Responsible Business Report

2019 Responsible Business Report About the Company Since 1977, Ferrexpo plc (“Ferrexpo”) has supplied high quality iron ore pellets to the world’s steel industry, and has been listed on the London Stock Exchange for over ten years. Ferrexpo plc Responsible Business Report 2019 01

Ferrexpo’s operations comprise of stakeholders and to provide ESG-focused funds also saw About Ferrexpo two iron ore mines, a third mine in assurance of the Company’s record inflows in 2019, pulling in an development in Ukraine, processing continued efforts to be a good additional US$20 billion, four times facilities and infrastructure for delivering corporate citizen. the level seen in 20181. the Company’s pellets around the 2019 was the year that ESG The Company has therefore world. The Company has been investing moved into the mainstream, decided to take the initiative and has premium listed on the London Stock with a number of high profile incorporated these frameworks into Exchange since 2007 and has been investors suggesting that companies its reporting, starting with this year’s Workforce Development a member of the FTSE 250 Index may not be considered for report, to further develop its ESG- of Companies since November 2016. investment if ESG frameworks, related reporting. Ferrexpo reports its Responsible such as the Task Force on Climate- Business activities, also referred related Financial Disclosures to as Environment, Social and (“TCFD”) and the Sustainability 1. https://www.cnbc.com/2020/01/14/esg-funds- Governance (“ESG”), on the basis Accounting Standards Board see-record-inflows-in-2019.html of providing transparency to (“SASB”), were not adopted2. 2. https://corpgov.law.harvard.edu/2020/01/18/ blackrock-nudges-companies-toward-a- common-standard-sasb-tcfd/ Ethical Business Sustainable Environments Supporting Communities Appendices Take a look

03 About Ferrexpo 28 Ethical Business 54 Appendices 04 Review of 2019 30 Ethics and Integrity 56 Appendix – Global 05 About Ferrexpo 32 Providing Value to Reporting Initiative Index 06 Business Model Communities 61 Appendix – Climate Change 08 About this Report 33 Tax and Transparency Risks 09 Strategy Review 65 Appendix – Index of reporting under 10 Governance and 34 Sustainable Sustainability Accounting Management Framework Environments Standards Board 11 CSR Committee 36 Climate Change 66 Appendix – Workforce 12 Climate Change Strategy 40 Managing Landscapes Development 13 Reporting initiatives 41 Biodiversity 72 Appendix – Ethical 14 Determining Material Topics 42 Energy Consumption Business 16 UN Sustainable 44 Balancing Water Use 77 Appendix – Sustainable Development Goals 46 Emissions Environments 47 Tailings Management 81 Appendix – Supporting 18 Workforce Communities Development 48 Supporting 20 Creating Safe Places Communities to Work 50 Ferrexpo Charity Fund 22 Employee Engagement 52 Engaging with Local 23 Promoting Equal Communities Opportunities 24 Human Rights 25 Health and Wellbeing 26 Promoting Talent

Reporting Ferrexpo’s Responsible Business activities in line with the Global Reporting Initiative framework of reporting. Ferrexpo plc Responsible Business Report 2019 03

The Company’s Responsible Business Reporting covers four About Ferrexpo key areas: Ferrexpo’s people, the environment, ethical business practices and local communities. These areas collectively demonstrate Ferrexpo’s approach to operating in a responsible and sustainable manner. okoc eeomn tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Workforce Development

Workforce Development Ethical Business Ferrexpo’s workforce, comprising its employees and The Company aims to conduct its economic business contractors, are the platform on which the Company’s activities and interactions with stakeholders, from successful pellet production is built. The Company seeks to governments to local councils and local businesses in a fair ensure a safe, constructive, and fair working environment and ethical manner. Through good business practices and for its workforce, with training and equal opportunities focus on local businesses, Ferrexpo believes it can make a provided to all those working for Ferrexpo. difference to the communities it operates within.

SEE PAGE 18 SEE PAGE 28

Sustainable Environments Supporting Communities Appendices Ferrexpo aims to utilise industry best practice in its Through Ferrexpo’s own Charity Fund, the Company has operations in order to protect the natural environment, from helped to maintain and improve schools, kindergartens and producing a form of iron ore for steelmakers that results in hospitals in the local areas where it operates since 2011.

40% less CO2 when turned into steel compared to more Other activities include funding medical treatments for local common forms of iron ore, to reducing the Company’s residents and sponsoring local sports people to participate water withdrawal from the local water supply network. in national and international competitions. SEE PAGE 34 SEE PAGE 48 Ferrexpo plc 04 Responsible Business Report 2019

Review of 2019

2019 was a year of progress in safety, employee engagement and community development projects.

