Our capitals
JSW Group's production capital mainly consists of tangible assets - mine infrastructure, mechanical coal processing units and coking plants, as well as infrastructure for support functions: transport, water and sewage, desalination, energy and IT systems, etc. Production capital also includes corporate governance and management systems at each company.
Key data:
| 2019 | 2018 | |
|---|---|---|
| mining facilities that extract hard coal | 5 | 4 |
| coking plants | 3 | 3 |
| mechanical coal processing facilities | 6 | 6 |
| production facility for composite solid fuels | 1 | 1 |
| number of concessions for mining of hard coal and methane as associated mining products | 16 | 11 |
Capital management:
- launch of a Bolter-Miner at KWK Budryk,
- launch of longwall complex operations,
- construction of level 1120m at KWK Borynia-Zofiówka-Jastrzębie Ruch Borynia,
- construction of level 1080m at KWK Borynia-Zofiówka-Jastrzębie Ruch Zofiówka,
- construction of level 1290m at KWK Budryk,
- construction of level 1050m at KWK Knurów-Szczygłowice Ruch Knurów,
- construction of level 1050m at KWK Knurów-Szczygłowice Ruch Szczygłowice,
- depth extension of shaft II and extension of vertical mine hoist at KWK Knurów-Szczygłowice Ruch Szczygłowice,
- expansion of level 1000m and deepening of shafts IV and III at KWK Pniówek,
- modernisation of coke oven battery 4 at Koksownia Przyjaźń,
- optimisation of on-going optimisation of thin deposit sections.
Defined risks:
- risk concerning operational activities and production planning,
- risk associated with production capacity, efficiency and productivity,
- production restrictions and management of mining machine and equipment park,
- risk associated with production continuity and management of incidents,
- risk associated with acquiring and managing coal resources.
Results:
- 14,762 thousand tonnes of coal produced,
- 3,169.7 thousand tonnes of coke produced,
- 6,619 tonnes of ecological fuel VARMO produced,
- approx. 25 active longwalls, including 6 launched in 2019,
- 5 new concessions secured.
Impact of production capital on other capitals:
- financial capital - In 2019, the Group focused on development and growth in productivity across all of its segments, generating the following revenue from sales:
PLN 4,771.1 million
in the coal segment
3,545.0 million
in the coke segment
355.7 million
in other segments
With the funds raised and generated, JSW Group can conduct operating activities and invest in future projects. The Group's total expenditures in 2019, amounting to PLN 2 399.7 million, include PLN 2 021.6 million on tangible assets, PLN 366.7 million on leases under IFRS 16 and PLN 11.4 million on intangible assets. Investment expenditures in the respective segments were as follows:
2,050.7 million
in the coal segment
115.0 million
in the coke segment
234.0 million
in other segments
- intellectual - Using modern IT tools to obtain better knowledge, optimise production costs and increase safety is JSW Group's response to the emergence and development of industry 4.0 in global mining. Using the latest technologies is the right direction that will not only ensure JSW Group's optimal development but also set trends for the entire mining industry. Rationally introduced innovative solutions will help us in developing our core busine.
- human - Mining is increasingly frequently faced with the generational gap challenge - a lack of human resources. The ever greater digitalisation and automation in the extractive sector does not eliminate the necessity to hire qualified staff. To counter this problem, JSW Group is undertaking activities and projects, including agreements with schools offering mining education and the award of scholarships to the best students.
- natural - The mining industry contributes to the degradation of local natural environment, including through disrupting the landscape or emitting pollution. Underground mining activities are accompanied by deformations on the surface, which may cause damages in private and public property and disrupt hydrological balance. Add to this storing waste rock that accompanies coal and is extracted together with it at the surface, noise associated with mining operations and dust and gas emissions, especially in the case of coking plants. The Company's on-going activities intended to minimise its negative impact are a domain of strategic operational management and are meant to ensure environmental safety for nature and the residents of local communities.
