Management Board Report on the activity of the JSW S.A. for 2012

4.4. Issues related to the natural environment

In 2012, JSW S.A. continued environmental protection measures, while complying with the environmental conditions specified by the law and giving consideration to the needs of local stakeholders and the local community. JSW S.A. treats care for the natural environment as its Corporate Social Responsibility for the local community and not just as a matter of fulfilling the duties following from the application of the law. This was reflected in the JSW S.A. Corporate Social Responsibility Strategy for the years 2013-2015 ("CSR") developed in 2012, where environmental awareness is one of the main values by which the Company is guided.

Commitment to the protection of the natural environment, which is the main element of the company's sustainable development strategy, is regulated by the strict principles set forth in the JSW S.A. environmental strategy and by the principles of the Environmental Management System implemented in 2005 according to the ISO 14001 standard.

The Company’s responsibility for the natural environment is reflected by measures taken to minimize the adverse impact exerted by its operations on the environment, and to meet the environmental protection requirements stemming from the best available techniques (BAT), where executing them makes it possible to achieve a high overall level of environmental protection on the whole. By following best practices in this area the Company is taking action focused on constant oversight and monitoring while showing care for having the lowest possible volume of pollutants emitted into the environment, and taking all steps possible to utilize space and natural resources in an optimum manner.

In 2012, JSW S.A. continued to observe in its operations the principles adopted in the environmental strategy, thus raising its responsibility for the natural environment and social environment, thereby giving evidence of its conviction concerning the importance of consciously managing according to the principles of sustainable development. This purpose was served by the performance of the specified environmental protection tasks in the following area:

• protecting water against salination,
• rationally managing waste,
• curtailing greenhouse gas emissions into the air,
• minimizing the impact of mining operations on the land surface,
• conducting environmental education among employees.

In 2012, 362.1 thousand m3 of water from dewatering mines was used

Protection of water against salination

The key actions aimed at protecting surface water against salination included:

• reducing the quantity and load of salinated underground mine water released into surface sewage through segregation of water from draining mines and to using it to the greatest extent:
  • for the mines’ technological purposes (e.g. in the preparation plants),
  • preparing mixtures (with post-flotation waste and power plant waste) used in abandoned workings for fire prevention and to liquidate unnecessary mining pits. In 2012, 362.1 thousand m3 of water from dewatering mines was used,
• dosing unused water from draining the Borynia-Zofiówka, Jas-Mos, Krupiński and Pniówek mines into the Odra River using a hydroengineering method of water protection, i.e. the Olza retention and dosage system operated by PGWiR. In 2012, 6,104.3 thousand m3 of water from dewatering mines was used,
• improving the Olza retention and dozing system by continuing modernization and renovation work and achieving the necessary retention capacity of the settlement tanks,
• desalinating water from draining the Budryk mine in the Dębieńsko Desalinating Plant whereby there was no environmental impact.

Rational waste management

The overriding objective of the rational waste management is preventing the production of waste and limiting its detrimental effect on the human environment, life and health, using the best available techniques.

In 2012, the Company continued to fulfill the assumptions of the Strategy for managing post-production mine waste in Jastrzębska Spółka Węglowa S.A. approved in July 2008. Its main objective is limiting and minimizing the negative impact of mining waste on the natural environment and increasing revenues through their rational management. The main strategic directions of the Company's activities in this respect include:

• limiting the quantity of waste produced,
• increasing the amount of utilized waste in the underground pits,
• producing and selling crushed rock produced from waste,
• selling unprocessed waste,
• recovering coal from waste,
• managing waste in the facilities for managing mine waste on the surface.

In 2012 JSW S.A.’s mines produced a total of 10 567.9 thousand Mg of extraction waste, classified as non-hazardous and non-inert waste.

An increase in the amount of utilized waste in the underground pits was carried out through a systematic upgrade and development of waste injection installations. In 2012, about 165.8 thousand Mg mining waste was used along with power plant waste and salinated water to fill and seal abandoned workings of caving longwalls in order to prevent fire and methane dangers and liquidate unnecessary workings. In the summer months, there is insufficient supply of power plant waste to cover the possibilities and needs of the mines. Therefore, action has been taken to use, in addition to power plant waste and post-flotation waste, also crushed rock from the coal preparation plant. Intensifying action to produce crushed rock in the mines’ wash plants and to sell it provided for the optimum utilization of mining waste in highway and road construction, in civil engineering and hydro engineering projects. Crushed rock was produced in accordance with the technical approval given by the Road and Bridge Research Institute in Warsaw for a construction product called JSW Mining Rock Aggregate. Waste was subjected to a recycling process in installations of the Coal Preparation Plants in individual mines based on the decisions held by the mines. In 2012 about 160.1 thousand Mg of crushed rock was sold.

In 2012, JSW S.A. commenced activities and cooperation with experienced partners with the necessary technical and economic resources to build facilities to recover coal and crushed stone in the facilities for managing mine waste from the Krupiński mine and the Budryk mine. The decision to build and operate this installation will be made after conducting tests, preparing a feasibility study and conducting economic and financial return analyses.

