While changing and affecting the global ecosystem and natural environment, climate change also exerts deep impacts on global economic development and social consumption concepts. which in tum affects the survival and development of enterprises. Zangge Mining pays close attention to global climate change, and proactively identifies risks and opportunities brought out by climate change and makes strategies accordingly At the meantime, we keep optimizing our energy structure, and comprehensively enhancing our energy efficiency. and endeavor to reduce greenhouse gas emissions, to make positive contributions to the Paris Agreement Temperature Targets and China's carbon peaking and carbon neutrality goals.

Identification and management of climate risks and opportunities

change on our production and operations. To strengthen our resilience against climate challenges and efficiently prevent and manage related risks, we have implemented a comprehensive top-down ESG management system. Within this system, the ESG and Sustainability Team plays a crucial role in identifying risks associated with climate change and collaborating closely with relevant departments and subsidiaries to formulate solutions and ensure their effective implementation. This year marked our first adoption of the Task Force on Climate-related Financial Disclosure (TCFD) Framework, Under this framework, we have systematically identified climate risks and opportunities and subsequently developed corresponding solutions with a particular focus on our major production sites.

Physical risks:We performed a scenario analysis using two Representative Concentration Pathways(RCPs) adopted by the Intergovernmental Panel on Climate Change (IPCC)-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 in the table below.

Transition risks:In the context of the national strategy of "dual carbon goals" and the green transformation of global industries. extremal climate-related policies, technological innovations, market sentiment, and changing consumer preferences will pose potential compliance risks and cost pressures for all companies. Having identified and evaluated the transformation risks we face based on our business development, external policy adjustments, industry trends, and other factors, we have formulated preliminary corresponding solutions.

Energy management and clean technology opportunities

Zangge Mining strictly adheres to the Law of the People's Republic of China on Energy Conservation and other relevant regulations. We have developed and actively implemented several procedural documents, such as the Energy Management Regulations, Energy Performance Parameter Control Procedure, and Energy Manual, and effectively established an energy management system under ISO 50001. During the Reporting Period, both Zangge Potash Fertilizer and Zangge Lithium achieved the ISO 50001 energy management system certification.

We place great importance on energy management and have established a comprehensive three-tier system consisting of the Company, departments (workshops), and workgroups. This network ensures that everyone within the Company is involved in and committed to our energy management efforts. Additionally, the Company has established an energy management leading group, headed by the General Manager. Responsible for overseeing energy management and making decisions related to energy use.

Organizational structure of energy management

Energy Management Actions:Actively implementing energy management actions is crucial for responding to climate change and promoting transformation towards low-carbon development During the Reporting Period, Zangge Mining has strengthened energy management and diligently promoted the effective and detailed implementation of various energy management actions.

Clean technology opportunities:Zangge Mining is dedicated to the continuous exploration of clean technology and energy efficiency opportunities. Since identifying global energy transition opportunities in 2018, the Company has built new lithium carbonate production line, using tai brine from potash production as raw material for lithium extraction. This initiative has enhanced the comprehensive utilization of water and mineral resources. In 2023.we have enhanced our clean technology investment strategy by expanding our lithium resource reserves. We have achieved this through participation in industrial development funds, equity mergers and acquisitions, and other approaches.

Moreover, following an energy policy focused on "legal compliance, continuous improvement, innovative development, cost reduction, and efficiency enhancement", we actively explore energy conservation opportunities and optimize our energy structure through equipment upgrades, utilization of energy-saving technologies, and adoption of clean energy alternatives.

Guided by the environmental management principles of "priority to protection, emphasis on prevention, integrated governance, public participation, and liability assumption", Zangge Mining continuously enhances its environmental management system, strengthening the management of resource consumption and pollutants discharge and improving risk prevention capabilities. By doing so, we strive to minimize negative environmental impacts throughout the entire product lifecycle.

