Climate change ranks among the major challenges of our time and is one of the most pressing non-traditional security issues confronting contemporary society. To address climate change and mitigate its impacts on society, Zangge Mining strictly fulfills its environmental protection obligations throughout production and operations, aligns with the growing trend of green operations, and consistently fosters positive synergies between ecological protection and business growth. Meanwhile, the Company actively implements climate change mitigation policies, promotes green and low-carbon development, and contributes to achieving the national goals of carbon peaking and carbon neutrality.

Identification and management of climate risks and opportunities

We have performed a scenario analysis using two Representative Concentration Pathways (RCPs) adopted by the Intergovernmental Panel on Climate Change (IPCC)—namely RCP4.5 (low-carbon emissions scenario) and RCP8.5 (high-carbon emissions scenario). Through this analysis, we have comprehensively identified our potential physical risks in the short term (by 2030), medium term (by 2050), and long term(by 2080). The results are presented below:

Transition Risks and Opportunities

Against the backdrop of the global green industrial transformation and China's national "Dual Carbon" strategy, climate-related policies and regulations, technological innovations, market sentiment, and shifting consumer preferences pose potential compliance risks and cost pressures for enterprises. In response, Zangge Mining has identified and assessed transition risks based on factors including its business development, external policy changes, and industry trends and has formulated preliminary corresponding solutions. At the same time, the Company has also identified opportunities in the market and technologies arising from the low-carbon transition, formulated targeted strategic development plans, and adjusted them accordingly to ensure continuous and steady growth.

Zangge Mining strictly adheres to the Energy Conservation Law of the People's Republic of China and other relevant regulations. We have developed and actively implemented several procedural documents, such as the Energy Management Regulations, Energy Consumption Measuring Management System, Energy Saving Incentive Scheme, Energy Performance Parameter Control Procedure, and Energy Manual, and established an energy management system under ISO 50001. By the end of the reporting period, both the Company's production bases, Zangge Potash Fertilizer and Zangge Lithium, have achieved the ISO 50001 energy management system certification. To ensure compliance with the energy management system, we conduct internal audits annually and undergo third-party external audits every three years. Each year, we set energy management goals and implement a range of energy saving measures to realize these targets.To further strengthen energy governance, we have established a three-tier energy management system. This network promotes the active participation of everyone within the Company in energy management affairs. Additionally, the Company has established an energy management leading group headed by the President responsible for oversight and decision-making related to energy management.

Strategy and Management Method

The Company upholds an energy policy focused on "legal compliance, continuous improvement, innovative development, cost reduction, and efficiency enhancement" and continuously refines its energy‑management capabilities. We conduct company-wide energy saving assessments to fully explore energy saving opportunities and lower energy use costs while enhancing efficiency. This year, Zangge Potash Fertilizer also completed a comprehensive energy management audit covering production workshops, mining workshops, office areas and auxiliary facilities. Drawing on assessment and audit findings, we are striving to fully elevate our energy management through measures such as strengthening compliance oversight and improving measurement accuracy, undertaking energy saving technological enhancements and optimizations, and strengthening employee training in energy conservation.

Metrics and Targets

In 2024, both Zangge Potash Fertilizer and Zangge Lithium established detailed energy management objectives. Additionally, Zangge Lithium signed the Letter of Responsibility for Energy Management Objectives with all relevant energy management personnel to promote the achievement of energy-saving and emission-reduction goals. Furthermore, Zangge Potash Fertilizer and Zangge Lithium set energy control indicators for 2024, covering metrics such as comprehensive energy consumption and electricity consumption per unit of product, thereby strengthening energy performance management. By the end of the reporting period, the progress toward energy management objectives is as follows:

Upholding the environmental management principles of "priority to protection, emphasis on prevention, integrated governance, public participation, and liability assumption", Zangge Mining continuously optimizes its environmental management system, increases investment in environmental management, and reduces pollutants discharge, resource consumption, and material usage throughout the entire product lifecycle. Simultaneously, efforts are made to strengthen environmental risk prevention and response capabilities and actively protect the ecological environment of the regions in which we operate.