single lost time injury, representing nearly In terms of the environment, 2019 marked three million working hours, which is an the sixth successive year of our reduced excellent achievement within the Group’s water extraction from the local water supply overall strong performance. network, as we continue to reduce our In other areas, the tragic events in Brazil environmental footprint through improved surrounding the failure of a tailings dam in efficiencies in water consumption and early 2019 led us to commission an modernisation of infrastructure. In terms of independent report on our tailings facility climate change, the Company managed to by consultants Knight Piésold, to review our increase its level of natural gas substitution tailings operations against best practice, in our pelletiser from 19% to 30% in 4Q and I am pleased to report that this review 2019, further reducing our reliance on fossil concluded that Ferrexpo’s tailings facility is fuels. The Company’s carbon footprint in

well managed and of an appropriate design. terms of its direct CO2 emissions remains In the summer, we successfully in line with its peers and the Company is conducted our second employee currently trialling a number of initiatives, engagement survey, receiving feedback including autonomous trucks, that will Looking back at 2019, the Ferrexpo business from over 4,750 employees – representing reduce our footprint. achieved a number of milestones across our over 50% of the workforce, with results Finally, I would like to thank our workforce Responsible Business activities – we communicated back to employees at town for their collective efforts in 2019, as none of recorded our lowest injury frequency rate hall meetings and leadership conferences in the progress being made in our Responsible since Ferrexpo listed in 2007, which is the September and October. We also held our Business activities would be possible result of developing safety reporting third leadership conference in Kyiv in without their continued hard work. practices and awareness around hazard and September for the top 60 individuals that risk identification. In addition, Ferrexpo have been identified as future leaders of Jim North Yeristovo Mining finished 2019 without a the business. Acting Chief Executive Officer Ferrexpo plc Responsible Business Report 2019 05

About Ferrexpo About Ferrexpo

Ferrexpo plc (“Ferrexpo”) is The Company operates two mines in the Poltava region of Central Ukraine, the Poltava a London listed producer of and Yeristovo mines, which both produce iron iron ore pellets, which are a ore that is processed in the Company’s premium product for steel mills processing facility, which has recently been to use in the production of upgraded to process over 36Mt of raw ore Supporting Communities Sustainable Environments Ethical Business Workforce Development per year. The Company also has a third mine steel products. in development, Belanovo, where initial waste stripping activities have recently begun. The Ferrexpo’s pellets are exported worldwide, to Company’s pellets are transported by rail, customers in Europe, Asia, North America either to the port of Yuzhny in south west and the Middle East, and since listing on the Ukraine, for export to the seaborne market, or London Stock Exchange in 2007, the to the western border of Ukraine for exports to Company has worked towards developing a customers in central Europe. The Company crisis resistant customer base, typically also has barging operations on the Danube selling its pellets under long-term contract to River, which provides operational flexibility for the best steel mills in the world. The delivery of pellets to European customers. Company has been in production for over The Company has marketing offices in 40 years, and has sufficient Ore Reserves to Dubai, Kyiv, Shanghai, Singapore and Tokyo, continue production for a further 50 years at in addition to corporate offices in London current mining rates. and Switzerland.

Established

LVIV MOSTYSKA logistics KYIV infrastructure 28Capesize vessels loaded POLTAVA

in 2019 (2018: 18) UZHHOROD The Group’s logistics ZOLO TNISHINO CHOP FER REXPO infrastructure enables it to BAT’OVO ZNAMENKA transport its pellets by rail to the western border of Ukraine to connect with the European rail network, by barge on the DNIEPER RIVER Danube River into Europe and 154Own barges by capesize vessel from its TIS (2018: 156) POR T YU ZHNY Ruda Terminal in the southern S EA OF AZOV POR T port of Yuzhny. ODESA DANUBE RIVER POR T IZMAIL CR IMEA 2,850 POR T CONSTANTA Own rail cars (2018: 2,252)

% Appendices World class 36 customer base Central Europe % Ferrexpo’s world class customer base % 30 produces high quality steels for value 13 China & South East Asia added finished products. Western % Europe 5 % Turkey, Middle 16 East & India North East Asia

Ferrexpo plc 06 Responsible Business Report 2019

Business Model

Ferrexpo believes its business model is sustainable on the basis that the Company has a competitive cost position on the iron ore cost curve, high quality products that command a price premium in a niche market that has high barriers to entry, a first class customer portfolio, a well-invested asset base and favourable long-term industry dynamics supporting pellet consumption. This enables the Company to be cash generative throughout the commodities cycle.

Ferrexpo’s key resources What Ferrexpo does Sustainable stakeholder relationships 1. Long-life iron ore Employees US$ M Wages and salaries paid 109 deposit in Ukraine (2018: US$86M) Ore extraction Crushing Customers US$ BN 2. Well-invested Revenue generated 1.5 Drilling Coarse crushing (2018: US$1.3BN) production process Blasting Medium crushing Excavation Screening Suppliers US$ M Haulage Fine crushing Money spent on suppliers 944 3. Skilled workforce Ore to crusher Dry magnetic separation (2018: US$900M) Communities US$ M Charitable donations 6 4. Infrastructure network (2018: US$15M) (with access to water/ electricity/gas) Environment US$ M Money spent to safeguard the environment 16 (2018: US$11M) 5. Global logistics capability Government US$ M Taxes and royalties paid 114 6. Customer relationships Pelletising Beneficiation (2018: US$73M) Thickening Grinding US$ (with high quality “crisis-resistant” Filtration Classification Investors M Dividends declared for the financial year 155 steel mills) Balling Hydro separation (2018: US$97M) Induration Magnetic separation Flotation upgrade Capital providers US$ M 7. Financial stability Tailings Debt repaid and interest payments 263 (2018: US$352M)

