Despite the drastic decline in coal and coke prices in 2012 compared to the record-breaking year of 2011, the company recorded a robust financial result, which was achieved by maintaining coal and coke production at a relatively high level, pursuing an active commercial policy and by acquiring new customers, primarily on new markets. A positive result was achieved in the face of constant deterioration on the European steel market and the economic slowdown that particularly affected our continent.
“Investment, operational efficiency and constant pursuit of our strategy characterize the company in 2012. For us it was a very difficult and demanding time of actively grappling with the reality of crisis in the European economy and the steel sector’s problems. Despite the dramatic decline in coking coal and coke prices we generated a very robust result and we surpassed the intended level of production”, says Jarosław Zagórowski, CEO of JSW S.A. He adds “The beginning of this year has produced some signals of revival; we are selling more and we are constantly reducing inventories. But we are diligently observing the market and price fluctuations to be able to react suitably. Just as in 2012, in 2013 we will certainly not repeat the record-breaking results of 2011. At that time, the Polish mining sector, having regard for record-breaking coal and coke prices also produced record-breaking earnings.”.
The Group’s coal production in 2012 was 13 462.4 thousand tons, which is 6.8% more than in 2011 when production was 12 610 thousand tons. Total coal sales revenues to external customers in the four quarters of 2012 were PLN 4 134.9 million and were down by 16.4% compared to the same period in 2011. External customers sourced 8 196.9 thousand tons of coal, which was 2.6% less than in 2011 when they bought 8 418.4 thousand tons. In turn, in 2012 Capital Group customers sourced 4 476.1 thousand tons, which was 11.3% more than in 2011 when they bought 4 021.5 thousand tons.
In comparison to the four quarters of 2011, coke production in the period from January to December 2012 surged up by 23.5%, net of production at KKZ and WZK. Sales measured in tons in this same period were up by 24.2% (net of sales at KKZ and WZK). Coke sales revenues to external customers in this same framework in 2012 were PLN 4 307.9 million and were up by 2.1% compared to 2011 (net of sales at KKZ and WZK).
In 2012 the Group increased capital expenditures, especially to procure coal production from new seams and to improve the level of safety for miners working under the surface. Nearly PLN 1 816.7 million was spent on investments, accounting for 22.9% growth compared to 2011 when capital expenditures were PLN 1 478.6 million.
The key events in 2012 concerning the Group’s long-term development and maintaining the pace of production included obtaining a concession for the Pawłowice 1 deposit, extending the period of mining to 31 December 2051; opening the Bzie-Dębina 2 – Zachód and the Bzie–Dębina 1 – Zachód deposits with access to approximately 100 million tons of recoverable coal reserves as well as an application for a new concession to extract coal and methane until 2030 at KWK Krupiński with access to 48.8 million tons of recoverable coal reserves. As a consequence of steadfastly pursuing the growth strategy in 2012, recoverable reserves grew by 74.6 million tons. The current status of the resource base in the company’s mines shows 567.6 million tons of recoverable coal reserves.
The company solved the method of shaping wages in a sustainable, responsible and financially-safe manner. The agreement with the trade unions has implemented a mechanism for restating employee benefits that is linked to the real inflation rate and that gives employees the certainty of pay raises according to specific principles.
The JSW Group is the largest producer of high quality hard coking coal and a leading producer of coke in the European Union measured by production volume. The JSW Group’s core activity entails producing and selling coking coal and steam coal as well as producing and selling coke and coal byproducts. The coal mined by the JSW Group, primarily including coking coal is used in Central Europe by local steel mills owned by international steel manufacturers and regional public utilities. The high quality coke produced by the JSW Group is also sold on global markets. The major customers for the JSW Group’s products are located in Poland, Germany, Austria, the Czech Republic, Slovakia, Romania and Hungary.
