Polish Government Engages Banks in Talks to Secure Loans for Troubled Miner JSW

Government Aims to Stabilize JSW Amidst Financial Crisis

The Polish government is currently engaged in intensive talks with banks to secure vital loans for Jastrzębska Spółka Węglowa (JSW), the European Union's largest producer of coking coal. The state-owned miner is grappling with a severe liquidity crisis and requires extensive restructuring to ensure its continued operation. Wojciech Balczun, the Minister of State Assets, has affirmed the government's commitment to saving JSW, emphasizing its strategic importance to the Polish economy and steel industry.

JSW's financial woes are significant, with the company reporting a staggering 7.28 billion PLN net loss and a 6.5 billion PLN EBITDA loss for 2024. The first quarter of 2025 saw an estimated net loss of 1.36 billion PLN, followed by a 724.1 million PLN net loss in the second quarter. The company's working capital is negative, and its Stabilization Fund, once a financial cushion, is nearly exhausted, with only 0.76 billion PLN remaining after recent redemptions. Concerns about JSW's ability to continue as a going concern led its auditor to refuse an opinion on the first-half 2025 financial report. Analysts warn that JSW could face a complete loss of liquidity by March 2026 if no decisive action is taken.

Restructuring Efforts and Government Support

In response to the escalating crisis, JSW's management is finalizing a comprehensive recovery plan, which includes a detailed roadmap for restructuring and a simplified financial model aimed at stabilizing the company's finances in the short and medium term. Key elements of this plan involve:

• Cost optimization and rationalization of investment expenditures.
• Renegotiating contracts with counterparties.
• Optimizing support functions.
• Considering the consolidation of mines into two extraction centers to enhance efficiency.

The company initiated a 'Strategic Transformation Plan' in December 2024, focusing on improving operational efficiency, reducing costs, and bolstering business resilience. This plan has already yielded results, with 307 million PLN in savings achieved in purchases by May 2025, representing 85% of the annual target. Additionally, JSW has agreed to redeem investment certificates from its Stabilization Investment Fund, valued at an estimated 170 million PLN.

Minister Balczun is closely monitoring the ongoing negotiations between JSW's management, social partners, and banks. He has stated that the government 'does not admit the possibility of JSW's bankruptcy.' A cross-ministerial team, comprising representatives from the Ministry of State Assets, Ministry of Energy, and Ministry of Finance, is actively seeking a solution regarding a 1.6 billion PLN 'solidarity contribution' imposed on JSW in 2023, which significantly exacerbated its financial difficulties. Furthermore, the government has passed an amendment to the mining act to provide 2.9 billion PLN for protective benefits for departing miners.

Factors Contributing to JSW's Decline

Several factors have contributed to JSW's precarious financial state. A significant downturn in global coking coal prices, coupled with unfavorable exchange rates, has severely impacted the company's revenues. Difficult geological conditions, operational challenges, and accidents in its mines have further hampered production. External pressures, such as reduced steel production in Europe, growing protectionism, the expansion of Asian producers, and the European carbon border adjustment mechanism (CBAM), have also played a role. High labor costs, which constituted 48% of the group's total costs in the first quarter of 2025, and issues with its subsidiary, JSW Koks, have added to the financial strain. The company also cites EU regulations aimed at limiting the role of coking coal as a contributing factor to its challenges.