Purpose Underpinned by Ferrexpo’s values

Ferrexpo produces and markets premium quality iron ore pellets, Responsibility Make it happen Means at all times exercising Means taking the initiative, being which are vital for sustainable steel self-discipline, putting health and engaged, not fearing failure, ensuring production, with steel an essential safety first, being environmentally work is done once and done well, part of modern life. responsible and being accountable achieving superior business results by to local communities. stretching the Company’s capabilities and focusing efforts on adding value. Ferrexpo plc Responsible Business Report 2019 07 About Ferrexpo

Ferrexpo aims to create value for its stakeholders through the careful development of its long-life iron ore deposit in Ukraine, and through its conversion into a high quality iron ore product. The Company’s ongoing success is dependent on the people

that it employs, continued investment in its operations, Supporting Communities ongoing Sustainable Environments Ethical Business Workforce Development development of its diversified global customer base and the continued support of local communities.

Integrity in what Diversity within Continuous Ferrexpo does one team innovation Meaning no double standards, being Means valuing difference, learning from Means showing courage, seeking truthful, honest and open at all times, each other, respecting other opinions, to improve not only the business upholding high ethical standards and building on the Company’s strengths, but ourselves, not being afraid to try delivering on the Company’s harnessing the capabilities of the whole something new, investigating if there commitments. team and working collaboratively across is a better way, taking personal boundaries for the benefit of one accountability and accepting change. Ferrexpo. Ferrexpo plc 08 Responsible Business Report 2019

About this Report

In 2020, Ferrexpo marks a significant milestone – 50 years since the Company was formed and mining commenced at the Poltava mine, and has supplied iron ore pellets to steel mills for over 40 years. This report represents the fifth anniversary of Figures presented in sustainability Reporting terminology Ferrexpo publishing standalone Responsible reports often lack context – it is hard to Ferrexpo notes a recent trend amongst Business Reports, building on the Corporate comprehend what 18 petajoules of energy issuers, investors and market indices Social Responsibility (“CSR”) reporting really means, and it is for this reason that towards referring to the topics covered in published in the Company’s Annual Reports the Company presents benchmarking this report as Environmental, Social and since listing in 2007. charts in its Responsible Business Reports, Governance (“ESG”) reporting. For continuity, This report covers calendar year 2019 to show its performance against other this report is titled as a Responsible and aims to provide stakeholders with an mining peers in the iron ore industry where Business Report, but the Company overview of all the material aspects of the possible. Peers are selected on the basis of makes no distinction between CSR, ESG Company’s interaction with its workers, the those that produce iron ore pellets, and and Responsible Business Reporting environment, and local communities, as well those which also publish information that is as the Company’s ethical conduct and directly comparable to the information governance structures. presented in this report. These peer companies are presented anonymously to maintain the discussion on Ferrexpo’s performance, not the peers. Ferrexpo plc Responsible Business Report 2019 09

Reporting of responsible business About Ferrexpo Strategy activities tends to follow current trends in Timeline sustainability, which include topics such as Review climate change, safety, stability of tailings Development of reporting since IPO dams and water consumption, and it is with these in mind that we are increasing our disclosure in each of these areas. In particular, we welcome the shift for companies to report their Scope 3 okoc eeomn tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Workforce Development emissions, as this highlights the 40%

reduction in CO2 emissions from steel mills through incremental increases in the tonnage of iron ore pellets used instead of sinter fines in their blast furnaces. Following an initial period of consolidation in the Company’s Responsible Business Reports, and adoption of a number of external initiatives in the first five years of standalone reporting, we enter the next Ferrexpo has developed its phase of reporting for Ferrexpo, whereby we understanding and reporting of can aim to begin to more proactively manage Responsible Business activities our footprint, through targets and careful since listing in 2007, as summarised planning of Responsible Business activities. below: Increased alignment with peers It is our intention that the next five years of At Ferrexpo, our reporting of Responsible Responsible Business Reports ought to 2007 Business activities has steadily progressed bring increased awareness of our impact on Company’s IPO Prospectus and first since listing on the London Stock Exchange the environment, local communities, our Annual Report are published; Company in 2007, whereby reporting of Responsible workforce and other stakeholders, and it is establishes Corporate Social Business activities previously came in the our collective goal as a business to start to Responsibility Committee. form of bespoke sustainability metrics, which establish more short-, medium- and have been slowly replaced by more long-term targets to help guide the Company standardised metrics, greater adherence to 2009 and proactively manage future performance. CSR Committee formed. international frameworks and best practice, Finally, for 50 years Ferrexpo has and more detailed reporting in standalone continued to operate as a key part of the 2011 Responsible Business Reports. local community, local economy and local Publication of CSR strategy goals. This year’s report aims to take our environment, with a close association with reporting a significant step forward, with the town of Horishni Plavni, and other several important new additions, such as surrounding villages, and our goal is to 2015 Scope 3 CO2 emissions, as well as adopting continue this bond for the coming 50 years Updated Code of Conduct, covering a additional frameworks to existing reporting through our Responsible Business range of compliance and governance such as the Task Force on Climate-related programme. A warm thank you to all of our topics. Financial Disclosures (“TCFD”) and employees and contractors that make our Sustainablity Accounting Standards Board continued success possible. 2016 (“SASB”). The addition of these new First standalone Responsible Business frameworks enables stakeholders to better Yuriy Khimich Report published. understand the risks and opportunities CSR Committee Chair relating to climate change, and increases the breadth of data that we provide – such as 2017 the inclusion of the total number of injuries in Ferrexpo included in FTSE4Good Index. our safety reporting, in addition to lost time Second Responsible Business Report injuries, to bring us into line with our peers. published in July, with peer With this expanded reporting of data and benchmarking added. Appendices frameworks, we have restructured our report to include more of the qualitative statements 2018 that are required by each framework in the Ferrexpo upgraded to BB rating by Appendices to this report, enabling the front MSCI. Publication of activities in line with section to focus on the key topics relevant for UN Sustainable Development Goals. our activities in 2019. 2020 Publication of fifth annual Responsible Business Report, with additional reporting on TCFD and SASB frameworks, Scope 3 reporting and reporting using the Greenhouse Gas Protocol. Ferrexpo plc 10 Responsible Business Report 2019

