Ferrexpo : Climate Change Report 2022

DEVELOPING OUR NET ZERO PATHWAY

Ferrexpo plc Climate Change Report 2022

INTRODUCTION	REGULATORY ANALYSIS	CLIMATE SCENARIOS	NET ZERO PATHWAY	NEXT STEPS	APPENDIX

Introduction

This report represents the culmination of extensive work conducted to map out the carbon footprint of Ferrexpo plc and our exposure to climate change risks and opportunities, as we strive to deliver net- zero emissions production by 2050.

Contents

REGULATORY ANALYSIS

CLIMATE SCENARIOS

Who we are	03
About this report	04
CEO statement	06
Our strategy on climate change	07
Performance and goals	08
Key components of our pathway to net zero	09
Key projects to achieve 2030 goals	10
Governance	11
Stakeholder engagement	12
Regulatory analysis	13
Policy review: European Union	16
Policy review: Beyond Europe	19
Policy review: Quantifying Impact	20
Climate scenarios	22
	NET ZERO
An overview of scenario analysis	25
Scenario analysis selection	26
Scenario analysis: In detail	29		PATHWAY
Materiality assessment	27
Net zero pathway	38
Next steps	47
Life cycle assessment	48
Conclusions and next steps	49
Appendix	50

www.ferrexpo.com

References to Ferrexpo plc

References in this report to "Ferrexpo", the "Company", the "Group", "we", "us", and "our" are all references to Ferrexpo, Ferrexpo subsidiaries and those that work for Ferrexpo, albeit not a singular entity or person. Such terms are provided as a writing style in this report, and are not indicative of how Ferrexpo or its subsidiaries are structured, managed or controlled.

APPENDIX

NEXT STEPS

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INTRODUCTION	REGULATORY ANALYSIS	CLIMATE SCENARIOS	NET ZERO PATHWAY	NEXT STEPS	APPENDIX

Introduction continued

Image: CAT793D trucks at Ferrexpo's Yeristovo Mine, with this image produced to mark Ukraine's 30th anniversary of independence in August 2021.

Forward-looking statements

This Climate Change Report contains forward- looking statements, including statements regarding plans, strategies and objectives of management; closure or divestment of certain assets, operations or facilities; and regulatory developments.

Forward-looking statements may be identified by the use of terminology, including, but not limited to, "intend", "aim", "project", "anticipate", "estimate", "plan", "believe", "expect", "may",

"should", "will", "continue", or similar words. These statements discuss future expectations or provide other forward-looking information. These forward-looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this Climate Change Report. Readers are cautioned not to put undue reliance on forward-looking statements.

Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including the Russia's invasion of Ukraine; the Company's ability to profitably produce and transport iron ore to applicable markets; the impact of foreign currency exchange rates on the market prices of iron ore that the Company produces; activities of government authorities in the countries where Ferrexpo operates, including increases in taxes, changes in environmental and other regulations, and political uncertainty; labour unrest; and other factors

identified in the risk factors set out in our 2021 Annual Report and Accounts, available online at www.ferrexpo.com.

Except as required by applicable regulations or by law, Ferrexpo does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or

future events. Past performance cannot be relied on as a guide to future performance.

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INTRODUCTION	REGULATORY ANALYSIS	CLIMATE SCENARIOS	NET ZERO PATHWAY	NEXT STEPS	APPENDIX

Who we are

We are a major producer of the highest grade forms of iron ore for the global steel industry, which help steelmakers to reduce their carbon emissions.

Ferrexpo was the third largest exporter of high grade iron ore pellets in 2021, which are a premium form of iron ore that has a significantly lower total emissions footprint when compared to the more commonly traded forms of iron ore (sinter fines). Our assets are located in central Ukraine, and have supplied the global steel industry with iron ore for more than 50 years,

Ferrexpo is listed on the London Stock Exchange and is a constituent of both the FTSE 250 and FTSE4Good Indices.

What we do

1 Extraction:

Our iron ore mines in central Ukraine have over 50 years of mine life remaining at present mining rates.

2 Processing:

Through significant investment, we are able to produce some of the highest quality forms of iron ore products that are commercially available.

3 Export:

As a result of our investments in quality, we are able to sell our products to a network of premium steel mills around the world.

