Activities supporting the strategy
Supporting activities are an important element in achieving the targets specified in the Strategy and generating substantial productivity improvements. These include the transport and logistics area, development of IT infrastructure and systems and introduction of solutions that reduce environmental impact. Support activities are performed within programs and specific functional strategies.
JSW Group's Project and Program Management Methodology
Implemented since 2017, project-based management of JSW Group's key investments, research and development and organisational activities is an inherent element of our Strategy. The Project and Program Management Methodology, adopted in 2018 and continuously updated, introduces structured and consistent management of strategic projects across all of the Group's companies. Cyclical information on progress in achieving strategic objectives, as defined in the Strategy, is delivered through a project management system.
JSW Group's gradual transformation into a project-based organisation is related to the dynamic development of project management processes across the entire organisation, an ever greater number of projects, the degree of their complexity and interdisciplinary nature mean that project management know-how is constantly being enhanced, which translates into stronger competences across the entire Group.
Project Management Academy
JSW Group's Project Management Academy, launched in 2019, went through profound changes in 2021, focusing on training related to the IT tool for EPM project management that is being implemented. The SARS-CoV-2 pandemic very strongly influenced the decision to change the formula and limit training - training was mainly carried out online.
However, the main objective of the Project Management Academy remained unchanged. The Academy aims to advance knowledge, develop competences and exchange good practices. It is also tasked with harmonising rules for implementing projects and investments at JSW Group. The Academy's motto states that "all process participants must know and understand the existing rules." The following training is available at the Project Management Academy:
- Training in Program and Project Management Methodology at JSW Group
- Training concerning project planning
- MS Project training (basic and extended)
- Enterprise Project Management training
As a result of the Project Management Academy's activities, ad hoc training sessions were conducted for tens of JSW Group employees by the PMO team. Thanks to these activities, the Academy's participants gained additional competences, without any additional training costs for JSW Group.
Deployment of Enterprise Project Management (EPM)
Enterprise Project Management (EPM) is a comprehensive collaborative project delivery and portfolio management environment, supporting better access to data. EPM supports projects and initiatives within the organisation covered by the Program and Project Management Methodology. EPM's full functionality at JSW Group was made available in January 2021.
A key feature of this modern tool is being able to report on a per-project basis, covering both the applicable procedures, regulations and the overall project documentation, from project initiation to the lessons learned in the project closing phase. However, the greatest added value is the Strategy Module developed for the Group Strategy Module, which allows for the development of scenarios for portfolios and programs through project prioritisation, supporting the decisions of JSW S.A.'s Management Board in implementing the strategic objectives of JSW Group.
Functional strategies
Financial strategy
The Group's operations are highly susceptible to economic conditions, capital-intensive and feature long periods of return on investment. During prosperity on the coal market, the Group generates strong positive cash flows, while during downturns it needs financing for negative free cash flows. The financial institutions' perception of coal as a high-risk industry is a very important element that exacerbates challenges related to managing the capital structure when the cyclical factor is high, which makes accessing stable short- and long-term debt financing more difficult.
Due to the high cyclical factor of financial results, JSW Group strives to maintain diversified financing sources also when it has cash surpluses. Equity and debt (credit facilities, loans, leases, etc.) are the key financing sources for the Group's assets.
The main objectives of the Group's financing strategy include:
- 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,
- striving to adapt the average maturity of financing to the period of return on the assets being financed,
- 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,
- searching for the most effective forms of financing in a given period, while ensuring appropriate maturities,
- striving to obtain products that finance the green transition,
- securing financing linked to ESG, supporting ESG efforts (e.g. by directly financing projects) and motivating to achieve KPI targets,
- striving to maintain a cash buffer for the Group,
- striving to maintain a stabilisation fund in assets during good conditions on the coal market,
- effectively managing the Group's financial risk.
Investments in FIZ asset portfolio
The net value of FIZ's assets at the end of 2021 was PLN 507.7 million. The main reason for the formation of JSW Stabilizacyjny FIZ was to limit the impact of product price volatility risk on the continuity of operating and investing activities by providing liquidity during down-turns on the coking coal market.
Real cash pooling
The Group has a real cash-pooling system in order to more effectively managing current financial liquidity. This is also an intra-group financing mechanism. The Group's financial strategy provides for active access to intra-group financing for each company within the structure.