Governance and Management Framework

The role of Ferrexpo’s Risk management process

Corporate Social Ferrexpo Board Responsibility (“CSR”) – Overall responsibility for maintaining sound risk management and internal control systems Committee – Sets strategic objectives and defines risk appetite – Monitors the nature and extent of risk exposure

In 2019, the Company’s governance structures include the CSR Committee, which Audit Committee Executive Committee CSR Committee acts as a sub-committee to the Board of – Support the Board in – Assess and mitigate – Oversight of Directors (“Board”) and reports directly to the monitoring risk exposure Company-wide risk CSR matters and Board. The CSR Committee met four times and risk appetites – Monitor internal controls performance during 2019 (2018: four), and covers the – Review effectiveness of risk management and Company’s management of safety, control systems environmental monitoring (including climate change and greenhouse gas emissions), energy consumption, community spending through the Ferrexpo Charity Fund, ISO Finance and Risk certification and other Responsible Business Management Committee activities. In early 2020, the Company decided – Monitor centralised financial risk to refresh the membership and focus of the management structures CSR Committee, with climate change now added as a standalone topic within the reformed Health, Safety, Environment and Community Committee (“HSEC”). The HSEC Executive Compliance Committee also oversees the effectiveness of Committee the Company’s policies and controls designed – Monitor Group compliance to manage risks associated with safety, – Monitor Group and local health, environment, climate change and compliance officers community relations. The Board considers climate change related issues when reviewing and guiding strategy, risk management policies and Internal audit function business plans. The Company is – Support the Audit Committee in reviewing the effectiveness of risk management continuously developing and looking to – Internal control systems expand its approach to reporting its environmental footprint, and the adoption of various external initiatives in 2019 is an example of this progress. As the Company Operational level improves its understanding of climate – Risk management processes and internal controls embedded across all change risks and opportunities, it is the Ferrexpo operations Company’s intention is to adopt additional Responsible Business related metrics in performance objectives, as well as govern Climate related issues are communicated This risk register describes individual risks future decisions on capital expenditure, to the Company’s executive management posed to the Company, the likelihood of acquisitions and disposals. An example of team through the Group risk register, which occurrence, scale of any impact and the this would be an internal price of carbon for aims to describe all of the major risks facing scale of any financial impact, including a approving capital projects. The Company is the business and is updated and presented maximum foreseeable financial loss to the currently in the process of settling additional on a monthly basis for regular updates business related to each risk. Responsible Business goals and targets for (with ad hoc updates for any material events the business in the medium to long term. as required). Ferrexpo plc Responsible Business Report 2019 11

CSR Committee About Ferrexpo

Oversight of Responsible Yuriy Khimich Business activities Chair Yuriy joined Ferrexpo in 2000 and worked in a number of The Corporate Social Responsibility (“CSR”) commercial and operational okoc eeomn tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Workforce Development Committee was formed in 2009 for the roles in all three of Ferrexpo’s purpose of achieving best practice in operational business units – FPM, corporate governance, internal control and FYM and FBM, before becoming corporate reporting. The following individuals General Director of FBM in 2015. made up the CSR Committee as of 31 December 2019:

Greg Nortje Viktor Lotous Chief Human Chief Operating Officer Resources Officer and Head of Managing Board, FPM Greg joined Ferrexpo in January 2014. He previously held a variety Viktor became Chief Engineer in of international human resource 1997 and General Director and leadership positions with Anglo Chief Operating Officer in April American and BHP Billiton. He 2007. He is a graduate of Kryvyi has Advanced Management Rih Mining and Ore Institute, and qualifications from the University of the Kyiv National Economic of Stellenbosch Business School University, specialising in Finance. and the Gordon Institute of Business Science, a Bachelor of Arts degree and a postgraduate Diploma in Education from the University of the Witwatersrand.

