Dialogue with customers

Customer relations

The Group operates in a volatile market environment influenced by the situation in the steel market and competition in the market of suppliers of coking coal and coke. The Management Board of JSW has adopted the JSW Group Product Sales Policy that establishes the annual targets to be achieved by the Salesforce in order to make optimum use of the current market environment and the Group’s potential. JSW operates on the basis of its two core lines of business: mining and coke production. The Sales Policy covers the products of both lines, seeking to take advantage of synergies. The ultimate objectives of the Group’s Salesforce include mainly:

The sales policy covers the following areas: Policy for placement of coal and coke volumes produced, Policy for establishment of prices for third party customers, Inventory management policy, Intra-Group sale of coal policy, External raw material procurement policy, Policy for improvement of communication and exchange of experience between the Group’s plants.

Sales of the Group's main products are based on long-term contracts with offtakers with an established market position. JSW has a group of regular buyers of coking coal, that is European coke plants, located mainly in Poland and in Central Europe. The structure of customers does not change significantly over the years. Coke produced by the Group is sold mainly to European steel concerns. In order to diversify sales markets, coke is also shipped to overseas customers. The unique trade relations with coke customers, which are different than in the case of coking coal, results from the fact that most steel concerns have their own integrated coke plants and make supplementary purchases on the market. For this reason, coke has greater volatility in terms of volumes shipped to respective customers and countries. The Group has some regular coke buyers, which purchase the material based on long-term offtake contracts. In case of temporary coke surpluses, they are exported to European or overseas customers cooperating with the Group occasionally, depending on the Group's own needs and capabilities.

In accordance with the accepted JSW’s Commercial Strategy, in respect of steam coal sales, JSW cooperates mainly with domestic commercial power plants, including key domestic power companies. JSW as a relatively small producer of steam coal cannot on its own dictate commercial terms on the domestic steam coal market, so it tries to optimize its strategy taking into account the market reality imposed by the largest market players.

Supplier relations

Employees who are responsible for contacts with suppliers are obligated to select suppliers based on objective criteria for assessment of their offers and service quality, and make sure that all offers are compared and considered in a fair and unbiased manner and that the entire procedure is accordingly recorded and transparently documented.

The Group does not cooperate with entities whose activities are even partially criminal in nature or raise reasonable doubts. This applies in particular to all forms of corrupt activities, tax evasion or non-payment of public debts, as well as any other manifestation of criminal activity. Therefore, the Group has in place the JSW GROUP BUSINESS PARTNER VERIFICATION POLICY .

The Group’s supply chain consists of thousands of suppliers and business partners. Since 2020, the JSW Group Anti-Corruption Policy has been in effect and anti-corruption clauses have been introduced for use in contracts with contractors in addition to the ethics clause. Bearing in mind the care for promoting the most important anticorruption attitudes and standards acceptable in JSW, the JSW Contractual Clause Book was developed, collecting in a single place the provisions which secure the Company’s interests. The provisions of the anticorruption clause introduced in the contracts stipulate that the business partner or its subcontractors and all other persons whom it uses to perform the contract represent that in their activity they do not apply and do not tolerate corruption, bribery and other forms of exerting influence. The business partners also represent that they have familiarized themselves with the JSW Group Anticorruption Policy in place in JSW and they undertake not to take corruption actions and to provide the other party with information to the extent required to prove that they comply with the specified obligations. In the case of breach of the obligations following from the aforementioned policy, they will take remedial actions and incur liability for the resulting damages.

In accordance with the adopted ethics clauses business partners represent that they have familiarized themselves with the JSW Group’s Code of Ethics and will adhere to the standards laid down thereunder. The Code of Ethics in question is addressed to all employees and persons cooperating with the Group, regardless of the form, duration or subject matter of cooperation. The Code of Ethics aims to name the most important principles and standards of conduct which the Group accepts and approves and present information on how to act in circumstances in which a decision or situation may give rise to ethical dilemmas. The document contains the most important elements of ethical, antidiscrimination and anticorruption policies of the Group. It also defines procedures of reporting any violations and irregularities, non-compliance with legal obligations, threats to occupational health and safety, health of customers and bystanders, environmental safety, unfair competition practices and attempts to conceal any of the above. Since 2018, 1,764 suppliers signed the ethics clause , and in 2022 alone, this number stood at 783 (including all previous suppliers).

The Group's operations are concentrated within the administrative boundaries of the Silesian Voivodeship, in various municipalities. Due to the location of the Parent Company and its subsidiaries, the Company uses local suppliers, thereby supporting the immediate market and local communities. Suppliers from the Company's immediate environment often demonstrate knowledge of the Company's needs and expectations. The share of local contractors in expenditures in 2022 accounted for 86.26%, while the share of local contractors in expenditures without equity affiliates of JSW was 61.15%.By working with local suppliers, we are not only influencing the development of the local market, but, above all, we are implementing our sustainable development strategy.

Actions taken in connection with the aggression against Ukraine

In connection with the entry into force of the amended Act on Special Solutions to Counteract the Support for the Aggression against Ukraine and to Protect National Security (the so-called Sanctions Act), JSW has taken steps to continuously monitor the entities included in the sanctions list and promptly communicate to all other Group companies the current circle of entities included in the sanctions lists of the Ministry of Internal Affairs and Administration, EU financial sanctions and EU entry ban. In addition, JSW, with the help of relevant tools, verifies the ownership structures of contractors, including beneficial owners, from the perspective of possible presence on the sanction list. In addition, clauses have been introduced into the general terms and conditions of concluded contracts that allow for termination of the contract if the counterparty appears on the sanction list. In the event of positive verification of the counterparty from the point of view of violating the law, absolute and immediate compliance with statutory obligations will be desirable, including the freezing of funds and exclusion from any proceedings, and, as far as existing business relationships are concerned, their termination.