Strategy

The JSW S.A. Strategy including the JSW Group’s subsidiaries for 2022-2030 (Strategy) lays out the directions for the JSW Group’s growth and identifies the strategic areas on which the JSW Group will focus to facilitate its long-term development and the creation of added value for stakeholders. It defines the strategic objectives whose parameters have been determined using the current market position of the business and market forecasts.

JSW Group’s mission and vision:

Mission - Producing a strategic raw material to transform the world.

Vision - Leading supplier of raw materials to the steel and chemical industries.

JSW S.A. emphasizes its long-term commitment and pursuit of efforts to achieve sustainability.

Overriding objective:

Grow the JSW Group’s value.

The JSW Group’s strategic goals for 2022-2030:

• Reducing the JSW Group’s carbon footprint by 30% by 2030 versus 2018 (Scope 1 and 2).
• Curtailing our impact on the environment - Striving to achieve climate neutrality by 2050.
• Average EBITDA margin of at least 25% in 2022-2030.
• Securing the coking coal resource base - development investments to open up new deposits and new mining levels.
• Share of coking coal production above 90% from 2026.
• Diversifying revenue:
  - Generating 10% of revenue on average on the sale of products unrelated to the core business in 2022-2030,
  - Diversifying revenue (in terms of products and geographically).
• Product quality - production and sale of coking coal and coke with stable and desired quality parameters.
• Safe JSW – continue enhancing our high safety standards.
• Efficient JSW Group - optimize the mix and level of costs (MCC, CCC).

Most important development plans up to 2030:

• Securing the coking coal resource base through development investments to open up new deposits and new mining levels.
• Switching to production of mainly coking coal - increasing the share of coking coal production to over 90% from 2026 (coal with stable and high quality parameters).
• Optimization efforts in the mining and coking segments and activities improving integration between these two operating segments.
• Maintaining coke production capacity.
• Ensuring JSW's energy independence (security) by developing generation capacity to a level ensuring maximum satisfaction of the JSW Group's needs in terms of energy sources, i.a. by using methane as an accompanying mineral in the coal mining process and coke oven gas generated during coke production for energy purposes.
• Growing the JSW Group’s profitability.
• Implementing innovative solutions.

The Strategy for 2022-2030 anticipates that the JSW Group will incur capital expenditures of approximately PLN 22.4 billion. The capital expenditures earmarked for investments in the coal segment will total roughly PLN 17.8 billion and will account for about 80% of the JSW Group’s total capital expenditures.

In the coke segment, capital expenditures of approximately PLN 2.8 billion are planned to be incurred in 2022-2030. The planned CAPEX in 2022 and 2023 will be the highest during this period and will in total account for approximately 40% of the planned investments until 2030. In 2022-2023, the key investments in JSW KOKS will involve the modernization of battery no. 4 and the construction of a power unit at the Radlin Coking Plant.

Operational assumptions:

• In accordance with the strategic objectives for the mining segment, the JSW Group will strive to increase the annual hard coal run rate from approximately 14.5 million tons in 2022 to 16.1 million tons in 2030.
• In the mining segment, the model calls for focusing on mining processes to ramp up coking coal production levels steadily, including in particular type 35 coal as it commands the highest prices in JSW S.A.'s product mix, thus contributing to higher profitability of the Group's product portfolio.
• The increase in the share of coking coal production to over 90% from 2026 is related to modifying the production profile as a result of implementing the Company's operating model positing a shift towards producing mainly coking coal, inter alia, through investments completed in coal preparation plants.
• Average annual roadway excavations in JSW in 2022-2030 should exceed 77 thousand running meters.
• Sustainable volume of coke production and sales at a stable level of about 3.6 million tons per annum.

Major objectives of the Company’s financing strategy:

• Ensuring a stable financing structure by striving to have equity achieve and maintain a level of at least 50% of total liabilities and equity, and cover non-current assets with fixed capital, too (coverage ratio > 1).
• Taking actions to ensure the amount of financing which allows for maintaining continuity of operating and investing activity processes at the assumed levels.
• Aiming to maintain a cash buffer within the Group to ensure that key liabilities are met, including in particular payroll liabilities; the buffer will be used during periods of drastic declines in sales revenues.
• Setting up a stabilization fund in periods of favorable coal market conditions so as to provide for an appropriate level of financial liquidity during coal market downturns - or generating negative cash flow, which will make it possible to maintain financial liquidity until cost-side actions are put in place to adapt to the prevailing price conditions on the marketplace.

Environmental protection goals

For years the JSW Group has been taking actions to protect the environment and the climate, such as reducing greenhouse gases. The current strategy continues and develops the previously adopted direction.

The basis for the Environmental Strategy, which is part of the business strategy, involves precisely defining the JSW Group’s role in the environmental, energy and climate transition of Poland and the European Union as our response to the changes transpiring in the external market environment in terms of the regulatory and technology framework.

One of the material parts of the adopted Strategy is countering climate change and striving to achieve climate neutrality by 2050.

The medium-term goal is to reduce the carbon footprint (in Scopes 1 and 2) by 30% by 2030 versus 2018 in line with the <2⁰C pathway of the Paris Agreement.

An analysis of climate risks and opportunities and their impact on the JSW Group's business was also conducted.

The largest potential adverse impact on JSW's current business is posed by the regulatory and market transition risks inherent in the ambitious requirements to curtail emissions and the need for the transition and diversification of the business towards low-carbon technologies. The opportunities associated with developing energy generation sources offer the greatest potential positive impact because they will facilitate energy self-sufficiency and the development of low and zero-emission technologies. Accordingly, the JSW Group’s investment and development plans incorporate actions to benefit the environment and the climate.

Since methane as an accompanying mineral in the coal extraction process represents 74% of the JSW Group’s carbon footprint, a methane emissions reduction program (MERP) by 2025 has been devised. It takes into consideration the program to use methane commercially that has been pursued to-date and the new efforts needed to achieve the intended level of methane capture of approximately 50% and its commercial utilization of up to 95%.

Additionally, measures have been planned for further optimizing electricity consumption and enhancing energy efficiency, the development of own RES capacity and ratcheting up the share of "green energy" in the volume of energy purchased on the market. Plans are also in place to undertake innovative developmental initiatives to reduce ventilation air methane (VAM) emissions.

Four key areas of action to benefit the environment and the climate:

Air protection and reducing emissions:

• Reducing greenhouse gas emissions in accordance with the Paris Agreement.
• Bringing facilities into compliance with environmental emission requirements of best available techniques (BAT).
• Further optimizing energy consumption and utilization throughout the JSW Group's operations.
• Successfully implementing the investment projects planned in the JSW Group, covering the main sources of emissions until 2030 and continuing the development of innovative emission reduction technologies for further neutralization until 2050.
• Diversifying JSW Group's operations based on low-carbon and taxonomic products and services.

Water conservation and biodiversity:

• Continuing water conservation efforts.
• Protecting surface water affected by the JSW Group’s discharge of salty mine water.
• Executing investment projects to develop and optimize infrastructure operations to support more effective water conservation.
• Implementing projects to restore biological and natural diversity in areas affected by the JSW Group’s operations.

Striving to implement a Circular Economy:

• Continuing activities consistent with the priorities of the circular economy (CE) and the 5R principle (Refuse, Reduce, Reuse, Repurpose, Recycle).
• Reducing the quantity of waste generated.
• Planning and developing better waste management practices.
• Producing and selling mining rock aggregates.

Land reclamation:

• Reclamation following the progress of the work front.
• Repairing mining damage.
• Inventory-taking of transformed and post-industrial sites, development of projects for their revitalization or use to build infrastructure, e.g. RES.