Management Board Report on the activity of the JSW S.A. for 2012
3.2.6. Mining cash cost
The table below presents the mining cash cost and its calculation methodology in 2012 and in 2011.
2012
2011(1)
(restated data)
Growth rate
Total costs by type
8,230.6
6,153.1
133.8%
Cost of sales
(259.7)
(127.0)
204.5%
Capitalization of pits
(487.2)
(288.6)
168.8%
Employee share ownership plan
-
(293.0)
Depreciation
(806.0)
(685.8)
117.5%
Value of materials and merchandise sold
(1,854.5)
(51.6)
3,594.0%
Other costs of the period not applicable to coal production
(62.4)
(56.0)
111.4%
Mining cash cost (in PLN millions)
4,760.8
4,651.1
102.4%
Coal extraction (in millions of tons)
13.5
12.6
107.1%
Mining cash cost (in PLN/ton)(2)
353.64
368.84
95.9%
(1) In connection with the restatement of data in the statement of comprehensive income for 2011, the Company updated its calculation of mining cash cost.
(2) To achieve greater accuracy, the value of mining cash cost per ton of coal was calculated based on values expressed in thousands of PLN and thousands of tons.
The methodology of calculation and presentation of mining cash cost reflects the cost from the point of view of cash consumption regardless of the period in which it was incurred. The Company calculates mining cash cost by subtracting costs not directly associated with the production of coal and costs not permanently affecting the Company’s financial flows from all costs incurred in the period.
Mining cash cost in 2012 stood at PLN 4,760.8 million, i.e. was PLN 109.7 million (2.4%) higher than in 2011. The increase in mining cash cost was caused primarily by the following factors:
increase in personnel costs whose main reasons are described in Item 3.1.5,
increase in costs of third party services, including mostly:
drilling and mining services, among other reasons due to a 1,840 m increase in the length of mined pits requiring additional drilling and mining services and a greater number of reconstructions,
other services, including coal dumping services, services related to the prevention and elimination of threats, IT services and costs of tests, approvals and measurements,
overhaul services,
increase in costs of consumption of materials and energy, mainly due to an increase in heading works, a greater length of reconstructions by 1,634 m and an increase in unit fees for electricity, heat and cooling.
On a stand-alone basis, mining cash cost in 2012 was PLN 353.64 per ton, i.e. 4.1% higher than in 2011 as a result of both a nominal increase in expenditures on coal production by 2.4% and a greater production of coal in 2012 by 7.1%.
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