In all the facilities for managing extraction waste, work was conducted to protect the environment against the negative effects of the accumulated extraction waste and to develop the areas affected by the mining operations to revitalize them and to reinstate their natural and scenic values that will serve local communities in the future, as maintained green areas and forests and sport and leisure facilities.

 All the mine waste management facilities are covered by technical and biological reclamation based on traditional and soil-free greening methods using FRISOL, to guarantee the rapid and sustainable achievement of the intended environmental effects. In 2012 some 5.5 hectares of surface area were planted with greenery, trees and bushes.

In conjunction with the necessity of adjusting the operations of mining companies to the standards of the mining waste act, all JSW S.A.’s mines, prior to 1 May 2012, obtained the required decisions and customized their mine waste management system to meet the requirements of this law.

The other waste produced in JSW S.A.’s mines is segregated and stored selectively in a way making it impossible for it to have an adverse impact on the environment and human health in accordance with the permits held in this area. Waste, which cannot be recovered or neutralized on site because of technological, ecological or economic reasons was steadily conveyed to the closest sites where it could be recovered or neutralized.

Curtailing greenhouse gas emissions

Curtailing greenhouse gas emissions in JSW S.A. was accomplished by making the maximum energy utilization of gas through methane drainage in mines. In 2012, the utilization ratio of methane from methane drainage in mines for electricity and heat production increased from 71% to 87% and the methane emissions decreased by approx. 24.1 million m3 as compared to 2011

Minimizing the impact of mining operations on the surface

In 2012 JSW S.A. achieved all of its extraction winnings by operating a longwall coal caving and retreat system determined by the geological structure of the deposits, their depth and economic considerations. In the mining areas of JSW S.A.’s mines, repairs of buildings, surface infrastructure and underground infrastructure when repairing the consequences of mining activity were conducted by doing the following:

• repairing damaged facilities and developed utility grids, based on the settlements reached with their administrators on their own or by the mines,
• refunding the costs of safeguards for newly-constructed buildings and construction prevention work in which the mines have built safeguards for facilities to increase their resistance to the impact exerted by mining activity,
• rectifying buildings with excess tilting in agreement with the injured parties,
• repairing damages to farmland and permanent green land and forest land by paying indemnification for losses in yields.

In 2012, 850 structures were repaired at an expense of PLN 87.2 million within the boundaries of the mining area of JSW S.A.’s mines which has a surface area of 214.94 km². The amounts incurred to remedy damages depend on the number of tasks implemented in response to the applications received from the injured parties. These tasks may include: securing buildings, repairing underground infrastructure and surface infrastructure, liquidation of flooding and regulation of watercourses. In curtailing and eliminating the impact exerted by mining activity on the earth surface, JSW S.A. will continue to conduct preventive activities and will repair mining damages, which will be agreed upon on an ongoing basis with the local governments and interested private persons.

Environmental usage fees and sanctions

The total environmental usage fees remitted by JSW S.A.’s mines were as follows in the period:

• from January to December 2011: PLN 1,001,656.88,
• from January to December 2012: PLN 1,061,506.37.

The growth rate of the fees in 2012 compared to 2011 was 106.0%. The increase in the fees resulted from the legislative increase of unit rates and increased production of coal. Broken down by environmental impact, in 2012 JSW S.A.’s mines incurred fees for dust and gaseous emissions of PLN 798,228.00, representing 75.2% of the total fees, and fees for water usage, waste and rainfall removal of PLN 263,278.37, representing 24.8% of all the fees. The fees for releasing salinated water into surface water are paid by PGWiR as the owner of the Olza collector, through which salinated water is released from the Borynia-Zofiówka, Jas-Mos, Krupiński and Pniówek mines, and for these mines they represent costs of services provided by external companies and in 2012 they were PLN 4,954.6 thousand.

In the Budryk mine, all the underground saline water is directed to the Dębieńsko Desalination Plant, and therefore the mine does not incur fees for their offload.

In 2012, JSW S.A. mines had no legally effective and due and payable decision on any fine for non-compliance with environmental regulations. In 2012, JSW S.A. mines had no legally effective and due and payable decision on any fine for non-compliance with environmental regulations. In September 2012, the Silesian Voivodship Environment Protection Inspectorate in Katowice set the amount of the fine for the Zofiówka section of the Borynia-Zofiówka mine, at PLN 341.28 per day, as the noise levels emitted from the area of the Zofiówka section of the Borynia-Zofiówka mine exceeded the levels set in the decision on permitted noise levels. The fine will aggregate in the period starting on 28 June 2012, i.e. the date on which the violation was found. Since the mine filed an appeal within the required deadline, the decision setting the fine amount has not become final and therefore it is not legally effective and payable.

Environmental education

In 2012 the Company continued to promote an environmental lifestyle among its employees and business partners, by conducting pro-ecology educational campaigns encouraging them to participate actively in the protection of the natural environment. To enhance environmental awareness among employees and the external environment, JSW S.A. has developed and made available an environmental leaflet providing information on actions taken by the Company to protect the natural environment.