Management system and structure

We strictly adhere to the Environmental Protection Law of the People's Republic of China and other relevant environmental regulations. We have established an ISO 14001-based environmental management system and developed a series of internal environmental management systems, including the Environmental Protection and Safety System and Operation Management of Environmental Protection Facilities. During the Reporting Period, we formulated and published an Environmental Protection Policy to communicate our commitment to environmental sustainability to all employees and to encourage our partners, suppliers, and contractors to implement relevant policies.

In terms of environmental management stucture, the Board of Directors oversees the implementation of environmental protection policies, while the General Manager is directly responsible for environmental management, including convening regular EHS meetings to supervise, inspect, and plan related work. To ensure that every employee meets their environmental protection responsibilities, we have implemented a target-based responsibility system. This system integrates environmental protection tasks into production and operation assessments, with 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 outines our environmental protection goals for the year and ensures that they are effectively implemented.

Environmental risk management

Zangge Mining rigorously implements the "three simultaneous" environmental protection principle and the environmental impact assessment system. We conduct environmental impact assessments for all new, renovated, and expanded projects and ensure timely approval. Upon project completion, we promptly conduct environmental protection inspections to ensure compliance with all relevant regulations. We also conduct regular internal and external audits to proactively identify and address problems and deficiencies in environmental management prevent potential pollution risks, and protect the environment and public interests. During the Reporting Period, Zangge Lithium passed a third-party audit and obtained the ISO 14001 environmental management system certification.

To effectively prevent and respond to environmental emergencies, we continuously improve our emergency response mechanisms. This includes regularly updating our Emergency Response Plan for Environmental Emergencies and conducting annual emergency drills to ensure the effectiveness of the plan and our measures. To improve environmental awareness and compliance among our employees, we also regularly provide environmental education and training to all employees. This includes thorough explanations of environmental laws and regulations, as well as the requirements for compliant disposal of industrial "three wastes". During the Reporting Period, we have conducted 7 environmental education and training sessions, covering 538 employees.

Zangge Mining strictly complies with the Water Law of the People's Republic of China, the Law on Prevention and Control of Water Pollution, and applicable national and local water consumption and drainage standards. We have established internal policy documents such as the Water Conservation Management System and System for Protecting Ecological Water Use. These policies guide us in actively practicing water environmental protection, efficient utilization of water resources, and the reuse of treated wastewater in our production and operations. Additionally, our ESG management system clearly defines the responsibilities of the Board of Directors in supervising and evaluating water resource management. The ESG and Sustainability Management Team is responsible for formulating relevant strategies and performance targets.

Water use management

Zangge Mining's main sources of water include surface water, groundwater, and municipal water supply. Due to the special geographical features of the salt lake industry. our main production activities are located in areas with limited water resources due to arid conditions and little rainfall To ensure the water security of our production and operations, we actively identify and manage water-related risks and regularly assess the effectiveness of our water resource protection measures.

Water risk management:During the environmental impact assessment phase before project implementation. we analyze the reasonableness of water use, the conditions of water sources for abstraction, and the potential impact on the water environment. This analysis takes into account the hydrogeological conditions, surface water, and groundwater at the project site We also establish a reserve water source and an emergency response system to address potential issues such as water source interruptions and water pollution to continuously strengthen our water risk management Furthermore, we are dedicated to the protection of water sources We explicity prohibit the destruction of vegetation related to water source protection, install flow meters to regularly track and monitor water use,and continuously test and manage the water quality of water sources.

Water conservation management

Zangge Mining has implemented a standardized water conservation management system. We create annual water use plans, set water use quotas per unit and establish water conservation targets for production workshops We also conduct monthly statistics and analysis of water conservation status and perform quarterly performance assessments Furthermore, we have established a water conservation supervision and inspection mechanism. This includes inspections of water faculties, equipment, and pipelines by designated personnel to prevent prolonged use of running water and address issues such as leaks and drips. Moreover, we are committed to enhancing water resource efficiency during production. We achieve this by improving production processes, using water-saving equipment, and adopting water recycling measures to minimize the need for new water consumption.

Zangge Mining regularly conducts water conservation awareness and training activities to enhance employees' understanding and encourage active participation in water conservation management We also actively participate in water conservation activities organized by water resource authorities and local communities, taking practical steps to lead and encourage the public to focus on and practice water resource protection.

