Our capital

Defined risks:

• relations with trade unions and collective labor disputes
• corporate social responsibility
• PR, media image, brand and reputation

Results achieved:

• PLN 6.5 million donated by the Foundation for the implementation of 251 projects
• expenditures on removal of mining damage in local communities: PLN 107.4 million
• share of local contractors in expenditures: 86.26% (including related parties)
• donations to charitable causes: PLN 9 million,
• more than 2 thousand meetings with the local community and local government,
• 900 students in 8 schools covered by the scholarship program:
  • Silesian Scholarship Fund,
  • Mining Families Foundation,
  • Mining Chamber of Industry and Commerce,
  • Hydrogen Europe – European Hydrogen and Fuel Cell Association,
  • Critical Raw Materials Alliance (CRM Alliance),
  • Association of Polish Committee of the World Mining Congress.

Social capital impact on other capital:

1. financial capital – it is important to build sustainable social relations based on dialogue with all groups of our stakeholders, since acceptance of JSW Group’s activities and investments is important. By engaging financial capital, the JSW Group supports social and local initiatives, for example through the activities of the JSW Foundation or sponsorship and promotional activities.
2. production capital – the mining industry has a significant impact on the region. The JSW Group is also the key employer and the main payer of taxes and other fees related to concessions and the extraction of deposits. These funds supply local government budgets, supporting their development and investment projects.
   
   
3. intellectual capital – one of the facets of JSW Group’s cooperation with local communities is an increasingly stronger cooperation with local governments of towns and townships related to professional mining education in schools. For the Group, this is a solution that could ensure the inflow of young staff and prevent the risk of the so-called generation gap. This cooperation is aimed at improving the quality of education of young people through internships and also support for various types of educational projects. The Company benefits by obtaining new resources driving its growth and ensuring optimum conditions for the effective and efficient operation of the JSW Group. Such cooperation is undertaken, in addition to JSW, also by other JSW Group subsidiaries: CLP-B, JSK or JSU.
   
   
4. human capital – the JSW Group is committed to building partnerships with local communities, local governments, as well as customers and suppliers. Our employees, as the largest group of our stakeholders, have a considerable influence on the development of the social environment, including through direct involvement in local initiatives or membership in trade unions.
   
   
5. natural capital – considering the nature of the JSW Group’s business, our employees by implementing their own programs and through social initiatives and activities, seek to promote the proper attitudes for environmental protection and against climate change, which should contribute to reducing the negative impact and excessive exploitation of natural capital.

Defined risks:

• hazards associated with dust and gas emissions into the atmosphere
• environmental protection regulations
• improper handling of hazardous substances and materials
• hazards arising from the occurrence of mining damage on the surface
• usage of alternative sources of energy/fuels in the energy sector
• long-term costs of energy
• adaptation of JSW’s activity to the EU Climate Policy
• increasing the share of energy from renewable sources and other ‘color’ certificates
• waste and byproducts management
• hazards to the aquatic environment

Results achieved:

• produced over 67 tons of high-quality food-grade salt,
• PLN 87.3 million for environmental and climate action in JSW,
• a 13.2% decline in direct emissions vs. 2021
• 4,32 million m³ of water recovered,
• protection of 150 kms of rivers enabled by the retention and dosing system (the Olza interceptor),
• more than 1.1 billion m³ of coke oven gas used for energy production,
• 91 million m³ of gas from mine methane drainage used for energy production

Natural capital impact on other capital:

1. financial capital – the operational activities of the JSW Group contribute to environmental degradation, including surface deformation that can cause damage to both private and public property. The unique nature of the operations also results in high environmental costs, which include investments, emission rights, environmental expenditures or charges for environmental use and water services.
   
   
2. production capital – development of the resource base within the Group’s concession deposits is planned at all mines. Effective coking coal mining requires the use of appropriate equipment and the application of state-of-the-art technologies that ensure the safety of miners working underground.
   JSW is carrying out projects aimed at developing infrastructure to enable electricity to be generated through the combustion of surplus methane obtained in the process of methane drainage from mines.
   
   
3. intellectual capital – given its respect for natural resources, the JSW Group is seeking technological solutions to reduce its negative impact on the environment, for example by using coal-derived substances such as coke oven gas, from which the Group may in the future produce a clean fuel, hydrogen.
   
