Management Board Report on the activity of the JSW S.A. for 2012
3.4. Evaluation of factors and unusual events affecting the result
The Company's operations and results are influenced by several external factors, including primarily demand for and supply of coal as well as its market prices, FX rates and costs of production (such as costs of employee benefits, consumption of materials and energy and costs of third party services). There also exist other specific factors which in the Company's opinion affected the operating results in the past and which according to the Company's predictions may influence its results in the coming years. These primarily include demand for and supply of raw materials, economic crisis and its consequences, costs of production, acquisitions, executed investments and FX rates.
The main determinants affecting the mines' production capacity include the following:
difficult conditions of conducting mining operations; mining work is performed at large depths frequently exceeding 1,000 meters and the tectonics of the deposits is complex,
natural hazards which are inherent to such conditions, including in particular hazards related to methane, outbursts, crumps and climate,
priority of ensuring safe work conditions in JSW S.A.'s mines which is reflected in the application of comprehensive actions and prophylactic work aiming at reducing risks associated with the occurrence of natural threats.
The scale of current and expected difficulties is much greater than it was foreseen 5-10 years ago.
In 2012, the volumes of production in the Company’s distinct mines were different, depending on the encountered difficulties associated with natural hazards and mining and geological conditions in the areas of operation and preparation for mining. Production shortages in some of the mines were more than offset by surplus production in the Company’s other mines. Furthermore, in October 2012, a 24-hour strike organized by the trade unions was held, reducing the volume of production by 53 thousand tons and generating estimated losses of approximately PLN 17 million.
