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Material factors relating to the Group’s development

Material factors relating to the Group’s development

The Group’s operations and its results materially hinge on demand and the evolution of coal and coke prices. They always exert an impact on the Group’s financial standing due to price volatility (the coal and coke markets are cyclical and are subject to numerous factors beyond the Group’s control). At the same time, FX volatility affects the evolution of coal and coke sales prices. Movements in prices and exchange rates are factors that exert the greatest influence on the Group’s financial standing. Their movement is noticeable in a very short period.

Moreover, extraordinary events stemming from the natural hazards present in underground mines may exacerbate the events and conditions that may affect performance (by diminishing output and elevating operating expenses).

  • External factors

    External factors

    • economic trends in local and global economy,
    • cyclicality in coal and coke consuming industries,
    • volatility of demand and prices for the Group’s products,
    • situation in the steel market,
    • level of imports of the products traded by the Group (coal and coke) to the EU and Poland
    • prices of sea freight facilitating the allocation of raw materials in the global market,
    • unplanned shutdowns of steel production capacity,
    • investments (or their absence) in new steel production capacities,
    • level of global structural excess supply of steel production capacities,
    • development of new technologies for steel production,
    • investments in PCI installations reducing coke consumption in the steel production process,
    • the policy pursued by large steel-making concerns to meet their raw material needs on their own,
    • high quality requirements of steel producers in respect of commodities used in their production,
    • investments (or their absence) in new production capacities,
    • dependence of merchant cokers on the shortfall in meeting the demand for coke in steel mills integrated with coking plants,
    • export potential of other producers and exporters of coking coal and coke in the world and in the EU,
    • increased share of spot transactions in the pattern of trade,
    • differences in mining costs of coking coal and coke production between the world’s largest producers,
    • volatility of PLN and other foreign currencies with respect to the EUR and USD,
    • changes to monetary, fiscal and tax policy; the level and volatility of interest rates, the rate of inflation, the availability of short and long-term debt financing and equity, credit risk,
    • rules on the protection of the environment,
    • changes to government policy in reference to the mining, coking and steel sector,
  • Internal factors

    Internal factors

    • cost of coal and coke production in the Group affecting their sale profitability,
    • quantity and quality of the coal mined and the coke produced by the Group,
    • investments resulting in increased efficiency and effectiveness of coal and coke production,
    • safety level in the production processes,
    • the intensity of occurrence of natural hazards and tectonics of the exploited seams,
    • extraordinary events which may disturb the production process,
    • failure rate of the mining machinery and equipment used in the production process,
    • relations with the social party and the possibility of a collective dispute.

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