Responsible operations based on the highest environmental, safety and product quality standards and consistency in implementing environmental tasks constitute priorities for JSW Group. The mining industry contributes to the degradation of local natural environment through disrupting the landscape or emitting pollution. The Group's on-going activities intended to minimise its negative impact are a domain of strategic operational management and are meant to ensure environmental safety for nature and the residents of local communities.
Key data:
| 2019 | 2018 | |
|---|---|---|
| expenditures on environmental protection | PLN 223.2 million | PLN 164.7 PLN million |
| total water consumption | 22.22 million m3 | 21.62 million m3 |
| quantity of sewage | 23.8 million m3 | 23.1 million m3 |
| carbon footprint | 7.92 Mt CO2e | 8.22 Mt CO2e |
Capital management:
- engaging in activities related to the rehabilitation and development of land transformed as a result of mining operations,
- engaging in activities intended to reduce gas emissions and waste, including salted waters,
- increasing energy efficiency and lowering carbon footprint,
- development a road map for impact of climate change on JSW Group's activities,
- development an extractive waste management strategy,
- development of an energy strategy,
- launch of construction on a power generating unit with cogeneration capacity of 28 MWe and 37 MWt, fuelled with coke oven gas,
- cooperation with universities in order to increase the value of land degraded or damaged by mining activities,
- striving to become self-sufficient energy-wise.
Defined risks:
- risk associated with particulate matter and gas emissions,
- risk associated with environmental protection regulations,
- risk associated with improper handling of hazardous substances and materials,
- risk associated with mining damages on the surface,
- risk associated with the use of alternative energy sources/fuels in the energy industry,
- risk associated with the cost of energy in the long term,
- risk associated with adapting JSW's activities to EU's climate policy,
- risk associated with increasing the share of renewables and other coloured certificates,
- waste and by-product management risk,
- risk associated with threats to the water environment.
Results:
- 1.6 million m3 of brine processed and approx. 67 thousand tonnes of high-quality edible salt produced,
- PLN 59.5 million spent on investments in environmental protection,
- 6.9ha of land subject to biological rehabilitation,
- 4.22 million m3 of recovered water,
- protection of rivers at a 150-km section thanks to the "Olza" retention and discharge collector system,
- entry into Geo-metan II program for acquiring methane from deposits prior to extractive operations,
- more than 1 billion m3 of coke oven gas used for energy generation purposes,
- more than 20 million m3 of gas from mine methane drainage used for energy generation purposes.
Impact of natural capital on other capitals:
- financial - JSW Group's operations contribute to the degradation of the natural environment, including land deformation, which may lead to damage of public and private property. Moreover, the specific nature of our business involves high environmental costs, which include: investments, emission allowances, environmental protection expenses, fees for use of environment and water services.
- production - The resource base is expected to be developed within the concession deposits at all of the mines. The effective extraction of coking coal requires the use and availability of appropriate equipment and use of the latest technologies that ensure safety for miners. JSW Group has joined the Geo-metan II program, which is aimed at capturing methane from the deposit prior to coal extraction, leading to not only an environmental effect in the form of maximal economic capture of methane but also enhanced employee safety.
- intellectual - out of respect for natural resources, JSW Group seeks out technological solutions to limit its negative impact on the environment, including by using coal derivative substances such as coke oven gas, which will in the future be used by the Group to produce a clean fuel - hydrogen.
- human – through initiatives focusing on training and education in environmental protection and climate as well as through research, development and innovation efforts, JSW Group strives to reduce the impact of its operations on the natural environment.
- social - considering the fact that the Group's operations may be burdensome not only for the environment but also for its closest surroundings, JSW Group is actively engaged in dialogue with local communities.
