Letter from the President of the Management Board

The past year posed many challenges for JSW and the Group ensuing from the coronavirus COVID-19 pandem- ic, forcing us to adapt to the rapidly changing conditions. Guided by the concern for the safety of our employees and the need to ensure continuity of all production and business processes, JSW responded promptly, setting up a crisis management team in the first half of March, whose task was to implement appropriate procedures to prevent the spread of the coronavirus, and ensure safe functioning of our plants in the extraordinary circum- stances of epidemic threat as well as continuous monitor- ing of the situation. In view of the worsening epidemic situation, JSW conducted screen testing in all plants, in order to extinguish potential outbreaks of infections. Furthermore, an administrative decision was taken to halt the technological coal mining cycles in KWK Budryk and KWK Knurów-Szczygłowice.

Considering that the type and scope of the Group’s oper- ations is highly sensitive to changes in the interconnected coal, coke and steel markets, the unstable economic situation due to the COVID-19 pandemic had a significant impact on the financial performance of JSW and the Group. Steel production globally was curbed on an un- precedented scale. In the European Union, in the period from May to July production of steel was almost 25% lower in comparison to 2019, and over the entire 2020 steel production in the European Union recorded a fall of almost 12%.

Despite the challenges posed by the COVID-19 pandem- ic, the JSW Group stood up to the test as a reliable sup- plier of coal and coke, fulfilling all contracts. Against the odds of market limitations, it increased, relative to 2019, the sales of coking coal to external customers by almost 9%, and of coke by as much as over 24%, entering new overseas markets, which ensured diversification of sales. Unfortunately, in these difficult conditions, in comparison to the previous year the average price of coking coal and coke fell by almost one third, which had a significant impact on the results of the Group.

The Group closed 2020 with a loss of PLN 1,537.4 mil- lion, achieved sales revenues of PLN 6,989.4 million, and Group EBITDA was PLN -638.4 million. In 2020, the Group produced 14.4 million tons of coal, excavated 73.1 km of corridor roadways, and produced 3.3 million tons of coke.

In connection with the crisis, in December 2020 the Company received key support from the Polish Devel- opment Fund in the form of a liquidity loan, in the amount of PLN 1 billion, and a preferential loan of PLN 173.6 million.

2020 was a test of resilience and strength not only for business and the economy, but primarily for those who create its fabric - people. Therefore we wish to thank our employees for their hard work, and all our stakeholders for perseverance and trust.

What matters today is the company’s stable develop- ment, which may be attained through improvements in organizational, technological, production and commercial efficiency, opening up to global opportunities, looking for new potential, caring for business partners and, above all, for our employees.

We wish for JSW to be a strong Polish brand, caring for safety of employees and high quality of work, apprecia- tive of its human resources, as well as the values, strong spirit and energy displayed by JSW employees. We will strive to create the best possible conditions for our staff, engaging in a dialog to develop optimum solutions, ad- dress market challenges and opportunities, and constant- ly strive to safeguard the highest standards of business and social ethics.

As a large industrial group, JSW is obligated to exercise special care for the natural environment. The Company is a leader in devising and implementing methane capture technologies and economic usage of methane. We will be more and more effective in these ventures, by setting clear investment objectives and ensuring careful supervi- sion over their timely and cost effective implementation.

In addition, JSW is involved in mine water desalination, a venture of unprecedented scale, producing pure salt and reducing burden on the rivers. JSW reclaims and revital- izes post-mining sites, restoring and improving their functionality in a dialogue with local communities. We will strive to transition towards a circular economy model

As a company committed to corporate social responsibil- ity, we will strive to an ever broader participation of the Group in the life of our local communities. In addition to the activity of the Foundation, JSW conducts a number of projects addressed to local residents, their families and children, as well as municipalities and schools, which it intends to systematically develop, subject to its capabili- ties.

I am convinced that we will ensure effective, efficient and stable development of JSW by building the value chain within the Group through improvement of the synergies of all our companies. We will build a responsible path for the Group, continually optimizing our processes, in par- ticular as part of operating activities, and strategically and carefully analyzing the economic cycles. To ensure peaceful and stable work conditions to all our employees, we all have to look for opportunities in upward market trends and plan solutions for potential downturns. Our success will come from shared wisdom and responsibil- ity, backed up by knowledge, experience and hard work.

I believe that continuation of active measures taken for the good of the residents, care for the company’s envi-ronment and business partners, and above all for its core- the employees, will significantly contribute to dynamic social and economic development of our region, putting JSW in the position of an unquestionable leader of the industry.