WARSAW, Nov 22 (Reuters) - Poland’s JSW, the European Union’s biggest coking coal producer, said on Friday it would review its strategy in the first quarter of 2020 to focus on the quality of output instead of volume to cope with a slowdown in the European steel market.
State-run JSW, which produces thermal coal alongside coking coal which is used in steel production, almost collapsed in 2015 when coal prices fell and labour costs rose.
European next-year coal futures prices were trading around $65 a tonne on Friday, compared to almost $100 hit in the fourth quarter of 2018.
“We remember what happened in 2015 and 2016, when the company had the worst time in its operations ever. I think the strategy will secure us for a worse time,” JSW Deputy Head Artur Dyczko told a news conference.
He said JSW would focus on improving the quality of coal produced not volume, although he did not say what the output target would be.
JSW expects coal output to exceed 15 million tonnes in 2019 and be about 15 million in 2020. It expects output to rise to 18 million by 2030.
If coal prices continued to fall, Dyczko said JSW would review its capital expenditure plans for 2020.
Last year, JSW set up a fund to put aside some cash to help cope with difficult times.
“If the negative trend continues, we will have to use these money,” JSW management board member Jaroslaw Zalozinski told the news conference, adding that the company would prefer to rely on debt financing first.
JSW’s total coal production fell by 3.8% to 10.86 million tonnes in January-September compared to the same period a year ago. Coking coal output fell to 7.6 million in the same period from 8 million.
Net profit for the first nine months of 2019 fell to 689 million zlotys from 1.4 billion zlotys a year ago.
The management board declined to comment on any potential dividend payout from 2019 profit.
Reporting by Agnieszka Barteczko; Editing by Edmund Blair