Fiona MacAulay Kostyantin Zhevago Independent Non-Independent Non-executive Director Non-executive Director

Fiona is a Chartered geologist Kostyantin joined the Board as a with over 30 years’ experience in Non-executive Director on the upstream oil and gas sector 14 June 2007. He is ultimately and key roles in a number of the controlling shareholder of leading firms including Mobil, Ferrexpo. During his business British Gas, Amerada Hess and career spanning over 30 years, Rockhopper. Fiona was CEO of Kostyantin had served as Echo Energy PLC from 2017 to chairman and member on the

2018, a Non-executive Director boards of various Ukrainian and Appendices from 2018 to 2019 and Chief international companies. He Operating Officer of Rockhopper graduated from the Kyiv State Exploration PLC from 2013 Economic University in 1996, to 2017. specialising in international economics and holds a doctorate In line with best practice, the Company In addition, Bert Nacken was a member of degree. Kostyantin was a looks to refresh membership of existing the CSR Committee in 2019 until his member of the Ukrainian Committees with new members, both resignation from the Board of Directors on Parliament from 1998 until 2019. employees of the business and Non- 26th April 2019. executive Directors. As part of this process, An overview of the external appointments Fiona MacAulay joined the CSR Committee for each Director named above is provided as a member in December 2019, and on the Company’s website at the following succeeded Yuriy Khimich as Chair in address: www.ferrexpo.com/about-us/ February 2020, with Yuriy continuing to corporate-governance/board-directors. act as Chair of the local CSR Committees in Ukraine. Ferrexpo plc 12 Responsible Business Report 2019

Climate Change Strategy

Assessing climate An example of a short-term risk would be drier weather conditions meaning that Location of TCFD-aligned change related risks and more dust is created through Ferrexpo’s disclosures opportunities mining operations, whereas a longer-term Board oversight of climate change risk to the business is the long-term trend risks and opportunities: (a) Determining towards carbon-neutral steel making Material Topics (page 14), and (b) CSR amongst steel producers, a number of This section is principally designed to Committee (page 11). which are Ferrexpo’s customers. Climate address the issues raised in the Task Force change also presents opportunities – with on Climate-related Financial Disclosures Management’s role in assessing governments worldwide introducing (“TCFD”) framework, which the Company is climate change related risks and legislation to curb greenhouse gas adopting for the first time this year. Additional opportunities: (a) Governance and emissions, this may increase demand by information on the risks and opportunities Management Framework (page 10), and steel mills as converting pellets to steel posed by climate change can be found in (b) Climate Change Risks and produces 40% less CO than other forms the Appendix (pages 61 to 64). 2 Opportunities (pages 61 to 64). of iron ore. The risks and opportunities relating to Information shown in Appendix (pages climate change cover a number of time Organisational processes to identify, 61 to 64) describes a number of the material horizons, including short-, medium- and assess, and managed climate change risks and opportunities facing the business long-term risks and opportunities. related risks: (a) Determining Material that relate to a transition to a lower-carbon Ferrexpo’s mining assets currently have Topics (page 14), (b) Governance and economy. Risks and opportunities are a mine life in excess of 30 years, with Management Framework (page 10), and assessed as being material if they have the the potential to extend this through the (c) Climate Change Risks and potential to impose a significant economic, development of assets currently not in Opportunities (page 61 to 64). environmental or social impact on production. The Company therefore Ferrexpo’s business, or if they could considers short-term risks to cover events TCFD-specific metrics and targets: substantially influence the assessments in the next three to five years, with longer- (a) Sustainable Environments section and decisions of stakeholders. term risks and opportunities presenting (page 34), (b) Environmental Appendix themselves ten years from now. (pages 77 to 80), and (c) Climate Change Risks and Opportunities (page 61 to 64). Ferrexpo plc Responsible Business Report 2019 13

Reporting Initiatives About Ferrexpo

Frameworks to ensure Ferrexpo’s Responsible Business reporting is as clear, relevant and comparable to its

peer group as is possible. Supporting Communities Sustainable Environments Ethical Business Workforce Development

Ferrexpo understands the need to use external initiatives to report a wide range of Responsible Business related information in a standardised format, to enable stakeholders to understand the Company’s performance and compare it to our peers in the metals and mining industry. Below are the initiatives adhered to in this report, with Greenhouse Gas Protocol Corporate ISO certification a brief overview of each framework. Accounting and Reporting Standard Ferrexpo pursues ISO certification at its This initiative covers the calculation and operations to demonstrate a commitment to reporting of seven greenhouse gases, quality safety, and efficiency in its production allowing companies to provide credible processes. and comparable reporting of emissions. This is Ferrexpo’s first year of reporting under this initiative.

Global Reporting Initiative (“GRI”) Framework providing guidance for disclosure on 34 sustainability-related topics, from training, to the discharge of water, to the rights of indigenous people. The Company Task Force on Climate-related has reported its Responsible Business Financial Disclosures (“TCFD”) activities in line with GRI since the A set of recommendations for voluntary and Company’s first standalone report consistent climate-related financial risk covering 2015. disclosures, including risks and opportunities of climate change to the reporting company. This is the first year of reporting under this framework for Ferrexpo. ESG-related recognition and ratings: MSCI and FTSE4Good UN Sustainable Development Goals Through its efforts in Responsible Business, (“UN SDGs”) Ferrexpo has received recognition from a The UN SDGs are designed as a blueprint to number of bodies focused on sustainability achieve a better and more sustainable future reporting. As of 2019, Ferrexpo plc has for all, with the goals aimed to address 17 received an MSCI ESG rating of BB1. The global challenges facing the world today. Company has also been included in the A number of areas of the goals are directly Sustainability Accounting FTSE4Good Index since 2017, which is relevant to Ferrexpo’s business, such as Standards Board (“SASB”) a series of ethical stock market indices climate change and gender equality. A non-profit organisation set up to develop launched in 2001 and based on corporate

Ferrexpo has linked its Responsible Business and disseminate sustainability accounting social responsibility criteria. Appendices Reports to the UN SDGs since 2017. standards. An index of SASB requirements under SASB is provided in the Appendices (page 65). This is Ferrexpo’s first year of reporting under this initiative.