1

3

2

	MINES	PRODUCTION		HIGH GRADE PRODUCTS	EMISSIONS REDUCTION
	Three	11.2MT	100%	30%
	Our three iron ore mines in central	Total production of 11.2 million		100% of our production comprises	Combined emissions reduction of
	Ukraine enable us to supply steel	tonnes in 2021, enabling us to be the		high grade forms of iron ore. For	30% recorded in two years since the
	mills around the world. Ferrexpo has	third largest pellet exporter globally,		more on how high grades help	Group's baseline year of 20191.
	been a long-term investor in Ukraine	and the largest publicly listed		steelmakers reduce their emissions,
	since our IPO in 2007.	company that is primarily focused on		see page 14 of the 2021 Annual	1 Scope 1 and 2 emissions combined,
		iron ore pellets.		Report and Accounts.
				presented on a per tonne basis.

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About this report

CLIMATE CHANGE REPORTING

COVERED BY THIS REPORT

This report represents Ferrexpo's inaugural standalone report dedicated to climate change risks and opportunities, our greenhouse gas emissions ("GHG") footprint, and our decarbonisation pathway.

The information in this report represents the conclusions drawn on our business following the work completed in conjunction with environmental consultants Ricardo Plc ("Ricardo"), which was a phase of work announced alongside our inaugural carbon emissions targets in October 2021.

The work completed to date as part of this project represents a desktop study of the Ferrexpo business and its products, ahead of further, more detailed studies into climate change related topics. This report represents the latest stage in Ferrexpo providing an increased level of reporting around climate change topics for the benefit of all our stakeholders.

Ferrexpo has been publishing information on its environmental footprint of our operations since listing on the London Stock Exchange in 2007. Initially this information was provided in the Group's Annual Reports, and since 2016, the Group has presented more detailed information on sustainability topics through the publication of standalone Responsible Business Reports, which are published in accordance with the Global Reporting Initiative for sustainability reporting.

The work presented here is a continuation of this process, which serves to provide more detail on material topics for the Group's

stakeholders. This report is designed to be read in conjunction with the Group's Responsible Business Reports, which are available here.

Work carried out to date has centred on the following key topics relating to our reporting of climate change:

1. Regulatory risk and opportunity analysis, with an external focus on the markets into which we sell our products;
2. Climate scenarios, with a specific focus on the Ferrexpo business; and
3. Net zero target setting and road mapping, representing a bespoke review of the Ferrexpo business.

The Group is also in the process of undertaking a life cycle analysis of our higher grade direct reduction ("DR") iron ore pellets, to benchmark their environmental footprint against the most commonly exported form of iron ore (sinter fines). The outcome of this work will

be published separately in due course.

Report boundaries

This report covers the Group's operating entities in Ukraine and logistics business in central Europe (First-DDSG), which collectively form the basis of the Group's existing reporting of its carbon emissions footprint in previous public reports. For a description of the subsidiaries

of Ferrexpo, please see page 206 of our 2021 Annual Report and Accounts. The Group reports on the basis of 100% ownership of its operating subsidiaries (where a majority

stake is held) and does not employ equity accounting of its sustainability data.

What is net zero?

Ferrexpo's goal in achieving net zero iron ore pellet production is to operate with minimal avoidable emissions, as far as possible, and offsetting any unavoidable emissions through initiatives that have a negative impact on emissions, such as carbon capture and storage. This topic is covered in further detail on page 40 of this report.

Considerations relating to Russia's war in Ukraine (2022)

The work completed here represents a desktop study of our approach to climate change, risks and opportunities on a range of scales, pathway to net zero production, and environmental

Image: Winter landscape at Ferrexpo's operations in Ukraine, where temperatures can range

from minus 20oC in winter to more than 40oC in summer. Any new technologies implemented must therefore be amenable to operating across this wide range of temperatures.

footprint. These are assessed on the basis of Ferrexpo's normal course of business and our long-term business model, and do not account for the change in operating environment seen during Russia's invasion of Ukraine in 2022. The research presented in this report is a study into the strategic position of the Group and is not focused on factors currently being encountered as a result of Russia's invasion of Ukraine.

Task Force on Climate-Related Financial Disclosures ("TCFD")

This report aims to present new information to stakeholders, rather than reproduce previously reported information. Our disclosures under TCFD are provided in our 2021 Annual Report and Accounts, available on our website (link here).

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