Impact on the Group activities Y 2024

THE IMPACT OF THE ARMED CONFLICT IN UKRAINE ON THE GROUP'S ACTIVITIES

The war in Ukraine and sanctions imposed on Russia have caused a reorganization of the global coking coal market. Before the war in Ukraine, Russia’s share of coking coal imports to the EU was: approx. 10% for coking coal and approx. 30% for PCI coal. After the sanctions were introduced, Russian coal was diverted to the Asian market, mainly to India and China. The missing volumes in the European market were supplemented by supplies from Australia and the US. The sanctions imposed on Russia have not significantly reduced the supply of coking coal on global markets, but they have changed the direction of trade. At present, the share of imports of coking coal from Russia in the total Chinese imports increased from approx. 7% in 2016-2020 to approx. 25% in 2024.

Due to the wartime activities, coking capacity in Ukraine has changed significantly. The Ukrainian portal GMK Center estimates that between 2014 and 2024 Ukraine has lost about 64% of its coke production capacity and production declined by almost 85%. According to GMK Center’s data, coke production in Ukraine in 2024 amounted to approx. 2,7 million tons, compared to 9.5 million tons in 2021 and 17.6 million tons in 2013. The imports of coke to Ukraine in 2024 amounted to 0.7 million tons. This has resulted in the need to shift from production based on own raw materials to steel production based on imported raw materials.
It is difficult to estimate the long-term impact of the war in Ukraine on the European and global markets. Globally, the war in the territory of Ukraine has resulted in a less stable economic situation, higher inflation and rising interest rates. The sanctions imposed on Russia after its aggression against Ukraine, which led to a ban on coal exports to Europe, caused a market restructuring and a periodic price increase in 2022, but now the impact of these sanctions on coking coal prices has weakened significantly. The Group monitors the economic situation on an ongoing basis to assess its potential negative impact on the Group and take measures to mitigate this impact.

In addition to threats, the war in Ukraine also creates market opportunities for the Group's operations. The loss of self-sufficiency in raw materials by Ukraine opens up new markets for the Group. Coke is delivered on a regular basis and test deliveries of coking coal have also been made. Ukraine will need a considerable amount of coking coal and steel, among others to rebuild housing and social infrastructure destroyed by the Russian invasion.

Source: MANAGEMENT BOARD REPORT ON THE ACTIVITY OF JASTRZĘBSKA SPÓŁKA WĘGLOWA S.A.
AND THE JASTRZĘBSKA SPÓŁKA WĘGLOWA S.A. GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024