   
4. human capital – the JSW Group aims to reduce the environmental impact of its operations through environmental and climate protection initiatives, training and education, and research, development and innovation activities.
   
   
5. social capital – in view of the fact that the Group’s activities may be burdensome not only for the environment, but also for the immediate surroundings, the JSW Group actively engages in dialogue with the local community and, through the JSW Foundation, supports initiatives implemented by the local government and carries out pro-social activities in the region.

Defined risks:

• JSW’s/Group’s growth and development strategy through mergers and acquisitions (M&A processes)
• identification of strategic objectives
• evaluation of potential investments and strategic transactions
• project structure and implementation
• implementation of development projects.

Results achieved:

• PLN 17.8 million for the research and development area in the JSW Group,
• net book value of intangible assets: PLN 106.4 million,
• 3 trademark and industrial design applications
• 2nd prize in the Polish Project Excellence Award competition for the implementation of a strategic management tool
• over 28 thousand views of the “360⁰ Jastrzębska Spółka Węglowa Mines” application⁰

Intellectual capital impact on other capital:

1. financial capital – in accordance with the financial plan adopted in the strategy, the JSW Group will annually spend funds for R&D&I area objectives, which will be allocated to projects assessed as having the highest priority. In 2022, the JSW Group allocated the amount of PLN 17.8 million to the research and development area. In order to maximize the effect and increase the scale of activities in the field of innovation, the Group also uses external financing from institutions such as: European Funds (Regional Operational Program of the Silesian Voivodship) or the National Center for Research and Development.
   
   
2. production capital – the application of modern IT tools to acquire better knowledge, optimize production costs and increase safety are the JSW Group’s response to the implementation and development of Industry 4.0 in the global mining industry. The use of the latest technologies is the correct direction, which will not only ensure optimal development of the JSW Group, but also set a trend for the entire mining industry. Rationally implemented innovative solutions will allow us to develop our core business.
   
   
3. human capital – the Group does its utmost for all employees to have the knowledge required to perform their jobs and that, through skills development, they achieve high levels of motivation and effectiveness and realize their full potential, and that the jobs they perform support the business objectives, not only now, but also in the future. Employees can raise their professional qualifications by participating in post-graduate studies, trade conferences, seminars and symposiums, in training organized by external entities, as well as by participating in training sessions and courses organized by the employer.
   
   
4. natural capital – the Group continued its actions focused on environmental protection, which were focused on constant oversight and monitoring while showing care for having the lowest possible volume of pollutants emitted into the environment, and taking all steps possible to utilize space and natural resources in an optimum manner. The solutions and technologies used ensure transformation towards circular economy (“CE”) being an indispensable element of development of a low-emission, resource-saving, innovative and competitive economy, expected to contribute to changing the economic development model defined by the European Commission. The directions of efforts defined in the Strategy in the area of utilization of methane for production of electricity, carbon footprint of the organization and the product, management of post-industrial areas, management of underground saline water and manufacture of products with the use of mining waste for applications in infrastructural projects constitute an element of a sustainable business model and contribute to execution of CE priorities and combating climate changes.
   
   
5. social capital – one of the facets of JSW Group’s cooperation with local communities is an increasingly stronger cooperation with local governments of towns and townships related to professional mining education in schools. For the Group, this is a solution that could ensure the inflow of young staff and prevent the risk of the so-called generation gap. This cooperation is aimed at improving the quality of education of young people through internships and also support for various types of educational projects. The Company benefits by obtaining new resources driving its growth and ensuring optimum conditions for the effective and efficient operation of the JSW Group. Such cooperation is undertaken, in addition to JSW, also by other JSW Group subsidiaries: CLP-B, JSK or JSU.

Defined risks:

• Commodity price risk
• Foreign exchange risk – EUR and USD exchange rate fluctuations versus the Polish zloty
• Interest rate risk
• Credit risk related to financial receivables
• Liquidity and working capital management risk

Results achieved:

• Sales revenues: PLN 20,198.5 million in the Group
• Operating profit: PLN 9,336.4 million
• EBITDA: PLN 10,564.1
• EBITDA margin: 52.3%
• Net result: PLN 7,593.8 million
• Cash flow from operating activities of the Group: PLN 10,689.8 million
• Associate member of:
  • Accountants Association in Poland,
  • Institute of Internal Auditors,
  • Polish Association of Listed Companies,
  • Polish Corporate Treasurers Association.

