Outlook
Short-term outlook (2022-2023)
In the short term, the coal, coke and steel markets will struggle with the post-pandemic and political conditions, primarily with the continuing conflict in Ukraine, i.e. the embargo for raw materials/commodities from/to Russia and the potential process of rebuilding Ukraine’s infrastructure. This will be a period of continuing recovery of demand for steel, and therefore also raw materials for steel production, i.e. coke and coking coal. It is also expected that trade, which has been severely disrupted, will stabilize and supply chains will be rebuilt.
In the short term, raw material trade will be affected by political and administrative changes causing the diversion of raw material flows: the sanctions imposed on Russia, as a result of which Russian supplies have been redirected to the Asian market, and the lifting of China’s ban on imports of Australian coal effective from 2020.
Medium- and long-term outlook (2026, 2030, 2050)
The blast furnace technology remains the main steelmaking process both in Europe and globally, representing more than 70% of the global steelmaking structure. According to the World Steel Association, the global crude steel production was 1,878.5 million tons in 2022, down 4.2% compared to 2021. Steel production in electric furnaces represents approx. 25%. Many European steel mills use the PCI (Pulverized Coal Injection) technology. By 2030, steelmaking technologies are expected to be developed that, by their design, reduce or eliminate the use of coke, and thus also coking coal, in the steelmaking process. This should enable the ambitious emission reduction plans in the European Union. Currently, these technologies are in the research or pilot plant phase, and steel production using these technologies is not economically viable. In developing countries with high steel production growth potential, the blast furnace process using coke and coking coal will continue to dominate in the steelmaking industry.
Although the European Commission has announced support for clean steelmaking technologies by 2030, many experts believe that it will be impossible to replace coke in the blast furnace pig iron smelting process in the next 25 years.
A major challenge for the JSW Group in the medium to long term will be to comply with environmental and natural resource use regulations - those requiring the reduction of greenhouse gas emissions and the emerging EU Strategic Plan on methane. As the industrial revolution continues, the JSW Group plans to actively use the achievements of science and technology, engaging its intellectual capital to do so and implementing the latest technological solutions for the mining sector in its structures.
Since 2018, the Company has been implementing the “Commercial Methane Utilization” program, the aim of which is to develop the infrastructure that will allow JSW to generate electricity through the combustion of surplus methane obtained in the process of methane drainage from mines. This project will utilize methane from the Budryk Mine and the Knurów-Szczygłowice Mine and generate energy to be used by these mines and subsequently by other JSW mines. In 2022, JSW S.A. announced the launch of reduction programs. The methane emissions reduction program is a continuation and an upgrade of the Commercial Methane Utilization Program. The project will reduce methane emissions by 19 million m3 per year and produce 60,000 MWh of electricity in the methane utilization process. The Methane Emission Reduction Project is of research and implementation nature. its new methane emissions reduction programs. The methane emissions reduction program is a continuation and an upgrade of the Commercial Methane Utilization Program. The project will reduce methane emissions by 19 million m3 per year and produce 60,000 MWh of electricity in the methane utilization process. The Methane Emission Reduction Project is of research and implementation nature.
In order to reduce the negative impact on the environment, the JSW Group is undertaking a number of initiatives to increase the commercial utilization of methane and coke oven gas to produce electricity and heat and to achieve energy independence in the use of hydrocarbons or the separation of hydrogen from coke oven gas, which is one of the important projects supporting the implementation of the goals in the adopted Strategy.
In the long term, if the project to produce hydrogen as the fuel of the future is implemented, the JSW Group will be able to efficiently produce this environmentally friendly energy source at its coke plants. Successful implementation of an appropriate installation would allow hydrogen to be used for zero-emission urban transportation in the future.
For the steel sector, the trend of reducing emissions and attempts to replace steel with other technologically advanced materials is expected to continue in the long term. However steel currently has no substitute because of its unique properties in terms of strength and possible 100% recyclability, and in terms of large-scale production.
| Key issues affecting the activities of the JSW Group | |||||
|---|---|---|---|---|---|
| Area | Outlook | short-term (2023-2024) |
medium-term (2026) |
long-term (2030) |
long-term (2050) |
| financial | limited ability of the financial sector to finance investments in the mining industry | x | x | x | x |
| diversification of revenues | x | x | x | x | |
| effective management of the Group’s financial risks | x | x | x | ||
| ensuring stable financing structure | x | x | x | x | |
| optimization of the Group’s operating costs | x | x | x | x | |
| national regulations, in particular the Capital Market Development Strategy | x | x | |||
| raising project financing from EU funds | x | x | x | x | |
| production | access to reserves of coking coal with high and stable quality parameters | x | x | x | x |
| expanding the range of products and services offered (including repairs, roadway excavation, laboratory services) | x | x | x | x | |
| expansion of the synergies between the mining and coking areas | x | x | x | ||
| extension of the value chain towards the use of the volume of hydrocarbons | x | x | x | ||
| optimization efforts in the mining and coking segments | x | x | x | x | |
| operating capacity to achieve planned production and supply volumes | x | x | x | ||
| extension of the resource base respect of coking coal | x | x | x | x | |
| regulatory | obligation to increase the share in RES energy and emphasis on accelerating development in energy efficiency | x | x | x | x |
| changes in regulations | x | x | x | x | |
| further reduction of CO₂ emissions, which causes an increase in emission allowance prices | x | x | x | ||
| adaptation of generation units to BAT conclusions and the EU ETS European Emissions Trading System | x | x | |||
| strategic documents adopted at the EU level, including the EU 2050 Climate Strategy | x | x | x | x | |
| regulations related to methane emissions | x | x | x | x | |
| National Plan for Energy and Climate for 2021-2030 | x | x | x | ||
| European Green Deal | x | x | x | x | |
| technological | new steel production technologies to reduce coke consumption (PCI, hydrogen) | x | x | x | |
| innovative technologies supporting the production and utilization of by-products (e.g. methane, coke oven gas or stone) | x | x | x | x | |
| digitalization of production support processes | x | x | x | ||
| market | limited inflow of Chinese coke into Europe due to production costs and strong internal demand in China | x | x | x | |
| escalation of the trade war between the US and China, resulting in further trade restrictions, including on steel | x | x | |||
| geopolitical situation related to the armed conflict in Ukraine | x | x | |||
| overseas deliveries of coking coal to the European market take a long time (about 2-3 months) compared to coking coal deliveries from JSW | x | x | x | ||
| stable trade relations based on trust in product quality | x | x | x | x | |
| limited competition from other producers of coking coal on the domestic and European markets | x | x | x | x | |
| customer retention, product development and market expansion | x | x | x | ||
| increased production of coking coal in Australia, Asia and export capacity | x | x | x | ||
| forecasts of India’s increased demand for coking coal coupled with an increase in steel production | x | x | x | ||
| environmental | pressure to reduce CO₂ emissions due to the EU’s climate and energy policy | x | x | x | x |
| efficient utilization of hydrocarbons and efforts to increase energy self-sufficiency | x | x | x | x | |
| economic | mergers and acquisitions in the European steel sector | x | x | x | |
| growth of the European and global economy | x | x | x | ||
| social | maintaining the social license to operate by building good relationships with local communities and getting involved in their lives | x | x | x | x |
| reducing the negative impact of mining activities on neighboring areas and their lives (mining damage) | x | x | x | x | |
| ensuring the highest level of occupational safety | x | x | x | x | |
| counteracting the generation gap | x | x | x | ||