Anhui Zhongyuan New Materials Co.Ltd(603527) : announcement on foreign investment projects

Securities code: Anhui Zhongyuan New Materials Co.Ltd(603527) securities abbreviation: Anhui Zhongyuan New Materials Co.Ltd(603527) Announcement No.: 2022008 Anhui Zhongyuan New Materials Co.Ltd(603527)

Announcement on foreign investment projects

The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents.

Important content tips:

Investment projects: production line project with annual output of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank (hereinafter referred to as "project I") and project with annual output of 50000 tons of battery foil (hereinafter referred to as "Project II"). The investment amount of project I is about 2.016 billion yuan and Project II is about 700 million yuan

Special risk tips:

1. The foreign investment still needs to be considered by the general meeting of shareholders, which is still uncertain. 2. Macroeconomic environment risk: as the basic industry of industrial development, non-ferrous metal processing industry is affected by the macroeconomic environment and the fluctuation of downstream industries. There is a risk that the performance of the project will be affected by the macroeconomic environment.

3. Raw material price fluctuation risk:

Project 1: the raw materials for production of the company are mainly electrolytic copper, and the fluctuation of copper price has a great impact on the operating cost of the company. The company adopts the pricing mode of "raw material price + processing fee". The main raw material is electrolytic copper, and its price fluctuates with the market. During the reporting period, the company adopted the method of determining production by sales and ordering by production to effectively deal with the risk of price fluctuation of electrolytic copper. However, if the price of electrolytic copper fluctuates sharply in the future, it may lead to the fluctuation of the company's operating performance, and the company has the operating risk caused by the sharp fluctuation of the price of raw materials.

Project 2: the main raw materials required for the production of the project are aluminum sectors and strips. With the change of supply and demand in the global market, the price of raw materials also fluctuates continuously. The fluctuation of raw material price will affect the production cost of the company, increase the operation risk of the company and have a significant impact on the production and operation performance of the company.

4. Risk of project policy and approval process: the energy consumption index, land and environmental impact assessment required for the construction of this investment project have not been finally approved, and there is great uncertainty whether they can be successfully approved. If the approval is not passed, there is a risk that the project cannot be started or the commencement time is uncertain, resulting in project delay, change or termination. 5. Project construction risk: project I and Project II are implemented by stages, and the construction cycle is long. The project investment amount and construction cycle are planned or estimated. After completion, many factors such as production line reaching production and market development are uncertain. The relevant data do not represent the company's prediction of future performance, nor do they constitute a performance commitment to shareholders. Whether and when the later project will be implemented will be determined according to the economic environment, industrial policies, changes in market demand, operation and management and other factors. There is uncertainty whether the later project can be carried out smoothly. 6. Talent and technology risks: project I: the production technology of the project is mature, reliable and advanced, and the main production equipment is domestic advanced, reliable and applicable equipment. However, whether we can stably produce high-quality products depends not only on the production mode and equipment level, but also on the technical ability and management level. The company will continue to attract management and technical talents with relevant production experience, and pay attention to the training of employees to reduce the risks of talents and technology of the project. The company will gradually expand the industrial chain, expand the types of aluminum foil products, and gradually improve the competitiveness of the company. Although the company has been deeply engaged in the copper rolling processing industry for many years and has rich experience accumulation, and the aluminum rolling processing industry belongs to the non-ferrous metal rolling processing industry, which has similarities in process. The company's accumulated experience for many years helps the company quickly master relevant processes in this industry, but the company is involved in the aluminum rolling processing industry for the first time, and the technical reserve in this field is limited, There are still uncertain risks whether it can support the smooth implementation of the project, and subsequent companies will increase investment in technology R & D. The company has conducted a certain talent reserve in the aluminum calendering industry, but the talent reserve is limited. There is still uncertain risk whether it can support the smooth implementation of the project. The follow-up company will continue to introduce high-end talents. 7. Market risk: the investment project may face the risk that the investment benefit of the project does not meet the expectation due to uncertain factors such as macroeconomic environment, industry cycle and market changes. Please invest rationally and pay attention to investment risks. 8. Financial risk: the investment amount of this project is relatively large, and the subsequent investment plan and time will depend on the actual operation and development of the company and the capital situation of the company, the actual demand of funds and the raising of funds

There is still uncertainty about whether it can be in place on time. In the short term, it may affect the company's cash flow and increase financial expenses. In the process of project implementation, the company will reasonably arrange the scale and progress of fund use, strictly standardize procurement and project construction, and strictly control the project cost on the premise of ensuring the project quality and controlling the implementation risk.