Wastewater management

Zangge Mining is dedicated to maximizing the comprehensive utilization of wastewater. Through ongoing research and development, we have strengthened our water resource recycling processes, achieving 100recycling of productionwastewater. Domestic wastewater from Zangge Potash Fertilizer and Zangge Lithium is treated using integrated wastewater treatment facilities. The treated water that meets relevant standards is the reused for ore dissolution or discharged into evaporation ponds. To prevent water pollution accidents, we have implemented ant-seepage and containment measures for temporary wastewater storage pools.

During the Reporting Period, Zangge Potash Fertilizer constructed new wastewater treatment facilities in Workshop 1and Workshop 8, each with a treatment capacity of 170 td, to better manage increased wastewater due to a growing workforce.

Zangge Mining is committed to enhancing the operational efficiency of its environmental protection management facilities and strengthening the management of "three wastes"-waste gas, wastewater, and solid waste. The Safety and Environmental Protection Office oversees the supervision and management of treatment facilities, aiming to reduce waste discharge through effective control measures and improve ecological and environmental management capabilities.

Waste gas management

Pollution and applicable national and local waste gas emission standards. We have implemented facilities for boiler dust collection, flue gas cleaning. and dust control during production to effectively manage particulate matters, nitrogen oxides, and other major air pollutants generated during production. We have created ledgers for the operation and management of environmental protection facilities and designated special personnel to inspect and maintain waste gas treatment facilities. We also regularly commission third-party testing to ensure that these facilities operate stably and comply with waste gas emission standards.

Solid waste management

Zangge Mining strictly adheres to the Solid Waste Pollution Prevention and Control Law of the People’s Republic of China, Pollution Control Standards for the Storage of Hazardous Wastes, and other relevant laws and regulations. We follow the principles of "minimization, resource utilization, and harmless disposer to promote comprehensive solid waste management and utilization. We follow a classification-based approach to manage the waste we generate and keep detailed ledgers for waste generation, storage, and transfer This approach helps us reduce waste and promote its comprehensive utilization while ensuring compliant disposal practices.

For hazardous waste management, we have established and implemented a Hazardous Waste Management System. We have created windproof, rainproof, sunproof, and leak-proof hazardous waste storage facilities categorizing different types of hazardous waste and marking them with warning signs as required by regulations. Additionally. we develop an annual hazardous waste management plan, which is filed with the relevant authorities, to ensure that hazardous waste is managed compliantly throughout the entire process.

In 2023,Zangge Potash Fertilizer planned to build a new hazardous waste warehouse in the Qarhan mining area. This facility will adopt concentrated management of hazardous waste, including storage depots, waste material yards, and oil depots. The project has already passed the safety assessment and safety facilities design review and has obtained the construction permit. Construction is expected to begin in 2024, following approval after the environmental impact assessment.

Zangge Mining places great importance on the impact of its production and operations on the surrounding ecological environment. We are committed to the principle that "lucid waters and lush mountains are invaluable assets", continually strengthening biodiversity protection, enhancing green mining, and promoting the harmonious development of mineral resources and ecological preservation.

Ecological protection

Zangge Mining recognizes the critical importance of ecological protection and the prevention of natural environment degradation. as well as their close relationship with climate change. During the Reporting Period. we formulated and published the Biodiversity Protection Policy to further improve ecological management throughout the lifecycle of mineral resource development and minimize our impact on biological habitats. This policy provides guidelines for achieving ecological protection in all production and operational activities. It requires that all personnel of our subsidiaries, as well as staff at our salt lake projects, exploration sites, production bases, and other operational projects, along with our suppliers, adhere to the policy requirements.

Green mining

As a participant in China's plot green mining initiatives, Zangge Mining actively takes on its due responsibly for comprehensive ecological improvement and is dedicated to the utilization of recyclable and renewable resources. Through various measures, we consistently elevate our standards for green mining and foster harmonious growth between resource utilization and environmental preservation, thereby contributing to the realization of amore beautiful China.