Weaker local currency helps Ukraine's miner Ferrexpo to cut costs

LONDON, April 17 (Reuters) - Ukrainian iron ore miner Ferrexpo (Other OTC: FEEXF - news) said on Thursday that a weaker Ukrainian currency helped it reduce its iron ore pellet production costs and said it was on track to ramp up production to a run rate of 12 million tonnes later this year.

Ferrexpo said its cash cost for iron ore pellet production in the three months to end-March was $50.3 per tonne, 21 percent lower than in the same quarter last year and 13 percent down from the last quarter of 2013.

The steep reduction reflected efficiency improvement but was also down to the devaluation of the hryvnia, the Ukrainian currency, in which around 50 percent of the company's production costs are denominated.

Ferrexpo, majority owned by Ukrainian billionaire and parliamentarian Kostyantin Zhevago, is investing more than $650 million to ramp up production to a run rate of 12 million tonnes of pellets in 2014. It is also focusing on increasing the grade of its pellets in an attempt to better access the growing Middle Eastern market where strict grade controls are in place.

In 2013, the company produced 10.8 million tonnes of pellet, 12 percent up from the previous year, and exported its production to Europe and Asia. (Reporting by Silvia Antonioli; editing by Stephen Eisenhammer)