high-grade iron ore product.

Including the special interim dividend of 39.6 cents a share, Ferrexpo declared record dividends of 72.6 cents for 2020, against 19.8 in 2019.

Ferrexpo is the world’s third biggest supplier of pellets, small balls of iron ore that feed directly into blast furnaces. They offer steelmakers improved productivity and also lower emissions, something that is becoming increasingly important in China where there is a crackdown on industrial pollution.

“Our work over the years to develop a customer presence in China enabled us to efficiently pivot to this market in 2020 when demand in the rest of the world declined as a result of the global Covid-19 pandemic,” said acting chief executive Jim North.

Shares in Ferrexpo, a member of the FTSE 250, have risen more than 200 per cent over the past year. The company’s equity market value currently stands at almost $3bn.