Intellectual capital is treated as all research and development competences at JSW Group - across specific subsidiaries and at the R&D-dedicated unit - JSW Innowacje. We have strong R+D+I and laboratory infrastructure. A constantly evolving network of relations with companies from the domestic and global industry and with the scientific world ensures a continuous flow of knowledge and new technology awareness at JSW. This cooperation has resulted in a range of innovative projects and applied solutions.
Key data:
Knowledge and competences
of JSW Group's employees
71
on-going R+D+I projects
R+D+I strategy
Capital management:
- greater integration of IT systems,
- digitalisation of key processes in business strategy areas,
- strategic project management - Methodology for Program and Project Management,
- cooperation with universities and technological businesses, both domestic and foreign,
- development of new product concepts offering potential for additional revenue,
- engaged in technical dialogue with largest hard coal producers in Poland.
Defined risks:
- risk associated with JSW/JSW Group growth and development strategy through mergers and acquisitions,
- risk associated with identification of strategic objectives,
- risk associated with evaluating potential investments and strategic transactions,
- risk associated with project structure and implementation,
- risk associated with implementing development projects.
Results:
- PLN 65 million spent on the research and development area,
- 45 projects covered by Methodology for Program and Project Management, worth PLN 2.5 billion,
- net book value of intangible assets: PLN 117.3 million,
- First stageloader manufactured by Jastrzębskie Zakłady Remontowe,
- 228 people trained as part of the Project Management Academy,
- member of International Project Management Association Polska (IPMA),
- International Mining Forum with 800 participants.
Impact of intellectual capital on other capitals:
- financial - In accordance with the financial plan included in the strategy, JSW Group will provide annual funding for the R+D+I area's objectives, which will be allocated to projects that are deemed as top priority. In 2019, JSW Group spent PLN 65 million on research and development. To maximise effects and increase scale in the innovation area, the Group is also using external financing from institutions such as: EU funds (Silesian Voivodship's Regional Operational Programme), National Centre for Research and Science Development.
- production - Using modern IT tools to obtain better knowledge, optimise production costs and increase safety is JSW Group's response to the emergence and development of industry 4.0 in global mining. Using the latest technologies is the right direction that will not only ensure JSW Group's optimal development but also set trends for the entire mining industry. Rationally introduced innovative solutions will help us in developing our core business.
- human - The Group makes every effort to ensure that all employees possess the knowledge necessary to perform their tasks and that, by developing skills, they represent a high level of motivation, effectiveness and use of their potential so that the tasks they perform support our business objectives not just today but also in the future. Employees have an opportunity to raise their professional qualifications by attending post-graduate studies, industry conferences, seminars or symposiums as well as training organised by external entities and by participating in training and courses organised by the employer.
- natural - The Group continued its integrated environmental protection activities, focusing on exercising continuous oversight and monitoring as well as concern for maximally reducing the scale of pollution into the environment as well as all steps essential to optimally manage space and natural environment resources. The applied solutions and technologies contribute to the transformation towards a circular economy, which is an essential element in creating a low-emission, resource-efficient, innovative and competitive economy that can drive changes in the economic development model, as outlined by the European Commission. The directions defined in the Strategy in the area of using methane for generating electricity, organisational and product carbon footprint, management of post-industrial land, management of salted mining water and manufacture of products with the use of extractive waste for application in infrastructural investments constitute an element of a sustainable business model and will contribute to achieving circular economy priorities and counteracting climate changes.
- social - Another dimension of JSW Group's cooperation with local communities is the increasingly extensive work with local authorities in the towns and municipalities where its companies operate on mining education. From JSW Group's point of view, this is a solution that secures an influx of young personnel and thus counteracts the generational gap risk. This cooperation is intended to raise the quality of education for young people by offering internships and support for various types of educational projects, which results in potential for the Company's development and ensures optimal conditions for JSW Group's effective and efficient operations. Aside from JSW, other JSW Group subsidiaries are undertaking such cooperation, including CLP-B, JSK and JSU.
JSW Group's financial capital includes all sources of financing for operating activities, including mining and coking operations.