Management System and Structure

In terms of Zangge Mining's environmental management structure, the Board of Directors oversees environmental protection matters, and the President is directly responsible for environmental management, including convening regular EHS meetings to supervise, inspect, and plan related work. Specific implementation of environmental responsibilities is carried out by relevant departments, including the Safety and Environmental Protection Department, Public Facilities Department, and Production Department.

Zangge Mining consistently strengthens its management of environmental protection and resource utilization while strictly adhering to the Environmental Protection Law of the People's Republic of China and other relevant environmental regulations at project sites. The Company has established an ISO 14001-based environmental management system and developed management systems including the Environmental Protection Policy, Environmental Protection and Safety System, and Operation Management of Environmental-Protection Facilities, which are applicable across all production bases to ensure compliance in environmental management. During the reporting period, Zangge Lithium engaged a third-party certification body to conduct an on-site audit of its environmental management system, with results verifying the system's sustained effective operation. Additionally, Zangge Potash Fertilizer achieved ISO 14001 environmental management system certification for the first time. In 2024, the environmental management system certification coverage rate across the Company's production bases (Zangge Potash Fertilizer and Zangge Lithium) reached 100%.

In terms of environmental management targets, we have implemented a target-based responsibility system, under which employees receive rewards or penalties based on the achievement of these targets. Furthermore, our safety and environmental protection management departments, along with those of our subsidiaries, sign an annual Letter of Responsibility for Security and Environmental Protection. This letter outlines our environmental protection goals for the year and integrates relevant indicators into the employee performance evaluation system to ensure the effective implementation of all objectives. In 2024, Zangge Mining achieved all environmental incident control targets.

Environmental Risk Management

Zangge Mining conducts project construction in full compliance with environmental impact assessments and rigorously implements the "Three Simultaneities" environmental protection principle. Upon project completion, we promptly conduct environmental protection inspections to ensure safe production, protect employee health, prevent safety incidents, and implement safety production policies.

The Company rigorously complies with laws and regulations such as the Emergency Response Law of the People's Republic of China and the Guidelines for Emergency Response Drills.We have also developed and implemented environmental risk management policies, including the Environmental Protection and Safety System. During the reporting period, Zangge Potash Fertilizer conducted a thorough review of its facility layout and updated the Response Plan for Environmental Emergencies. This update included identifying categories of hazardous substances and organizing environmental incident response drills. These drills tested the refined emergency response plan while reinforcing employees' understanding of the new emergency protocols, thus further strengthening the Company's overall environmental risk response capabilities.

Zangge Mining strictly complies with the Water Pollution Prevention and Control Law of the People's Republic of China, and applicable national and local water consumption and drainage standards. We place significant emphasis on the environmental impact of water resource consumption, remain dedicated to water resource protection, and actively enhance water recycling and reuse. We also take multiple measures to reduce the pressure from our production and operations exert on local water resources.

Impact, Risk, and Opportunity Management

Zangge Mining actively identifies and assesses water-related risks every year, and implements corresponding management measures to mitigate associated risks. This year, the Company continued to assess water security risks for water abstraction at domestic production bases (Zangge Potash Fertilizer and Zangge Lithium) and review water stress in production and operations. We have used the Aqueduct Water Risk Atlas developed by the World Resources Institute (WRl) and the Water Risk Filter developed by the World Wildlife Fund (WWF) to identify and assess water stress levels at water withdrawal sites. The results show that water risk scores of the withdrawal sites at both domestic production bases are below 3, indicating they are not in high or extremely high water risk areas. During 2024, no incidents of noncompliance related to water resource utilization were recorded.

In 2024, we conducted our first specialized analysis of the potential risks that water withdrawals may pose to local communities and ecosystems. This analysis aims to effectively evaluate the dependency and impact of our production activities on water resources and offers theoretical support for enhancing water resource management. Details are presented in the table below.

Strategy and Management Method

Water Use Management

In terms of risk management, the Company strives to reduce reliance on water withdrawal through measures such as conducting water resource risk analyses, performing water balance tests, optimizing production processes, and setting water use targets. Additionally, an annual comprehensive water use plan is formulated and allocated to subsidiaries and production workshops. We have established water management indicators and targets, preprared ledgers for energy-saving and waterconserving equipment, and conducted monthly water-saving statistics and analysis as well as quarterly performance reviews.Besides stringently regulating production water use, we also actively enhance employees' water conservation awareness through regular campaigns and promote knowledge of water conservation and related products to encourage employees to reduce household water usage.

