COVID-19 hits the mining industry

JSW Group’s EBITDA, net of non-recurring events, stood at PLN 48.6 million in Q1 of this year. Total sales revenues amounted to PLN 1.9 billion and were 8.6% higher than in the last quarter, due to higher volume of coke sold.

- Slowdown in economic activity, softening steel demand, decline in steel production resulted in lower demand for the raw materials used to produce it in March and April. In the coming weeks we expect the economy to pick up, which will be visible first in sales of coke – believes Włodzimierz Hereźniak, President of the Management Board of Jastrzębska Spółka Węglowa. - What is important, in these difficult times we are able to continue the deliveries and fill all orders in accordance with the contracts signed.

In the first quarter of the year, coal production volume was approximately 4.1 million tons, up 4.4% from last quarter. Revenues on coal sales to external clients amounted to PLN 918.1 million. Coke production was much higher, at 0.8 million tons, which is 21.0% more than in the fourth quarter of 2019. Revenues on sales of coke and hydrocarbons in the period under analysis reached PLN 947.7 million and were 57.1% higher than in the previous quarter. In terms of capital expenditures in the JSW Group, cash expenditures amounted to PLN 782.3 million and were 46.5% higher than in the previous quarter.

- We are running a number of modernization investments in the coal preparation plant in the Knurów-Szczygłowice and Budryk mines. This will make it possible to ramp up the production of metallurgical coal, including type 35 or hard coking coal, which offers top notch commercial parameters. Additionally, the coking coal yield in the Knurów-Szczygłowice mine will increase to 80% and in the Budryk mine to 60%. The completion of all this work is slated for 2020 even though some process units have already been commissioned. This has enabled the mine to improve the coking coal yield this year with coking coal commanding higher prices on the market. After the completion of this investment, the mine will be poised to diversify its product mix and react flexibly to market demand – explains Artur Dyczko, Vice-President for Technical and Operational Matters.

The Jastrzębska Spółka Węglowa Group closed the first quarter of 2020 with the (net) result of negative PLN 208.9 million. During this period the average price of coking coal and coke decreased; in the case of coking coal the price fell by 3.5% to PLN 488.19 per ton. The average coke price decreased by 11% to PLN 801.05 per ton.

In the first quarter of this year, the JSW Group focused on further development and increase of production efficiency in all the segments of its business. The pandemic associated with the spread of COVID-19 coronavirus caused economic turmoil and significant restrictions on business activity, which affected the financial position of Jastrzębska Spółka Węglowa and the whole Group.

It is worth mentioning that the Crisis Management Team established in Jastrzębska Spółka Węglowa has taken a number of preventive measures and measures strengthening the safety of employees aimed at preventing the spread of coronavirus. Contingency plans containing measures ensuring continuity of business operations have been developed and adopted. As a result of the preventive measures, the Group incurred various costs associated with, among others, the purchase of tents, non-contact thermometers, protective suits, medical masks, gloves, disinfectants and disinfection equipment. In Q1 2020, these costs reached PLN 1.8 million.

At the same time, the JSW S.A. Management Board monitors on an ongoing basis the developments associated with the persisting effects of the spread of coronavirus and their impact on the operating activity of the Company and the JSW Group and takes all possible measures to minimize the adverse effects of the pandemic and ensure continuity of JSW Group’s operations.