JSW (Jastrzebska Spolka Węglowa) is the largest coking coal producer in the EU. The company extracts coal from four existing mines and a fifth one is presently under construction. Together these hold one billion tonnes of recoverable resources, which can guarantee a production until the year 2075. JSW employs more than 30.000 people, which makes it one of the biggest employers in Poland.
Mr. Dyczko, you recently concluded JSW’s strategy for 2030. What are the key elements of this long term vision?
The strategy revolves around maintaining leadership in coking coal production in Europe. We find ourselves in a favorable position now that coking coal has been listed among the EU Critical Raw Materials, hence it has a vital impact on the European economy.
The European Union has historically been and will remain in a structural shortage of coking coal, which is why it is a major importer of this raw material.
Currently, among all EU countries only Poland produces coking coal (about 11 million tons per year) together with Czech Republic (about 1.5 million tons in 2018) which is expected to shut down production soon. The demand from the steel industry exceeds mining capacity of EU countries by approx. 40 million tons.
You have started construction of Bzie-Debina mine, an unlikely move nowadays in Europe. How will this contribute to your goals?
For the raw material producing company, it is crucial to ensure access to resources. Bzie-Dębina mine holds proven resources of up to 180 million tons of coking coal. This ensures that we will have access raw materials in the perspective of several decades to come.
This is truly a strategic project for us. We are currently extracting approx. 15 million tonnes of coal per annum, and in the future we would like to reach 18 million tonnes. We should receive our first profits from this investment in two years time when we lunch extraction from the first longwall panel. However, the entire investment worth PLN 3 billion will pay off after eight years. I emphasize that this is a crucial investment if we want to be a coking coal production leader, increase our mining potential and enter new mining areas.
This critical need for steel is counter-balanced by high pressure to reduce CO2 emissions. How are you navigating these two strategic interests?
Since 2017 we have been estimating the carbon footprint of all companies of the JSW Capital Group in accordance with the GHG Protocol standard, and have been looking for ways to optimize our work.
CO2 allowances have increased by 264% in the past 18 months so we are well motivated to take steps towards reducing greenhouse gas emissions.
One goal is to maximize the economic use of methane. This is a by-product of coking coal extraction and production, and EU fees count methane release as part of CO2 emissions. We are now using the most modern technology to capture methane and use it for electricity generation. Hydrogen separation from coking gas is also one of our ongoing projects - the intention is to join the producers of this ultra pure gas, called the fuel of the future.
You have also signed an agreement to start construction of a CHP plant in Radlin.
Indeed, we concluded the agreement in June this year. Cogeneration is an excellent example of the use of waste derived from coking coal processing. The goal is circular economy - everything stays within JSW. We have plans to invest in PV panels as well to power our mines and these solutions combined will make us self sufficient from an electricity demand perspective as early as September 2020, and will contribute significantly to reducing our carbon footprint.
Do you have a final message for foreign investors that hold an interest in your sector?
Without the participation of coking coal, it is impossible to produce steel in an economically viable manner and this is an important argument demonstrating the company's potential in the coming years.
It is important to diversify operations, which is why we are developing additional projects related to our basic raw material, which is coking coal. Jastrzębska Spółka Węglowa is a company with a clearly defined strategy of action and plans that are being implemented, which is why it should undoubtedly be of interest to stock market investors.