It consists of:
- equity capital from owners, lenders and bondholders,
- financial results,
- other non-current and current liabilities.
With the funds raised and generated, JSW Group can conduct operating activities and invest in future projects, including financing for its research and development activities.
One of our objectives is to generate an average EBITDA margin in 2020-2030 of at least 25% and generate on average 10% of revenue from the sale of products not related to our core business.
Key data:
PLN 14,926.4 million
Balance sheet total
PLN 8,851.5 million
Equity
PLN 11,565.1 million
Non-current assets
PLN 3,361.3 million
Current assets
4.4 %
Return on assets
7.3 %
Return on equity
Capital management:
- cooperation with the State Treasury, a strategic investor,
- communication by phone and email with minority shareholders, other capital market participants and lenders,
- searching for the most effective forms of financing in a given period,
- striving to maintain a cash buffer at the Group and a stabilisation fund in assets during good conditions on the coal market,
- effectively managing the Group's financial risk, including currency risk and interest rate risk, by implementing appropriate management policies,
- introduction of a cash management system - real cash pooling.
Defined risks:
- commodity price risk,
- currency risk - changes in PLN exchange rate vs EUR and USD,
- interest rate risk,
- credit risk concerning financial receivables,
- liquidity risk and working capital management risk.
Results:
- Revenue from sales: PLN 8,671.8 million,
- Operating profit: PLN 905.6 million,
- EBITDA: PLN 1,939.5 million,
- EBITDA margin: 22.4%,
- Net profit: PLN 649.6 million,
- Cash flows from operating activities: PLN 1 140.3 million,
- member of associations:
- The Accountants Association in Poland,
- Institute of Internal Auditors,
- Polish Association of Listed Companies,
- Polish Corporate Treasurers Association.
Impact of financial capital on other capitals:
- production capital - In 2019, the Group focused on development and growth in productivity across all of its segments, generating the following revenue from sales:
PLN 4,771.1 million
in the coal segment
PLN 3,545.0 million
in the coke segment
PLN 355.7 million
in other segments
With the funds raised and generated, JSW Group can conduct operating activities and invest in future projects. The Group's total expenditures in 2019, amounting to PLN 2 399.7 million, include PLN 2 021.6 million on tangible assets, PLN 366.7 million on leases under IFRS 16 and PLN 11.4 million on intangible assets. Investment expenditures in the respective segments were as follows:
PLN 2,050.7 million
in the coal segment
PLN 115.0 million
in the coke segment
234.0 million
in other segments
- intellectual - In accordance with the financial plan included in the strategy, JSW Group will provide annual funding for the R+D+I area's objectives, which will be allocated to projects that are deemed as top priority. In 2019, JSW Group spent PLN 65 million on research and development. To maximise effects and increase scale in the innovation area, the Group is also using external financing from institutions such as: EU funds (Silesian Voivodship's Regional Operational Programme), National Centre for Research and Science Development.
Employees also have an opportunity to raise their professional qualifications by attending post-graduate studies, industry conferences, seminars or symposiums as well as training organised by external entities and by participating in training and courses organised by the employer.
- human - As the largest employer, JSW is well-known in the region. JSW plays a key role in providing a safe and stable workplace to employees. As of 31 December 2019, the Group had 30,629 employees. Group companies have separate rules for remunerating employees. The level of remuneration at the Group's entities in 2019 ranged between PLN 3,821.55 and PLN 10,808.05.
- natural - The mining industry contributes to the degradation of local natural environment through disrupting the landscape or emitting pollution. Striving to minimise its adverse impact on the natural environment, JSW Group spent 223.2 million on environmental protection in 2019, including PLN 194.8 million at JSW.
- social - JSW Group is very strongly embedded in the region in which it operates. The mining industry is also a key employer and a key payer of taxes and other fees related to concessions and deposit exploitation. These funds go to local budgets, making development and investments possible. JSW Group is also a sponsor and patron of local sports teams or events of importance to the local community.
