Strategic objectives

Development plans to 2030

• development of coking coal resource base through development investments related to accessing new deposits and mine levels,
• shift to the production of coking coal predominately - increase in the share of production to over 90% from 2026,
• optimisation efforts in the extracting and coking segments and efforts to enhance the integration of these two areas,
• maintenance of coke production capacities,
• ensuring energy independence (security) of JSW by developing generating capacities to a level ensuring maximum satisfaction of the Group's needs in terms of energy, inter alia, through the use for energy purposes of methane as an associated mineral in the coal mining process and coke-oven gas generated in the production of coke,
• the following is expected to be achieved as a result of these activities: 198 MWe of generation unit installed capacities, 1.62 TWh/year of volume of energy produced at the Group in 2029 from methane, coke-oven gas and PV installations, 114 GWh/year of energy produced from renewables sources within the Group in 2029,
• increase in the Group's profitability,
• deployment of innovative solutions.

Operating assumptions

• The Group will aim to increase its annual hard coal extraction volumes from approx. 14.5 mt in 2022 to 16.1 mt in 2030,
• the model envisages orienting mining processes towards a gradual increase in the level of coking coal production, including in particular type 35 coal, which enjoys the highest prices among JSW's product structure, thus leading to an increase in profitability of the Group's product portfolio,
• increase in the share of coking coal production to over 90% from 2026 in connection with a change in the production profile as a result of implementing the Company's operating model geared towards production of mainly coking coal, inter alia, through investments completed at the Mechanical Coal Processing Facilities,
• over 77 thousand running metres of corridor headings on average is planned at JSW in 2022-2030,
• during the term of the Strategy, JSW expects productivity per employee to increase from approx. 620 tonnes to approx. 860 tonnes of coal per person by 2030, assuming an average annual level of employment in 2022-2030 at around 19 900 employees,
• sustainable level of coke production and sales at a stable level of approx. 3.6 mt annually,
• capital expenditures at the Group are expected to reach approx PLN 22.4 billion. The share of expenditures on investments in the coal segment will reach approx. PLN 17.8 billion, a figure that constitutes around 79% of the Group's total expenditures,
• Capital expenditures in the coking segment in 2022-2030 are expected to reach approx. PLN 2.8 billion, of which the highest items are planned for years 2022 and 2023 and together constitute approx. 40% of the investments planned until 2030. The key investments at JSW KOKS in 2022-2023 will be the battery 4 modernisation and a power generating unit construction at Koksownia Radlin.

Key financing strategy objective

• securing a stable financing structure by striving towards reaching and maintaining at least a 50% share of equity in the equity and liabilities structure and coverage of non-current assets with equity,
• making decisions to ensure a level of funding that will be sufficient to maintain the continuity of operating and investing processes at an expected level,
• aiming to maintain a cash buffer within the Group to ensure that key liabilities are met, including in particular payroll; the buffer will be used in periods of drastic decline in sales revenue,
• creation of a stabilisation fund to ensure a sufficient level of financial liquidity during downturns in the coal market.

The strategic objectives are defined on the basis of areas in which JSW Group conducts operating and investing activities. Investment projects always relate to one of the strategic areas of operation. In the traditional view, the placement of long-term strategy in the management system is achieved through a measurement mechanism based on the Balance Scorecard in four perspectives: financial, development, process and customer.

Development of extractive activity

In line with the strategic objectives assumed for the mining area, JSW Group will strive to increase annual hard coal output from approx. 13.8 mt in 2021 to approx. 16.1 mt in 2030. JSW S.A. also aims to increase the yield of coking coal in the extraction structure to above 90%, which will contribute to an increase in the profitability of extraction activity.

In the mining area, the model envisages orienting mining processes towards a gradual increase in the level of coking coal production, including in particular type 35 coal, which enjoys the highest prices among JSW's product structure, thus leading to an increase in profitability of the Group's product portfolio.

In order to achieve the above mining objectives, it is necessary to carry out a sufficient amount of investment and operational works. A total of approx. 77 000 running metres of corridor excavations will be performed across the Company on an average annual basis. Approx. 84% of the excavations will be performed by the mine's own services on average annually, and 16% by external companies.

JSW Group's investment program encompasses investment projects for 2022-2030 worth in total approx. PLN 22.4 billion, with the highest priority given to projects focusing on:

• development of mining activities,
• modernisation and optimisation in the coke segment,
• becoming self-sufficient in terms of energy by developing new generation capacities based on products accompanying coal mining - methane, and coke production - coke oven gas,
• improving the Group's profitability and integrating various operating segments,
• implementing innovative technologies,
• improving efficiency in core business and support functions.

The highest priority is given to investment projects that offer the highest rates of return and flagship projects within the core business, which are of key importance to building JSW Group's competitive advantage and leading to the optimisation of operating costs.

JSW plans to incur approx. PLN 17.8 billion in investment expenditures in 2020-2030, which constitutes approx. 80% of the Group's total expenditures. Subsidiary JSW KOKS expects to spend approx. PLN 2.8 billion on investments. Development investments constitute 12% of JSW Group's planned CAPEX.

The investment program for the coke segment includes projects in the period 2022-2030 worth in total approx. PLN 2.8 billion, as follows:

• investments in the area of coke production,
• investments in the area of carbon-related products,
• investments in the area of energy,
• innovative projects and R&D projects,
• other investments across all operating areas at the Company.

Stable production of coke

The coke production business model assumes adjustment of the production level and structure at individual coking plants to maximise the margins generated by the Group.

• The coke production profile at JSW KOKS takes into account the largest share of blast furnace coke with CRI and CSR parameters - over 70% of the total quantity now
  and over 76% as a target.
• The Company's business model expects to maintain nominal production capacities within the range of approx. 3.3-3.9 mt of coke on an annual basis.