Geological and market conditions adversely affected the sales volume and financial result in the coal segment.
JSW managed to curtail coking coal price volatility to $1 USD per ton while the benchmark price fell by $ 9 USD in this period.
JSW’s steam coal price declined in line with market trends. During Q1 2014 the steam coal price in ARA ports fell by $ 5 USD per ton, namely 6% compared to the final quarter of 2013. JSW’s steam coal price declined by $5 USD per ton in this same period, representing a 5.3% drop compared to Q4 2013. The situation in the coke segment was slightly better. The falloff in sales was less pronounced while the price remained virtually unchanged compared to the level recorded in Q4 2013.
In Q1 2014 EBITDA was PLN 210.3 million. That is approximately 38% lower than in Q4 2013. The major drivers were production and sales volumes and the sales prices for steam and coking coal, which were down from last year. The net loss was PLN 88.5 million.
“This year we want our coking coal output to surpass 10 million tons. We have no doubt that this year is a challenging period for the entire mining industry, but at the same time it is a time for making decisions. That is why we are steadfastly expanding our resource base and striving to make efficiency gains to be able to take advantage as soon as possible and to the greatest possible extent when better conditions emerge”, says Jarosław Zagórowski, CEO of JSW. “We will secure access to high quality coal thanks to the launched process to acquire the Knurów-Szczygłowice mine. In that manner we will expand JSW’s prospective resource base by approximately 65% and our production capacity by roughly 30%, up to a target run-rate of 18.5 million tons per year.”
The Group’s coal production in Q1 2014 was 3 177.7 thousand, making it 9% lower than in the previous quarter as a result of how the coal lies in the deposit. In 2014 JSW nevertheless intends to extract more coal than in 2013, namely in excess of 13.6 million tons. The coke segment’s production in Q1 2014 was 1 015.6 tons making it 1.6% higher than during the last three months of 2013.
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The JSW Group is the largest producer of high quality hard coking coal and a significant producer of coke in the European Union measured by production volume. The JSW Group’s core business entails the production and sale of coking coal and steam coal as well as the production and sale of coke and hydrocarbons. The coal mined by the JSW Group, 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 the global market. The JSW Group’s major clients are situated in Poland, Germany, Austria, the Czech Republic, Slovakia, Romania and Hungary.