Water Conservation Management

Given the relative scarcity of water resources in the Qinghai-Tibet Plateau region where the Company operates, coupled with the high water dependency on chemical production, Zangge Mining leverages the adjacency of its two production bases to strengthen water recycling and reuse between them. By establishing a comprehensive tailing fluid utilization flow, the Company has improved the efficiency of both water and mineral resource utilization and effectively conserved water resources.

Zangge Mining rigorously manages pollutants and waste by controling emissions throughout the entire process from the source to production and end treatment. The Company has created and refined ledgers for the management system of solid waste, waste gas, wastewater, and noise, ensuring that pollutant and waste emissions comply with relevant standards. We also continuously explore more efficient emission reduction methods to enhance environmental governance.

Waste Gas Management

Zangge Mining strictly observes the Law of the People's Republic of China on the Prevention and Control of Air Pollution and applicable national and local waste gas emission standards. The Company employs pollution treatment methods such as flue gas purification facilities, bag filter dust collectors, cyclone dust collectors, and water bath dust treatment to effectively manage particulate matter, nitrogen oxides, and other major atmospheric pollutants generated during production. These measures contribute to reducing air pollutant emissions and protecting the environment surrounding the production sites.In May 2024, Zangge Potash Fertilizer replaced the burners in key production equipment with low-carbon, environmentally friendly low-nitrogen burners to achieve efficient, stable, and clean fuel combustion. Four low-nitrogen burners were installed, and calculations indicated a 2-3% decrease in operating energy consumption per burner and an effective reduction in the emission concentrations of carbon monoxide and nitrogen oxides.

Wastewater Management

Zangge Mining enforces rigorous control over production and domestic wastewater. As for the production wastewater, we enhance the management of pollution prevention and control facilities and increase wastewater reuse to improve water resource utilization efficiency. Domestic wastewater is collected and treated in integrated sewage treatment facilities until it meets the Class 1 standard of the Integrated Wastewater Discharge Standard (GB8978-1996).Treated wastewater is then directed to impermeable evaporation ponds for natural evaporation or reused in ore dissolution to ensure zero external discharge.

Waste Management

Zangge Mining follows the principles of "minimization, resource utilization, and harmless disposal" and handles different types of waste in accordance with laws and regulations. We keep detailed waste ledgers to classify and manage waste across its generation, storage, and transfer processes. This approach ensures effective oversight of waste disposal compliance and enhances waste management efficiency based on the ledgers.

In 2024,, Zangge Potash Fertilizer completed the construction of a hazardous waste storage facility in the Qarhan mining area. This facility adopts concentrated management of hazardous waste and waste materials’ storage. This facility meets China's latest hazardous waste storage requirements, which improves waste storage compliance. Zangge Potash Fertilizer also provided its personnel with professional hazardous waste management training, strengthening their environmental awareness and operational skills to ensure the effective implementation of management policies. Meanwhile, Zangge Lithium continuously improves the management of its hazardous waste storage rooms, ensuring standardized waste storage with clear and accurate labeling.

Zangge Mining is committed to the principle that "lucid waters and lush mountains are invaluable assets" and places great importance on the impact of its operations and operations on the surrounding ecological environment. We actively identify potential impacts of our production and operations on the ecosystems and promote green mining and ecological protection education. This ensures that corporate growth does not come at the expense of the environment and remains in harmony with the local natural environment.

In July 2024, Zangge Mining signed a research collaborative agreement with Qinghai University, supporting the "State Key Laboratory of Plateau Ecology and Agriculture" in research on ecological restoration in the Qinghai-Tibet Plateau. This collaboration has explored sustainable resource development and ecological restoration models through innovative projects. The study has investigated the effects of ridge-furrow film mulching and non-woven fabric coverage on vegetation restoration in saline-alkali lands within the Qaidam region, contributing to improved environmental quality in the Qinghai-Tibet area.