9. The project will not lead to significant changes in the company's main business and is not expected to have a material impact on the company's operating performance in the short term.

1、 Overview of foreign investment

(I) basic information of foreign investment

1. Item 1

Based on the current situation that the existing production capacity of Anhui Zhongyuan New Materials Co.Ltd(603527) (hereinafter referred to as "the company" or " Anhui Zhongyuan New Materials Co.Ltd(603527) ") has reached full capacity and full sales, according to the company's strategic development plan, the company plans to take Anhui Yongjie Copper Co., Ltd. (hereinafter referred to as "Yongjie copper") as its wholly-owned subsidiary, The project with an annual output of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank is constructed in Nanling County, Anhui Province. The project is implemented in two phases. The first phase of the implementation project is the production line project with an annual output of 50000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank. Yongjie copper purchased land to build factories and new production lines in Nanling County, Anhui Province.

Phase II implementation project is relocation and reconstruction project. According to the needs of urban planning, the people's Government of Nanling County plans to collect and store the current plant area of Yongjie copper. After being collected and stored, Yongjie copper will move to the new plant as a whole, and increase the existing annual capacity of 35000 tons to 50000 tons.

After the implementation of the above new construction, relocation and transformation projects, Yongjie copper will have an annual production capacity of 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank.

According to the investment needs of the project, the company plans to increase the capital of Yongjie copper. After the capital increase, the registered capital of Yongjie copper will increase from 80 million yuan to 200 million yuan.

The new production line and relocation and reconstruction project will help the company expand production capacity, expand development space and strengthen the competitiveness of the company, so as to cope with the rapidly increasing market demand and improve market share.

2. Item 2

The company plans to take the newly established wholly-owned subsidiary (hereinafter referred to as the "newly established entity") as the investment entity to purchase land for plant construction in Wuhu Economic and Technological Development Zone, Anhui Province, and build a battery foil production line with an annual output of 50000 tons.

The project will add battery aluminum foil and other products to the company, gradually broaden the company's industrial chain, enrich product types, optimize industrial layout and improve comprehensive competitiveness.

3. The specific investment content and amount are as follows:

Unit: 10000 yuan

No. project investor main content of project investment estimated investment amount

Project 1: Yongjie copper's annual output of 100000 tons of high-precision copper alloy strip and 20161050000 tons of copper strip blank production line project

Project 2: 70000 tons of battery foil project with an annual output of 50000 tons

(II) deliberations of the board of directors

On March 4, 2022, the 11th meeting of the Fourth Board of directors of the company deliberated and approved the proposal on investing in the construction of 100000 tons of high-precision copper alloy sector and strip and 50000 tons of copper strip blank production line project and the proposal on investing in the construction of 50000 tons of battery foil project. According to the Listing Rules of Shanghai Stock Exchange, the Anhui Zhongyuan New Materials Co.Ltd(603527) articles of association and other relevant provisions, the proposal for the investment and construction of new projects needs to be submitted to the general meeting of shareholders of the company for deliberation.

(III) the proposal for investment and construction of new projects does not constitute related party transactions, nor does it constitute major asset restructuring as stipulated in the administrative measures for major asset restructuring of listed companies.

2、 Basic information of investors

(I) project I

1. Investor

Company name: Anhui Yongjie Copper Co., Ltd

Unified social credit Code: 91340223664201163p

Registered capital: 80 million yuan

Legal representative: Feng Quanhu

Date of establishment: July 5, 2007

Business term: long term

Address: Economic Development Zone, Nanling County, Wuhu City, Anhui Province

Business scope: production, sales and processing of sectors, strips, tubes, rods, rows and wires of non-ferrous metals and ferrous metals; Acting as an agent for the import and export of various commodities and technologies (except for the commodities and technologies restricted or prohibited by the state).

2. Basic information of the subject of the investment agreement

Name of the other party: Nanling County People's Government

Nature: local government agency

(II) Project II

1. Investor

The newly established entity will be established after the relevant proposal is considered by the general meeting of shareholders and disclosed in the progress announcement.