Energy strategy
JSW Group is working on economic uses for the by-products of coal and coke production. This is intended to enhance security and improve the Group's operational performance. In 2019, JSW's Management Board adopted the JSW Group Energy Strategy 2020-2030, which sets out the key objectives and development directions for the Group in the area of producing and managing energy.
Aside from being an electricity customer, JSW Group also holds a concession for electricity generation, trade and distribution. One of the Group's strategic objectives is to become self-sufficient energy-wise. This is why we are implementing projects related to the economic utilisation of methane and the construction of the Radlin CHP, which will use coke oven gas to produce energy and heat.
Aside from being an electricity customer, JSW Group also holds a concession for electricity generation, trade and distribution (JSW KOKS S.A.). One of JSW Group's strategic objectives is to strive for energy self-sufficiency by increasing the level of internal electricity generation. The program includes three projects: "Economic use of methane" being implemented in KWK Budryk and KWK Knurów-Szczygłowice and "Construction of Radlin CHP," which uses coke oven gas to produce energy and heat.
Key objectives
- Striving to secure JSW Group's energy independence
- Energy from coke-oven gas.
- Energy from methane derived from methane capture systems.
- Energy from / use of VAM - search for solutions, cooperation / participation in R&D projects and implementation of the best identified solutions.
- Energy from renewable sources (JSW S.A., JSW KOKS S.A., PGWiR S.A., JZR Sp. z o.o. and at selected company sites).
- Production of ecological energy for own purposes.
- Increase in economic effectiveness.
In 2021, Jastrzębska Spółka Węglowa was implementing the assumptions of the Economic Use of Methane program on the basis of agreements concluded in 2020. Investments related to this program are expected to be completed in the third quarter of 2023.
At the same time, as a result of using methane to generate electric and thermal energy in high-efficiency cogeneration, methane emissions in 2021 were reduced by approx. 99 million m3 (approx. 15% more than in 2020). Production of electricity from methane reached 140 000 MWh (approx. 40% more than in 2020).
Innovation strategy
JSW Group's strategy for developing the innovation area (R+D+I) constitutes a response to the changing market, technological and regulatory conditions in which a modern extractive-industry enterprise operates. Given the globalisation of trade in coking coal and coke, being the EU leader in their production does not insulate JSW Group from challenges brought on by the market environment, instead forcing us to become a company that sets development directions for the entire industry. The sector's key challenges include production cost reduction by improving operational efficiency, continuous improvements in product quality and incorporating challenges related to safety, environmental protection and social responsibility in all aspects of the business.
High and stable production quality is playing an increasingly important role in view of the changes taking place on the coal and coke markets. Stricter requirements from the steel industry, supported by competitors from Asia and Australia, necessitate investments in innovations raising the quality of products and ensuring stability.
Using modern IT tools to obtain better knowledge of minerals, optimise production costs and increase safety is JSW Group's response to the development of industry 4.0 in global mining, as manifested in our R+D+I Strategy.
IT/OT strategy
The role of IT in mining enterprises - so far usually understood as activities related to the processing of information, servicing of equipment, building networks, providing internet services or operating systems - is increasingly changing and becoming more important. Given the specific nature of JSW Group's activities, aside from its "traditional" definition, IT also applies to industrial IT, which supports coal mining and processing ("OT").
This change in approach results from the business needs that are specified in the Strategy, which explicitly emphasise the role of IT and OT in improving performance in coal mining and processing and other business processes. Four strategic areas have been defined in connection with this:
Safety
- safety of mining crews
- operational safety, understood as the capacity to ensure continuity of production and operational processes
- technology safety - cybersecurity
Integration and automation
- integration and automation of implemented IT and ICT solutions
- wider and better use of ICT data to increase the performance of key production and organisational processes
- ensuring support for all technological processes throughout the coal and coke production cycle
Development technologies
- use of the latest technologies and operational methods
- implementing the latest methods for teamwork organisation and managing IT/OT projects
Organisation and competences
- development and expansion of the IT team to a sufficient scale and with appropriate competences
- implementing IT management organisation and processes
Strategic and tactical objectives in the IT/OT Strategy.
