The Mining Segment’s revenue was 11% higher in 2020, as compared to 2019, as a consequence of the higher coal volume sold, which was due to the higher production of the commercial coal by TAURON Wydobycie mining subsidiary’s coal mines. Janina Coal Mine (ZG Janina) and Brzeszcze Coal Mine (ZG Brzeszcze) reported the biggest increase, which was due to the more favorable configuration of the longwall fronts than in 2019. The lower extraction output of the Sobieski Coal Mine (ZG Sobieski) was a consequence of a smaller number of the longwalls for mining.
The Mining Segment’s 2020 EBITDA and EBIT were higher in 2020 as compared to the same period of 2019. The achieved results were impacted by the following factors:
- an increase of the sales volumes of the large and medium size grain products by 8% and of the thermal coal by 10%,
- an increase of average coal price by 7%, i.e. from 237.25 PLN/Mg to 247.60 PLN/Mg, which was mainly due to an increase of the price of the coal dust (fine grained product) from 221.35 PLN/Mg to 234.85 PLN/Mg,
- a decline of the variable unit cost by 7%, i.e. from 47.31 PLN/Mg to 44.11 PLN/Mg, primarily due to the lower unit cost of the preparatory works,
- receiving of the funding under the government’s anti-crisis shield program,
- others – mainly due to the fact that some of the coal produced and not sold had been recognized as assets in the balance sheet in 2020 and one-off events affecting the 2019 result.
In addition, the Segment’s higher EBIT was impacted by the lower impairment charge than in the same period of 2019.
Mining Segment’s 2019-2020 financial data
Export to Excel| Item (PLN ‘000) | 2019 | 2020 | Dynamics (2020/2019) | Change (2020-2019) |
|---|---|---|---|---|
| Sales revenue | 944,433 | 1,051,923 | 111% | 107,490 |
| coal – coarse and medium assortments | 236,506 | 235,829 | 100% | -677 |
| thermal coal | 658,630 | 769,327 | 117% | 110,697 |
| other revenue | 49,296 | 46,767 | 95% | -2,529 |
| EBIT | -1,391,949 | -886,665 | – | 505,284 |
| Depreciation and write-downs | 892,084 | 729,344 | 82% | -162,740 |
| EBITDA | -499,865 | -157,321 | – | 342,544 |
TAURON Capital Group recognized, in the 2020 results, the booking of the impairment charges related to the loss of the carrying amount on the balance sheet of the Mining Segment’s cash generating units (CGU), whose total impact on the charge to the Segment’s operating profit reached PLN 560 million in 2020, which is a lower figure than the amount recorded in the same period of last year, i.e. PLN 694 million.
Mining Segment’s 2019-2020 financial data
Mining Segment’s EBITDA along with significant factors affecting the change y/y
Major investments (CAPEX)
The Mining Segment’s total capital expenditures came in at PLN 345 million in 2020, including the outlays on the following investment projects:
- PLN 41 million on the construction of the 800 m level at Janina Coal Mine (ZG Janina),
- PLN 38 million on the purchase/upgrade of the longwall mining system in the coal seam 301,
- PLN 32 million on the Brzeszcze Coal Mine’s (ZG Brzeszcze) CAPEX program,
- PLN 17 million on the construction of the “Grzegorz” shaft, including the construction of the infrastructure and the accompanying headings,
- PLN 139 million of outlays on the preparation of future production.
The Mining Segment’s other capital expenditures are spent on coal extraction preparations and operations (mainly the purchase of machines and equipment, drilling of headings, longwall preparation).
CURRENT AND FORECAST FINANCIAL AND ASSETS SITUATION
The results of the Mining Segment in the coming years will, to a large degree, be dependent on the work progress in the implementation of the investment projects and the technical and organizational changes introduced. The Company assumes the implementation of the restructuring initiatives that are aimed at increasing the productivity and efficiency of the production and optimizing the costs.