1. The use by Ferrexpo of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation or promotion of Ferrexpo by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided “as-is” and without warranty. MSCI names and logos are trademarks or service marks of MSCI. Ferrexpo plc 14 Responsible Business Report 2019

Determining Material Topics

Stakeholder consultation to determine key areas

Materiality index

Where issues are considered to be – Waste generation – Human rights and – Safety in the workplace material to Ferrexpo stakeholders, – Water management collective bargaining – Environmental monitoring, they are included in the Group’s – Community sustainable – Employee engagement emissions and climate priorities and managed as part of development plan change the Company’s Responsible Business – Resettlement and – Employee turnover strategy. The diagram opposite details closure plan and retention the key issues: – Diversity, equal – Training and development – Community Key to materiality matrix opportunities, and of personnel recreational facilities – People and workforce related topics non-discrimination – Water management – Sustainable usage of (for more information, see pages 18 – Employee wellbeing – Tax transparency resources and business to 27 of this report) – Responsible purchasing improvement activities – Compliance and ethical business – Biodiversity related activities (for more information, see pages 28 to 33 of – Efficient energy use this report) – Code of Conduct and – Environmental monitoring and

Increasing concernIncreasing to stakeholders compliance activities management (for more information, see pages 34 to 47 of this report) – Community projects (for more information, see pages 48 to 53 of this report) Increasing current or potential impact on Ferrexpo Ferrexpo plc Responsible Business Report 2019 15 About Ferrexpo okoc eeomn tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Workforce Development

Approach to Responsible Business

Operational level Ferrexpo’s responsible approach Stakeholders

Logistics Government

Workforce Investors People Economic indicators – Safety and business ethics Marketing – Occupational health – Financial performance Suppliers – Diversity – Local investment – Local hiring (including purchasing)

Processing Workforce Appendices – Training and development and recruitment – Employment and turnover – Direct value generated Resource base – Contracts and collective – Code of Conduct Communities bargaining – Responsible purchasing Mining Customers

Capital providers Community Environment – Community support – Energy donations – Water – Government relations – Greenhouse gases – Resettlement and – Other air emissions closure plans – Land use and rehabilitation Ferrexpo plc 16 Responsible Business Report 2019

UN Sustainable Development Goals

Tackling global The United Nations’ Sustainable Through its approach to Responsible Development Goals (“UNSDGs”) are a set Business, Ferrexpo acknowledges it has a part challenges of 17 interconnected ambitions that relate to play in helping combat the issues addressed to improving the quality of life through by the UN SDGs. Below are examples of how tackling problems that blight the modern Ferrexpo’s efforts in Responsible Business world today and pose a risk to our collective interact with the UN SDGs. futures. These global challenges are: poverty, inequality, climate change, environmental degradation, peace and justice.

UNSDG Applicable business Goals and targets Performance in 2019 Further reading area(s) at Ferrexpo – Ferrexpo Charity Fund: – To provide material aid direct – UAH9.5 million provided in – Community/Ferrexpo Direct assistance for to individuals in local direct aid to local individuals Charity Fund, page 50 individuals in local communities to solve urgent in 2019, an increase of 28% communities through social issues. on 2018. Ferrexpo Charity Fund. – To support Ferrexpo – FPM’s average salary was – Employee wellbeing: employees through paying a 60% above the Ukrainian Decent living wages for all decent living wage to all average in 2019. employees at Ferrexpo’s employees. – Percentage of employees on operations. Ukrainian minimum wage reduced to zero in 2019 (2018: less than 0.05%). – Employee wellbeing: – Target employee health – 8,281 employee health – People/safe places, page 20 Monitoring worker health checks for 100% of checks conducted in 2019, through regular medical employees. representing 94% of checks. – Support any employees employees at operations. – Identifying ill health and affected by drug and alcohol – Further 1,500 medical treatment. addiction. checks provided to – Improving workplace – Support the needs of local contractors. environments to prevent hospitals in the community – One recorded case of occupational illness. each year through Ferrexpo occupational illness in 2019 – Ferrexpo Charity Fund: Charity Fund. (2018: zero). Improving hospitals and – Over 13,000 behavioural other medical facilities in safety audits in 2019. the wider local community. – Workforce training: – Provide safety and skills – Over 15,000 training courses – People/developing talent, Developing talent within training to further the careers undertaken by employees in page 26 Ferrexpo’s workforce. of all employees. 2019, 33% increase on – Improving schools in the – Support the needs of local 2018. wider local community. schools and kindergartens in – Total number of sponsored the community each year learners up 60% versus through Ferrexpo Charity 2018. Fund. – Gender diversity: – Increase female – Female managers represent – People/equal opportunities, Improving Ferrexpo’s gender management representation 18% of total in 2019 (2018: page 23 balance within its workforce to 25% by 2030. 18%). through recruitment, training – Training courses specific to – 40 female managers from and retention. future female leaders. across the operating Group – Flexible working for families. participated in a two-day training course tailored specifically for women.

