The JSW SA Supervisory Board approved the Strategic Transition Plan prepared by the Company's Management Board. The document assumes the implementation of measures in four key blocks: improvement of mining efficiency, optimization of purchasing processes, rationalization of capital expenditures and optimization of support functions. All activities in these areas, according to the Strategic Transition Plan, are expected to generate an estimated PLN 8.5 billion in positive financial impacts for the Company by the end of 2027. Importantly, the Plan, adopted by the Company's governing bodies, does not generate the risk of JSW SA employees losing their jobs.
- PLN 8.5 billion is our target potential resulting from taking the measures set out in the adopted Strategic Transition Plan. This amount consists of an increase in the mining volume and margins, the introduction of a number of changes in procurement planning and materials management, the reduction of unnecessary capital expenditures, and the simplification and digitalization of support function processes in all Group companies - explains Ryszard Janta, President of the JSW SA Management Board.
The biggest effect is expected to come from the introduction of the "Efficient Mine" model, i.e. 15 initiatives, the introduction of which is expected to increase, among other things, the efficiency of mining machinery, and consequently the efficiency of mining crews. In addition, a number of measures have been proposed for reorganizing work and maximizing the use of machinery. Applying innovative solutions to prevent rockfall in longwalls and roadways. Increasing emphasis on the quality of development work, which will result in shorter longwall bay construction times in the future.
- The introduction of the Efficient Mine model will translate into the extraction of 14.5 million tons of coking coal. Through a series of transitional measures in building an 'Efficient Mine' model, JSW SA is expected to achieve an estimated PLN 4.2 billion in additional margin over a 3-year period - stresses Adam Rozmus, JSW SA’s Vice-President for Technical and Operational Matters.
An analysis of the challenges of current purchasing processes identified the need to, among other things, update IT tools and develop a purchasing strategy for the JSW Group. The Strategic Transition Plan proposes a series of optimization measures, the effect of which is expected to be visible as early as 2025.
- Aggregation of supplier contracts between units in both CAPEX and OPEX, extending the term of contracts and implementing framework agreements, changing the terms of bidding procedures, or updating the main purchasing tool, are just some of the initiatives that will ultimately save approx. PLN 600 million each year. These are measures that will have a multi-year, repeatable effect. In turn, reviewing and stopping unnecessary CAPEX spending and building a model for improving their supervision should have a one-off effect of PLN 1.5 billion in savings - says Remigiusz Krzyżanowski, JSW SA's Vice-President of the Management Board for Financial Matters.
Another pillar of the adopted Strategic Transition Plan will be the optimization of support functions at all JSW Group companies. Positive effects are to be achieved through synergies within the group. Currently, most of the support teams have significant overlap between Group companies generating their inefficient use.
The implementation of the Strategic Transition Plan's initiatives is necessary due to changing market realities - the European market's growing supply of low-cost coal from Asian and Australian mines and the associated price decline. Not insignificant for JSW SA's operations is also cheap coke from Indonesia, which is increasingly boldly conquering European markets.
The JSW Group is also faced with the need to make rapid efficiency and optimization changes due to rising mining costs, an unmotivating salary system, or declining mining volumes despite increased capital expenditures in 2022 and 2023.
- The initiatives laid down in the Strategic Transition Plan will require the involvement of all of us - employees of Jastrzębska Spółka Węglowa. I am sure that we all care about stabilizing the situation of the Company, which is the largest employer in the region and a strategic raw materials company in Poland and Europe - concludes Ryszard Janta, President of the JSW SA Management Board.
