Outlook

JSW Group's core business, the production of high-quality coking coal, is aligned with the steelmaking value chain, although it is often incorrectly associated with the mining of thermal coal. In reality, the Group mines and processes primarily coking (metallurgical) coal, which is used in steelmaking.

In September 2020, the European Commission once again confirmed the critical raw material status for coking coal by placing it on its list of 30 raw materials that carry the risk of supply shortages, the effects of which for the economy would be greater than in the case of other raw materials.

The primary challenge that the mining industry is facing is the increase in requirements related to environmental and climate protection, including CO2 emission reduction. In connection with strong changes in market expectations, JSW is continually working on reducing production costs by increasing operating efficiency, expanding the resource base, whilst taking into account challenges related to safety, environmental protection and corporate social responsibility in all aspects of its operations.

JSW Group is closely monitoring the situation in industries and is rapidly responding to changes on the coal, coke and steel markets. JSW S.A.'s strategy incorporating JSW Group subsidiaries for 2022-2030 constitutes a response to the challenges emerging in a dynamically changing market environment and economic situation, changes in the Group's capital structure, as well as challenges related to stable, long-term growth that meets the expectations of stakeholders in the long term. JSW Group has decided to update its business strategy in order to adapt to the on-going changes. In addition, legislative changes at the European level have necessitated the extension of the strategy's time horizon to 2050. 

Global market conditions for the Group's main products are shaped by the largest customers and suppliers for these raw materials, i.e. China, Australia, India, Russia and the U.S., and especially the supply-demand relations between them. Aside from the supply-demand equation, particularly between Asia and Australia, one-off events play a role, including logistics problems resulting from sharp and unforeseen changes in weather or geological conditions as well as crisis situations, such as the coronavirus pandemic. JSW Group is exposed to demand and supply swings on the global market and to changes on the domestic mining and steel sectors. Changes in China's production capacities are having a negative impact on businesses throughout the world because the Chinese industry is present in a majority of global supply chains and is involved in building the value of international corporates. Supply disruptions out of China have an impact on the financial results of a majority of companies from numerous industries and sectors that operate on a global scale.

Near-term outlook (2022-2023)

In the short term, the coal, coke and steel markets will be driven by post-pandemic and political conditions, mainly related to the on-going conflict in Ukraine, i.e. the embargo on raw materials/goods from/to Russia and the possible process of rebuilding Ukraine's infrastructure. This will be a period of continued recovery in demand for steel, and thus for the raw materials used in steelmaking, i.e. coke and coking coal. Trade is also expected to stabilise after facing substantial disruptions and supply chains are expected to be rebuilt. On a near-term basis, commodity trading will be subject to conditions resulting from the strained trade relationship between China and Australia and the informal ban on Australian coal imports into China, which has shifted commodity flows and price relationships.

Mid- and long-term outlook (2026, 2030, 2050)

Blast-furnace technology is the dominant steelmaking process in Europe and in the world, accounting for more than 70% of the global steel output. Electric furnace production accounts for approx. 25%. Many European steelworks use the Pulverized Coal Injection (PCI) technology. Steelmaking technologies that by their design reduce or eliminate the use of coke, and thus coking coal, in the production process are expected to develop by 2030. This is intended to enable the ambitious plans for reducing emissions in the European Union to be achieved. These technologies are currently in the research or pilot installation phase, and steel production using these technologies is economically non-viable. In developing countries with high growth potential for steel production, the blast furnace process using coke and coking coal will continue to dominate the steelmaking landscape.

Despite the fact that the European Commission has announced supported for clean steelmaking technologies by 2030, many experts believe that it will not be possible to completely replace coke in blast-furnace iron pig smelting within the next 25 years.

Compliance with legal regulations related to environmental protection and the use of natural resources - reducing greehouse gas emissions and the EU Strategic Plan on methane - are a major challenge for JSW Group in the mid- and long-term. As the industrial revolution progresses, JSW Group plans to actively use scientific and technical advancements, committing its intellectual capital and implementing the latest technological solutions for the mining sector.

To reduce adverse environmental impact, JSW Group is engaging in a range of initiatives to increase the economic use of methane and coke oven gas to generate electric and thermal energy and become energy-independent, also when it comes to the use of coal derivatives and the separation of hydrogen from coke oven gas, which constitutes one of the key projects supporting the achievement of strategic objectives.

In the long term, if the project to produce hydrogen as fuel for the future is green-lit, JSW will be able to efficiently produce this energy source at JSW Group's coking plants.  A properly built installation would make it possible to use hydrogen in the future for zero-emission urban transport.

The steel sector is expected in the long term to see continued emission reduction trends along with attempts to replace steel with other technologically advanced materials. Due to its unique properties in terms of strength, its 100% recyclability, and large-scale production capacity, steel currently has no substitute.