– Responsible water usage: – Maximise water reuse at – 91% water reuse at FPM. – Environment/water use, Through minimised water Company’s processing – Water extraction from page 44 extraction, maximising water facilities. potable sources down by reuse and applying high – Minimise water withdrawn 12% versus 2018, sixth water quality standards for from local supply network. successive year of decrease. any water discharge. – Climate change: Transition – Maximise use of biofuels in – Biofuels represented up to – Environment/climate energy usage to lower production process where 30% of fuel mix in pelletiser change, page 36 carbon sources. possible. in 4Q 2019. – Implement usage of – Scoping study for 5MW pilot renewable energy sources. solar plant. Ferrexpo plc Responsible Business Report 2019 17 About Ferrexpo okoc eeomn tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Workforce Development

Goal Applicable business Goals and targets Performance in 2019 Further reading area(s) at Ferrexpo – Safety: Creating safe – Maintain lost time injury – Record low Group LTIFR – People/safe environments, working environments. frequency rate at a level of 0.58x. page 20 – Employee wellbeing: below industry peers. – LTI-free year at FYM. – People/human rights, Paying a decent living wage. – Pay fair living wage to all – FPM’s average salary page 24 permanent, full-time 60% above national average workers. in 2019. – None of Ukrainian workforce paid minimum wage (2018: less than 0.05%). – Infrastructure investment – Continue to invest in town of – Completion of Ferrexpo – Community/charity fund, through Ferrexpo’s Charity Horishni Plavni, in roads, Square in Horishni Plavni. page 50 Fund. hospitals and schools. – Physics and STEM – Investing in Ukraine’s railway classrooms and sports infrastructure to deliver facilities all completed at Ferrexpo’s pellets to local schools. customers. – Sustainable transport: – Ferrexpo finances local bus – Ferrexpo provision of 1.41 – Environment/climate Encouraging and enabling network to encourage local million bus journeys for local change, page 36 Ferrexpo employees to get residents and employees to residents (2018:1.49 million) to work through public use public transport. through subsidising local transport, walking or cycling. buses. – Climate change: Prioritise – Reduce carbon intensity – Motor upgrade project – Environment/climate the environment through per tonne. commenced in 2019, saving change, page 36 reducing greenhouse gas – Reduce carbon intensity over 40 million kW. emissions. per dollar of revenue – Sunflower husk consumption increased to 30% of pelletiser’s total energy in 4Q 2019. – 5MW solar power pilot plant studies under way. – Water usage: Water is – Minimising extraction of – Water reuse at Ferrexpo’s – Environment/balancing predominantly extracted for fresh water and maximising processing operations water use, page 44 dust suppression in the reuse of water through maintained above 90% Company’s mines, and for reclamation of water from (2019: 91%). pumping ores around the the tailings dam. – Potable water extraction Company’s processing plant down 12% in 2019. and waste to the tailings dam.

– Biodiversity: Relates to the – Action plan being developed – Biodiversity consultants – Environment section Appendices wildlife found in the air, water for 2020. engaged and currently (Biodiversity, page 41) and forests in and around conducting baseline studies. the Company’s operating – Continue biodiversity site assets. visits to Ferrexpo sites for educating local students. – Compliance: strong – Automation of third-party – Achieved 98% completion – Ethical Business section compliance principles and screening for anti-bribery. rate for Code of Conduct training in ethical business – Ethical leadership training. helps build effective, programme. – Over 6,000 compliance accountable and inclusive courses completed by institutions. employees since programme commenced.

The above table shows the UN SDGs that directly relate to Ferrexpo’s business operations and have been identified as the material issues. There are additional UN SDGs that not are shown above, which are important on a global scale but less applicable to Ferrexpo.

Ferrexpo plc 18 Responsible Business Report 2019 Workforce Development

Working with the Company’s workforce to build a positive future for the local population and area in which Ferrexpo operates, through best business practices. Safety, human rights, equal opportunities, training, and employee engagement initiatives are all part of maintaining a sustainable working environment.

Highlights achieved in 2019: – Zero fatalities – Lowest lost time injury (“LTI”) rate recorded since IPO in 2007. – One year LTI-free at FYM (nearly three million hours worked) – Inaugural employee engagement survey, covering over 50% of employees – 33% increase in number of training courses undertaken, with main increase in safety training

Relevant UN Sustainable Development Goals

Performance measures: (ongoing) – To operate fatality free 1 – Maintain injury frequency rate below industry peers 1 – Female empowerment through targeting 25% female managers by 2030 2

Key to symbols above: 1 Goal met or materially exceeded 2 Goal neither materially exceeded or materially underperformed 3 Goal not met and materially underperformed Ferrexpo plc Responsible Business Report 2019 19 About Ferrexpo Workforce Development tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business Appendices Ferrexpo plc 20 Responsible Business Report 2019

Creating Safe Places to Work

Fatalities and LTIFR across Ferrexpo Group since listing (2007–19) Every individual has the basic right to work in an Fatalities across Ferrexpo Group since listing (2007–19) environment where their

safety and wellbeing is provided for, applicable 2 for employees and 1 contractors alike.

