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Turmoil on the commodity market

Financial performance of the JSW Group in 2020 was impacted by low prices of metallurgical coal and coke, difficult market situation in the mining industry caused by the COVID-19 pandemic in Poland and globally and the resulting decline in demand for raw materials.

photo: Dawid Lach

JSW Group generates revenues primarily on sales of metallurgical (coking) coal and coke. In 2020 the Group’s mines produced 14.4 million tons of coal and 3.3 million tons of coke. Coal sales to external customers reached 9.5 million tons and were nearly 2% lower than in 2019. Coke sales rose by as much as 24.4% up to 3.6 million tons.

The average price of metallurgical coal in the period stood at PLN 436.76 per ton, down 31.2% from the previous year. The average coke price also fell, by 30.1%, to PLN 777.75 per ton. Revenues on sales of coal to external clients amounted to PLN 3.5 billion, while revenues on sales of coke and hydrocarbons reached PLN 3 billion. The low prices of coal and coke had a significant effect on sales revenues, which amounted to PLN 7 billion in 2020 and were 19.4% lower vs. 2019.

What matters today is the company’s stable development, opening to global opportunities, looking for new potential, commitment to business partners and first of all to our employees.This is why the Management Board is taking measures to minimize the impact of the COVID-19 pandemic on the Group’s liquidity and improve its organizational, technological, production and commercial efficiency – professor Barbara Piontek, Ph.D, President of the JSW Management Board emphasized. – I am convinced that implementation of these plans will have a significant impact on the social and economic development of the whole region, putting JSW in the position of an unquestionable leader of the industry – she added.

In 2020, JSW Group’s EBITDA net of non-recurring events was negative at PLN 218.8 million. In the past year, the JSW Group incurred a net loss of PLN 1.5 billion.

The situation on the metallurgical coal and coke market is linked to the market of steel and metallurgical products. Because of the volatility of prices, they always have a significant effect on the financial standing of the JSW Group. The sales prices of coal and coke are also affected by volatility of exchange rates – noted Radosław Załoziński, Vice-President of the JSW Management Board for Financial Matters.

Last year, Jastrzębska Spółka Węglowa spent as much as PLN 3.2 million combating COVID-19. From the outbreak of the pandemic the JSW Group has taken a number of preventive measures strengthening the safety of employees. The implemented procedures helped to prevent the spread of coronavirus and ensured continuity of its business. The JSW Group continues to pursue its strategic and investment objectives to increase its shareholder value.

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On 3 September 2020, the European Commission (EC) relisted coking coal in the list of Critical Raw Materials for the EU. This confirmed the importance of coking coal for the development of European economy. Coal production in JSW mines contributes to reduction of European Union’s dependence on the imports of this raw material from other countries. The new list of critical raw materials will remain in effect for the next three years.

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