Financial capital impact on other capital:

1. production capital – in 2022, the Group focused on developing and increasing production efficiency in all the segments of its business, achieving the following sales revenues:

These funds that are raised and generated enable the JSW Group not only to run its day-to-day operations, but also to invest in future ventures. In 2022, the Group incurred total capital expenditures of PLN 2,665.5 million, out of which PLN 2,430.8 million was spent on property, plant and equipment, PLN 207.5 million on right-of-use assets, and PLN 27.2 million on intangible assets. The capital expenditures in respective segments were as follows:

2. intellectual capital – in accordance with the financial plan adopted in the strategy, the JSW Group will annually spend funds for R&D&I area objectives, which will be allocated to projects assessed as having the highest priority. In 2022, the JSW Group allocated the amount of PLN 17.8 million to the research and development area. In order to maximize the effect and increase the scale of activities in the field of innovation, the Group also uses external financing from institutions such as: European Funds (Regional Operational Program of the Silesian Voivodship) or the National Center for Research and Development.

3. human capital – JSW is the largest and valued employer in the region. It is the main factor that provides its employees with the sense of a safe and stable workplace. As at 31 December 2022, the Group had 30,739 employees. Group companies have separate rules for employee compensation. The average monthly salary in Group companies in 2022 ranged from PLN 5,012.56 to PLN 13,856.85.
   
   
4. natural capital – the mining industry contributes to the degradation of the local natural environment, for example by disturbing the landscape or emitting pollutants. In an effort to minimize its negative impact on the natural environment, the JSW Group spent PLN 406.6 million on environmental protection in 2022.
   
   
5. social capital – the JSW Group has very strong links to the region in which it operates. The mining industry is also the key employer and the main payer of taxes and other fees related to concessions and the extraction of deposits. These funds supply local government budgets, supporting their development and investment projects. The JSW Group is also a sponsor and patron of local sports teams or events of importance for the local community.

Defined risks:

• succession and filling of key positions
• availability of employees, allocation and development of human resources and availability of sub-contractors
• allocation of powers and effective delegation of responsibilities
• accidents at work.

Results achieved:

• 8 training hours on average per JSW employee,
• total number of newly-hired employees in the JSW Group – 2,659,
• total number of departures in the JSW Group – 3,877,
• number of JSW Group employees who took parental leaves – 275,
• number of employees who returned to work after their parental leaves: 222, of which in JSW: 51,

Human capital impact on other capital:

1. financial capital – JSW is the largest and valued employer in the region. It is the main factor that provides its employees with the sense of a safe and stable workplace. As at 31 December 2022, the Group had 30,739 employees. Group companies have separate rules for employee compensation. The average monthly salary in Group companies in 2022 ranged from PLN 5,012.56 to PLN 13,856.85.
   
   
2. production capital – the mining sector is increasingly struggling with the so-called generation gap – the lack of human resources. The increasing digitalization and automation of the mining sector does not relieve the need to hire qualified personnel. This problem is prevented by measures and ongoing projects undertaken by the JSW Group, including agreements with schools training mining professionals and scholarships awarded to the best students.
   
   
3. intellectual capital – the JSW Group does its utmost for all employees to have the knowledge required to perform their jobs and that, through skills development, they achieve high levels of motivation and effectiveness and realize their full potential, and that the jobs they perform support the business objectives, not only now, but also in the future. Employees can raise their professional qualifications by participating in post-graduate studies, trade conferences, seminars and symposiums, in training organized by external entities, as well as by participating in training sessions and courses organized by the employer.
   
   
4. Natural capital – the JSW Group aims to reduce the environmental impact of its operations through environmental and climate protection initiatives, training and education, and research, development and innovation activities.
   
   
5. Social capital – the JSW Group is committed to building partnerships with local communities, local governments, as well as customers and suppliers. Our employees, as the largest group of our stakeholders, have a considerable influence on the development of the social environment, including through direct involvement in local initiatives or membership in trade unions.