Against the backdrop of an increasingly complex global landscape and profound domestic reform and development tasks, Zangge Mining, guided by the development of new quality productive forces, continues to steadfastly advance high-quality development and practice new development philosophy. It seizes the opportunities brought by new quality productive forces as "new momentum," persistently drives technological innovation, accelerates the transformation of technological achievements into innovative productive forces, and strengthens green manufacturing. These efforts aim to cultivate clean productive forces, accelerate the digitalreal economy integration and propel digital-intelligent productive forces amid the wave of information.

Innovative Productive Forces

Scientific and technological innovation is the main driving force of new-quality productivity, which can promote the evolution of productivity towards a more efficient model. Since its early development stages, Zangge Mining has regarded technological innovation as a critical support for large-scale mining development and sustainable utilization. It has continuously accumulated technical expertise, cultivating a professional team long engaged in the development and utilization of salt lake resources and specializing in lithium extraction technology. From the breakthrough of the solid-toliquid conversion technology in the potassium chloride production process to overcoming the challenges of extracting lithium from ultralow-concentration brine in salt lakes, technological innovation has become the core support for the Company to maintain its market position and competitiveness.

Clean Productive Forces

Developing new quality productive forces is a critical pathway to synergistically advance carbon reduction, pollution control, and ecological expansion. Zangge Mining consistently maintains an environmentally responsible approach, leveraging new technologies to drive the transformation of mining practices toward cleaner and greener production. The Company vigorously promotes green mine construction, and reduces resource consumption through optimized processes and equipment configurations. It aims to integrate cuttingedge technologies and produce cleaner products as the foundation for its green transition.

Construction of Green Mine

As a mineral-based enterprise and a national pilot unit for green mines, Zangge Mining recognizes the importance of green mine construction. It revised the original The Administrative Measures Green Mine Construction, adjusted the leadership team, and further improved the management mechanism. Zangge Mining employs sustainable production and operation models, implementing multi-faceted measures to enhance green mine construction capabilities. The Company fully implements The Mine Geological Environmental Protection and Land Reclamation Plan during project planning, operation, and post-closure phases, ensuring sustainable ecological development.

Clean Technology Opportunities

The global energy structure is transitioning towards low-carbon and clean energy in an accelerated way. The rapid development of the new energy vehicle industry has further driven the growth in demand for power batteries. As a key raw material, lithium's market value and strategic position have become increasingly prominent. Riding on this wave and leveraging the advantages of its salt lake resources, Zangge Mining has invested in building a lithium carbonate production line since 2018. Innovatively using the non-reusable brine from potash fertilizer production for lithium salt extraction, the Company has improved the comprehensive utilization efficiency of mineral resources. At the same time, it has accelerated the layout of the industrial chain and expanded into areas related to clean energy.

Clean Production Practices

As a company located in the special geographical environment of the Qinghai-Tibet Plateau, Zangge Mining has operated in compliance with the requirements of laws, regulations and regulatory documents such as The Cleaner Production Promotion Law of the People's Republic of China and The Notice of the List of Enterprises Subject to Cleaner Production Audits in Haixi Prefecture in 2024, and continuously promoted multi-category technological transformations related to cleaner production. Based on the requirements of protecting the ecological environment, the Company has promptly optimized the technical route, applied green production technologies and the principles of circular economy, and effectively promoted the realization of cleaner production goals.

Digital Intelligence Productive Forces

In the process of promoting innovation and cleaner production, digital and intelligent productivity, as a key force to improve production efficiency and sustainable development, is gradually becoming the core of the Company's industrial transformation and upgrading. Through the deep integration of digital and intelligent technologies, the Company's DCS (Distributed Control System) construction is applied in multiple production links.

In March 2024, Zangge Potash Fertilizer passed the system certification audit of The Requirements for the Integration Management System of Informatization and Industrialization (GB/T 23001-2017) and The Grading Requirements for New Capabilities of the Integration Management System of Informatization and Industrialization (GB/T 23006-2022) issued by the Ministry of Industry and Information Technology of the People's Republic of China, obtained the evaluation certificate for the construction of Class A project management ability of the "Integration of Informatization and Industrialization" management system, and received special subsidy funds issued by the Department of Industry and Information Technology of Qinghai Province.