Quality strategy
Dynamic changes in the global economy and in global fuel and commodity markets are forcing producers to maintain product quality parameters at precisely defined levels.
Modern management and planning of production processes assumes a far-reaching optimisation of multiple factors that affect the final product. As a leading supplier of high-quality coking coal and coke, JSW is continuously working on improving and monitoring the production process in order to meet market requirements.
The following documents concerning quality management were accepted for implementation in October 2019:
- JSW Group's Product Quality Strategy 2020-2030 - outlines the business context and key activities as regards product quality, key challenges and expectations as well as overriding and strategic objectives.
- JSW Group's deposit and product analysis quality management policy - outlines responsibilities and framework rules concerning the process of managing the quality of deposit analysis and products throughout the entire coal and coke production cycle at the Group and implements guidelines from the business strategy in the area of managing quality surveys, intended to ensure the on-going monitoring and supervising of product quality throughout each production stage.
The Quality Strategy's overriding target is to increase the effectiveness of managing deposit and product quality through:
- stabilising the coking parameters of coal and coke
- achieving the expected quality parameters for commercial products
- optimising the cost of feedstock mixtures
- standardising, automating and integrating sampling and analysis processes for coal quality online
Activities undertaken in 2020:
In October 2020, JSW S.A.'s Management Board set up a working team tasked with formulating an operational model where JSW would shift toward the production of coking coal predominately. The team analysed the coal resource base and the technological lines at processing facilities in terms of achieving the objective - coking coal representing 100% of production. It was assumed that after the change of operational model and with the implementation of replacement and development investments at the mechanical coal processing facilities at each mine, JSW could predominately produce coking coal from 2031.
An investment at the mine Ruch Szczygłowice was completed in November 2020. The final handover process began for a modernised mechanical coal processing facility at the mine Ruch Knurów in the first quarter of 2021.
Product Quality Policy at the JSW Capital Group
Transport strategy
JSW Group's transport areas mainly cover the management of rail infrastructure, railway siding operations, transport and forwarding services. The Group's transport and forwarding activities are focused on supporting product sales processes and include the purchase of transport services as well as port and forwarding services.
The Transport Strategy was developed in the light of the need to ensure timely deliveries and reduce the the risk of insufficient rolling stock of appropriate quality to meet the Group's product sales needs. JSW Group's value will be built as part of this strategy through:
- supporting the sales process by professionally cooperating with rail carriers
- optimising costs
- continuously analysing the process in terms of potential changes in how certain elements of logistics are performed, depending on business needs
- optimising rail infrastructure
- generating the effect of scale in relations with service providers by focusing supervision and competences in the area of transport and forwarding activities
- ensuring the continuity of comprehensive rail sidings services
- expanding our own carrier's rolling stock in order to secure a larger market share in cargo (rail) transport and ensure that costs are market-based.
Extractive waste management strategy
Geological and mining conditions in the mines and strict quality requirements that the production of commercial coal must meet result in large quantities of extractive waste being generated in mining and coal processing.
An analysis of the entire production cycle shows that there is room for reducing such waste and for using it in engineering or technical construction. Despite the Group's wide-ranging activities, because of the significant volume of waste, the options for its use are limited due to its physical and chemical properties and logistics problems. So far, it is still not possible to completely recycle it.
This is why it is exceptionally important to undertake activities intended to secure the existing volume reserves, intended to manage waste on the surface, and build new ones so that waste management is carried out in a rational and planned manner, taking into account economic, social and technical conditions.
JSW Group strives to very rationally approach the subject of generating and managing waste. To this end, an Extractive waste management strategy was put in place in 2019. The strategy aims to indicate the directions and means for handling waste that is generated by JSW's mining facilities. The strategy sets out in detail the directions for extractive waste management currently and in the coming years and indicates activities that optimise the waste management process and proposes promising directions. The key directions being pursued in 2020 were as follows:
- production and sale to external customers of mine rock aggregates,
- production and internal use of mine rock aggregates,
- recovery of waste in waste management facilities,
- recovery of waste on land subject to rehabilitation,
- disposal of waste at the Central Extractive Waste Landfill,
- use of extractive waste and mine rock aggregates to rectify mining damages, fill in land that was adversely transformed,
- sale and internal use of unprocessed waste.