3、 Basic information of investment projects

(I) basic information of investment project I

1. Project Name: 100000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank production line project 2. Project location: Nanling County Economic Development Zone, Wuhu City, Anhui Province. The total land area of the project is about 260 mu (subject to the actual measurement). The land use and ownership nature are industrial land, and the transfer period is 50 years. The company will transfer the land use right of the above project land through bidding, auction and listing in accordance with national regulations, and the transfer price shall be implemented in accordance with the relevant provisions on the transfer of state-owned land in Nanling County.

3. Main contents of project investment: the design scale of the project is 150000 tons. The project is put into operation in two phases. The first phase is a new production line with an annual output of 50000 tons of high-precision copper alloy strip and 50000 tons of copper strip blank; The phase II production project is a relocation and reconstruction project.

Phase I of the project: Yongjie copper will transfer the land use right of the project through bidding, auction and listing in Nanling County, Anhui Province, purchase land, build plants and carry out project construction.

Phase II of the project: according to the needs of Nanling County's urban planning, sign relevant expropriation compensation agreements with Nanling County government at a selected time. When the second phase of the project is implemented, Yongjie copper will move to the new plant area as a whole and improve the existing production capacity. The company has conducted preliminary consultations with Nanling County Government on the land and housing expropriation compensation of Yongjie copper, and will sign relevant agreements and issue progress announcements after being deliberated and approved by the board of directors and the general meeting of shareholders. The amount of land and house expropriation fees shall be subject to the final agreement signed.

4. Project investment amount: the total investment of the project is 2016.1 million yuan, including construction investment of 803.5 million yuan. 5. Project construction period: the total construction period is 36 months, including 24 months for phase I and 12 months for phase II.

6. Project approval procedures and progress: the project has obtained the project filing form of Nanling County Development and Reform Commission (220234022304-01284010) issued by Nanling County Development and Reform Commission, and the approval procedures of environmental assessment and other projects are being handled.

7. Mode of contribution: self raised funds for investment and construction.

8. Project feasibility analysis:

8.1 necessity and feasibility of the implementation of this investment project

8.1.1 background and purpose of the investment project

8.1.1.1 the state has issued a number of policies to support the development of the industry

The guidance catalogue for key products and services of strategic emerging industries (2016) covers five major fields and eight industries of strategic emerging industries. Among them, the advanced structural materials industry in new materials clearly refers to "high-precision copper and tube, rod and linear products" and "high strength and high conductivity copper materials", "rolled copper foil" and other copper calendering materials for electronic products. Made in China 2025 proposes to promote the efficient recycling of resources, promote the standardized and large-scale development of resource recycling industry, strengthen the support of technical equipment, and improve the comprehensive utilization level of bulk industrial solid waste, waste metals, waste electrical and electronic products. Policy documents such as the development plan of nonferrous metals industry (20162020) and the guiding opinions on creating a good market environment to promote the structural adjustment of nonferrous metals industry, promote transformation and increase benefits (GBF [2016] No. 42) emphasize that high-end copper and other new material products should be listed as the development focus, improve the level of product processing technology, and improve product quality, grade and competitiveness, Further improve the global market share of copper processing materials.

8.1.1.2 the company is committed to optimizing the product structure and continuously extending to high value-added products

Since its establishment, the company has mainly engaged in the R & D, production and sales of red copper strip foil. Based on the non-ferrous metal rolling processing industry, after years of technology accumulation, the company has mastered the technical process of the key links in the production of red copper strip foil products. As of December 31, 2021, the company has a total of 82 patents independently developed. The company uses a number of patented technologies and production processes independently developed to organize production and provide customers with a series of red copper strip foil products. The company's products are widely used in transformers, power cables, communication cables, radiators, heat exchangers, electronic appliances, new energy and other fields.

The company has always paid attention to technological transformation and continuously improved its manufacturing capacity to lay the foundation for high-quality product manufacturing. The company has always been committed to optimizing the product structure and continuously extending to high value-added products.

8.1.1.3 expand production base, improve production capacity and increase market share

After the completion of the project, it will effectively expand the production capacity of high-precision copper alloy strip, expand the development space and strengthen the competitiveness of the company, so as to cope with the rapidly increasing market demand and improve the market share.

8.1.1.4 enhance the company's sustainable profitability and maximize the interests of shareholders

This project focuses on the company's main business

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