0 200 200 2009 2010 2011 2012 201 201 201 201 201 201 2019 Embedding a safety-focused culture ploees ontrtors Ferrexpo has worked hard to establish safety Lost Time Injury Frequency Rate across at the forefront of the Company’s thinking, from operatives conducting day-to-day Ferrexpo Group since listing (2007–19) activities, to the first topic of discussion at 1 daily operations briefing, to incorporating 1 safety-related metrics into the remuneration 12 of Ferrexpo’s executive management team. 10 0 The Company has traditionally measured its 0 performance in terms of safety through its 0 zero harm objective – targeting zero fatalities 02 0 in any given year, and measuring the Lost 200 200 2009 2010 2011 2012 201 201 201 201 201 201 2019 Time Injury Frequency Rate (“LTIFR”) per million hours worked. In addition, this year the Company is adopting an additional Ferrexpo plc Responsible Business Report 2019 21 About Ferrexpo

measure – the Total Recordable Injury to help deliver this change in approach Frequency Rate (“TRIFR”) per one million towards health and safety, and in 2019 a hours worked, to bring Ferrexpo’s reporting total of 8,266 training courses in safety into line with its peers and best practice. were provided to employees, representing Whilst reporting of injuries is a trailing an 86% increase on 2018. This increase is Workforce Development indicator of safety, which typically indicates attributable to additional first aid training, the number of unsafe events that have led to with the Company striving for all employees injuries and the severity of that injury, there at its operations to be trained in basic first are a number of lead indicators that can aid. A further 2,000 safety training courses provide an early indication of how safe a undertaken in 2019 related to fire safety working environment is before any injuries training, and a further 146 individuals occur – these are the Company’s Significant undertook emergency response training. Incident Reports (“SIRs”) and near miss Risk registers are kept across Ferrexpo’s event reports. In reporting lagging indicators, To ensure compliance with existing safety operations, which identify low-, medium- and the Company seeks to minimise the policies and state regulations, as well as the high-risk activities based on the severity and incidence of these injury events, whereas correct use of personal protective equipment likelihood of each event occurring, with risk tia uiesSsanbeEvrnet Supporting Communities Sustainable Environments Ethical Business with leading indicators, the goal is to increase (“PPE”), the Company conducted over registers maintained in each of the the reporting of these events, to show 13,000 behavioural safety audits in 2019 Company’s 15 departments. Risk registers increased awareness and understanding of (2018: 12,982). are updated regularly, for example when unsafe practices. Ferrexpo also includes the input of its new risks are identified, when technological The introduction of SIRs in 2017 has employees in discussions regarding safety processes change or at times of legislation enabled the Company to better identify and through the labour unions that operate at its change. correct unsafe practices before an injury site, and in particular the provision of PPE, occurs. In 2019, SIRs proposed a total of 210 including the type and specification of PPE, corrective actions to operational activities, which typically exceeds the government with 202 now completed, representing a ascribed standards for PPE. completion rate of 96%. Remaining actions Whilst safety is an area where the include: replacement of existing seat belts Company strives for continuous with red versions to improve visibility and improvement, the Company is proud to completion of lock-out tag-out systems report its excellent safety performance in across the Company’s processing facilities. 2019 with zero fatalities, and a LTIFR of 0.58, In 2018, a total of 158 corrective actions were the lowest level that the Company has identified through SIRs, with a completion achieved in this metric for a full year since rate of 87%. listing in 2007. An analysis of SIRs has revealed that the Creating a safe working environment is main areas of safety related risks in the driven by creating a safe attitude to work Zero Company’s operations are in working at over a number of years, as such an ZERO FATALITIES IN 2019 (2018: ONE) height and working with cargoes (both with increased awareness of safety procedures, eight reports each in 2019). After an increase faster reporting of near-miss incidents and in road traffic related incidents in 2018, subsequent learning from any events that do corrective actions have resulted in fewer SIRs happen, and improved PPE. Ferrexpo’s in this area in 2019. training centre provides the relevant training x Safety in the workplace 0.58 LOWEST LTIFR SINCE LISTING IN 2007 Appendices Fatalities x Lost Time Injury Frequency Rate (“LTIFR”) 0.94 TOTAL INJURY FREQUENCY RATE IN 2019, INCORPORATING LOST TIME AND FIRST AID INJURIES Total Recordable Injury Frequency Rate (“TRIFR”)

Significant Incident Reports (“SIRs”) Ferrexpo plc 22 Responsible Business Report 2019

Employee Engagement

low cost producer, sell to a world class customer portfolio, maintain a social licence to operate and to maintain appropriate capital allocation between a strong balance sheet, returns to shareholders and investment for growth. The employee surveys completed in 2017 and 2019 are an opportunity to ensure the Company has effectively communicated its purpose and priorities to its employees, and they also provide an opportunity for employees to provide input into the future direction of the Company. Through its employee engagement Engagement is a workplace approach that results process, the Company has developed an understanding of what matters most to its in the right conditions for all employees to give their employees, and is responding by creating best performance each day, be passionate and department-specific joint action plans, and is striving to enable employees to do more of committed t