We realise that people are a company's greatest asset and have a decisive meaning for its success. We strive to provide optimal conditions for professional and personal development for our employees. We invest in personnel already at the stage of shaping relations with universities and vocational secondary schools. This is why safety and health protection at JSW are considered equally as important as production levels and financial results.
Key data:
| 2019 | 2018 | |
|---|---|---|
| people employed at JSW Group | 30,629 | 28,268 |
| expenditures on occupational health and safety | PLN 979.7 million | PLN 834.4 million |
| percentage of managers hired from local community | 55.33% | 52.21% |
| number of accidents at the Group | 412 | 404 |
Capital management:
- surveys of organisational culture and employee satisfaction,
- implementation of a code of ethics along with feedback mechanisms,
- regular dialogue with trade unions,
- high standards in occupational health and safety,
- fire-fighting and occupational health and safety training in VR (virtual reality) workshops,
- on-going monitoring of employee turnover and employment structure,
- continuous employee development programs,
- cooperation with educational centres,
- organisation of preventive health campaigns for employees.
Defined risks:
- Risk of succession and placing key jobs,
- Risk associated with employee availability, allocation and development of human resources and subcontractor availability,
- Risk associated with assigning competences and the effectiveness of delegating responsibilities,
- Risk associated with work-related accidents.
Results:
- 29.1 hours of training per employee at JSW on average,
- total number of new hires - 2,608,
- total number of departures - 1,270,
- number of employees who took parental leave – 150,
- number of employees returning to work after parental leave ended – 94,
- awarded the title "Employee-Friendly Employer" for re-building the company's credibility, respecting the Collective Labour Agreement and caring for employees,
- launch of campaign concerning prostate cancer prevention and early detection - free examinations for JSW employees financed by JSW Foundation.
Impact of human capital on other capitals:
- financial - As the largest employer, JSW is well-known in the region. JSW plays a key role in providing a safe and stable workplace to employees. As of 31 December 2019, the Group had 30,629 employees. Group companies have separate rules for remunerating employees. The level of remuneration at the Group's entities in 2019 ranged between PLN 3,821.55 and PLN 10,808.05.
- production - Mining is increasingly frequently faced with the generational gap challenge - a lack of human resources. The ever greater digitalisation and automation in the extractive sector does not eliminate the necessity to hire qualified staff. To counter this problem, JSW Group is undertaking activities and projects, including agreements with schools offering mining education and the award of scholarships to the best students.
- intellectual - The Group makes every effort to ensure that all employees possess the knowledge necessary to perform their tasks and that, by developing skills, they represent a high level of motivation, effectiveness and use of their potential so that the tasks they perform support our business objectives not just today but also in the future. Employees have an opportunity to raise their professional qualifications by attending post-graduate studies, industry conferences, seminars or symposiums as well as training organised by external entities and by participating in training and courses organised by the employer.
- natural – through initiatives focusing on training and education in environmental protection and climate as well as through research, development and innovation efforts, JSW Group strives to reduce the impact of its operations on the natural environment.
- social - JSW Group is committed to building partner relations with local community representatives, local authorities as well as customers and suppliers. Our employees - our largest stakeholder group - have considerable influence over the development of the social surroundings, including through direct engagement in local initiatives and trade union membership.
JSW Group is deeply embedded in the region in which it operates. Hard coal mining has been and continues to be a part of Silesian culture. It is a part of local traditions and customs. JSW Group companies' engagement in the activities of social and industry organisations and associations is an important element of strengthening the culture of sustainable and responsible business. Renewed and tended relations with local communities, including authorities, based on trust and openness, are an equally important aspect. The Group is focusing on cooperation and implementation of joint tasks, taking into account the impact of its business decisions on local communities and cooperation with local government on investments and education.
Key data:
Capital management:
Defined risks:
Results:
Impact of social capital on other capitals: