BECOMING A LEADER IN INNOVATION IN PERMANENT

MAGNETIC MATERIALS

Stock code:603072 2025

Environmental Social and Governance (ESG) Report

Baotou Tianhe Magnetics Technology Co.Ltd.CONTACT INFORMATION

Addr e s s ： No.8-17 Rare Earth Avenue Rare Earth High-tech Industrial Park BaotouInner-Mongolia.Emai l ： project@thmagnetics.com

Tel：0472-5240512Contents

GOVERNANCE PRODUCTS

With Magnetism as the Foundation The Connecting Industry through

About this Report 03 Groundwork Is Strengthened; Magnetics and Leading Innovation

with Responsibility as the Bond Develop-

ment Is Advanced 01 with Intelligence APPENDIX 73Report Description 03 03

Statement of Reporting Standards 03 Key Performance Table 73

Reporting Scope and Boundary 04 Comprehensive Responsibility Governance 15 Building High-quality Magnetic Materials 41 Indicator Index 79

Sources of Data and Reliability Assurance 04

Efficient Management Mechanism 20 Assurance Statement 83

Report Release and Access 04 Adhering to Technological Innovation 48

Feedback Form 85

Compliant and Steady Operations 22 Building a Shared Responsibility Chain 54

Chairman’s Statement 05

Staying True to the Original

Aspiration through Magnetics ENVIRONMENT SOCIETY

Fulfilling Responsibilities and 07

Building the Future Together Protecting Ecology through Magnet- 02 Bringing Together Strength through Magnetics ics and Creating Green Cleanliness and Creating Shared Benefits for All Parties 04

Discover THMag 09

Company Profile 09 Improving Environmental Management 27 Building a Talent-driven Enterprise 59

Tianhe Culture 10

Product Introduction Strengthening Pollution Management 28 Protecting Safety and Health 6711

Market Layout 11 Addressing Climate Change 29 Creating Social Value Together 71

Awards and Honours 12

Building a Green Industrial Park 34

01 02ABOUT THIS REPOR

About this Report

Report Description Reporting Scope and Boundary

This report is the second Environmental Social and Governance (“ESG”) report published by Baotou Tianhe Magnetics Technology Unless otherwise specified the data contained in this report cover the period from 1 January 2025 to 31 December 2025 (hereinafter

Co.Ltd. (hereinafter referred to as “THMag” “the Company” or “we”) for the public. referred to as “2025” the “Year” or the “Reporting Period”). To enhance the comparability and completeness of the report certain

data and content have been appropriately traced back to previous years.Upholding the sustainable development philosophy of THMag this report aims to present to stakeholders including shareholders

employees government authorities customers partners and the public a true account of the Company’s practices and achievements Unless otherwise specified this report covers the ESG-related performance of the headquarters and all subsidiaries of Baotou Tianhe

in fulfilling our responsibilities in 2025 in areas such as corporate governance compliant operation quality and safety customer Magnetics Technology Co.Ltd. and the information boundary is consistent with that of the Company’s annual report.service talent development environmental protection and social contribution.Sources of Data and Reliability Assurance

Unless otherwise specified the information and data cited in this report were derived from the Company’s statistical reports and

relevant documents as well as ESG information collected and reviewed by the Company.Unless otherwise specified the currency and

Statement of Reporting Standards monetary amounts involved in the data contained in this report are denominated in RMB.The Board of Directors of the Company warrants that this report contains no false or misleading statements and is responsible for the

The Guidelines No. 1 for Self-regulation of Listed Companies—Standardized Operation issued by the Shanghai Stock Exchange. authenticity accuracy and completeness of its contents.The Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability Report (Trial) issued by the Shang-

hai Stock Exchange.The China Corporate Sustainability Reporting Guidelines (CASS-ESG 6.0) issued by the Chinese Academy of Social Sciences. Report Release and Access

The recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This report is published once a year. The electronic Chinese and English versions are available on the Company’s official website

The United Nations Sustainable Development Goals (SDGs). (www.thmagnetics.com) and the website of the Shanghai Stock Exchange (www.sse.com.cn).The GRI Sustainability Reporting Standards (GRI Standards) (2021 Edition) issued by the Global Reporting Initiative. For further enquiries or if you have any questions or suggestions regarding this report or the Company’s ESG work you may contact the

Company through the following means.Address:No.8-17 Rare Earth Avenue Rare Earth High-tech Industrial Park BaotouInner-Mongolia.Email:project@thmagnetics.com

Tel: 0472-5240512

03 04CHAIRMAN’S STATEMENT

Green Transformation and Low-carbon Practices for a Better Home

Chairman’s Statement In response to industry changes driven by the “dual carbon” goals green development was adopted as one of the core strategies. The

effective operation of the ISO 14001 Environmental Management System and the ISO 50001 Energy Management System was further strength-

ened and the standards and requirements for “Green Supply Chain Factory” and “Green Factory” were strictly followed. During the year

RMB 1.0277 million was invested in the upgrading of environmental protection facilities and technological transformation with a focus placed

on energy-saving projects such as waste heat recovery and green electricity substitution. After the waste heat recovery project was put into

operation electricity consumption during the heating season was reduced by 57% with remarkable results achieved. Through process optimi-

zation and resource recycling the annual water recycling and reuse rate reached 99.69%. The adoption of KLT reusable containers has

increased bicycle transportation volume by 50%. Resource consumption and environmental footprint were both reduced and the solemn

commitment to “protecting the ecology through magnetics” was honoured through practical action.Innovation-driven Leadership and Strong Capabilities for Industrial Upgrading

A strong focus was maintained on the field of high-performance rare earth permanent magnetic materials and technological innovation was

regarded as the source of core competitiveness. In 2025 research and development investment exceeded RMB 112 million and continued efforts

were made in core technology breakthroughs and product upgrading. A number of core patents were added and self-developed technologies

including the intelligent continuous furnace and the 3D diffusion process were successfully industrialised. Through precise temperature control

design the intelligent continuous furnace increased the product qualification rate by 5%–10%. The 3D diffusion process enabled directional and

differentiated performance of permanent magnetic materials according to specific needs further expanding product application scenarios. In

recognition of solid product quality and technical strength honours such as “Sustainable Long-term Partner” and “Excellent Supplier” were

awarded by globally renowned customers including Volvo Bosch and Daikin. High-quality industrial development was supported by technologi-

cal innovation and the upgrading of downstream green and low-carbon sectors such as new energy vehicles wind power and energy-efficient

household appliances was further advanced.People-oriented Development and Responsibility-driven Value Creation

A strong focus was maintained on the field of high-performance rare earth permanent magnetic materials and technological innovation was

regarded as the source of core competitiveness. In 2025 research and development investment exceeded RMB 112 million and continued

efforts were made in core technology breakthroughs and product upgrading. A number of core patents were added and the intelligent

continuous furnace and the 3D diffusion process were successfully industrialised. The intelligent continuous furnace optimizes the furnace

insulation structure and temperature control logic shortening the product production cycle by approximately 5%–10% compared with the

original single furnaces. The 3D diffusion process enabled directional and differentiated performance of permanent magnetic materials

according to specific needs further expanding product application scenarios. In recognition of solid product quality and technical strength

The year 2025 was a milestone for THMag. The Company was successfully listed on the Main Board of the Shanghai Stock Exchange honours such as “Sustainable Long-term Partner” and “Excellent Supplier” were awarded by globally renowned customers including Volvo

Bosch and Daikin. High-quality industrial development was supported by technological innovation and the upgrading of downstream greenunder stock code 603072 marking a new stage in the capital market. Throughout the year the mission of “Customer First Cleaning theand low-carbon sectors such as new energy vehicles wind power and energy-efficient household appliances was further advanced.World Magnetising the Future” was upheld and the vision of “becoming a leader in innovation in permanent magnetic materials”

was pursued. ESG principles were deeply integrated into strategic decision-making and daily operations and solid progress was made Looking back remarkable achievements were made. Looking ahead the path forward remains long and demanding. At this new starting point the

in corporate governance environmental protection product innovation and social contribution. core values of “Safety Striving Innovation Integrity and Responsibility” will continue to be upheld by THMag. Guided by ESG Medium-term Strategy

(2025-2030) efforts will be focused on three key directions namely green and low-carbon transformation breakthroughs in technological innova-

tion and collaborative and mutually beneficial supply chain development. By 2030 operational carbon neutrality is targeted to be achieved the

proportion of green electricity is targeted to 100% and R&D intensity is targeted to be increased to over 4%.Strengthening the Foundation with Compliance and Supporting Steady Development through Transparency

It is firmly believed that only by adhering to the path of sustainable development can steady and long-term progress be achieved. Going forward

In 2025 the governance structure of the General Meeting the Board of Directors and the management was further improved. A three-ti- THMag is committed to working together with all partners continuing to deepen its presence in the rare earth permanent magnet industry support-

er ESG management system with clear responsibilities and efficient coordination was established and sustainable development ing the achievement of the “dual carbon” goals striving unremittingly to build a “Century-old THMag” and become a global leader in the rare earth

performance was incorporated into senior management appraisal thereby strengthening the foundation for corporate development permanent magnetic materials industry and making greater contributions to the sustainable development of society.through transparent and compliant operation. A total of 213 announcements of various kinds were disclosed during the year and a

100% response rate to investor communications was maintained effectively safeguarding the lawful rights and interests of sharehold- Baotou Tianhe Magnetics Technology Co.Ltd.

ers and stakeholders. Chairman：

05 06STAYING TRUE TO THE ORIGINAL ASPIRATION THROUGH MAGNETICS FULFILLING RESPONSIBILITIES AND BUILDING THE FUTURE TOGETHER

Staying True to the Original Aspiration through Magnetics

Fulfilling Responsibilities

and Building the Future Together 2024 DEVELOPMENT STAGE

Awards such as “Excellent Strategic Partner” “Key Supplier”

and “Excellent Supplier in the Asia-Pacific Region” were

granted by customers.The autonomous region-level award for the optimisation and

restructuring of key laboratories was received.

2020 2022 DEVELOPMENT STAGEDEVELOPMENT STAGE

The Company was rated as a National Intellectual Property

Advantage Enterprise and a high-quality development

The title of “Green Factory” was granted by the Ministry of

industrial enterprise of Inner Mongolia Autonomous Region

Industry and Information Technology.and undertook a national key research and development

The No. 2 post-processing plant was put into operation and programme project under the Ministry of Science and

the intelligent factory was completed. Technology’s 14th Five-Year Plan.

2018 DEVELOPMENT STAGE 2025 DEVELOPMENT STAGE

The 10th anniversary of Baotou Tianhe and the 30th anniversary of The Company was successfully listed on the Shanghai Stock

Tianhe Group. Exchange on 3 January 2025 under stock code 603072.The “Tech Giant Enterprise” award and the “Outstanding Private The Company was rated as a benchmark enterprise for digitalEnterprise of Inner Mongolia” award were granted by the Baotou transformation in manufacturing and an advanced-level

Municipal Government and the People’s Government of Inner intelligent factory in Inner Mongolia Autonomous Region

Mongolia Autonomous Region respectively.

2015 GROWTH STAGE The design of the NdFeB base material plant for new energy 2023ranking third among the “Top 30 Private Enterprises for ScientificDEVELOPMENT STAGE and Technological Innovation” in the autonomous region.vehicles and the Phase II post-processing plant was completed. Multiple core technological achievements were granted 2021 invention patents in China and Japan.The production capacity of the sintered SmCo DEVELOPMENT STAGE The Company ranked 22nd among the “Top 30 Private Enterprises for Scientific and Technological Innovation in Inner

2012 A wholly-owned subsidiary was established and major project permanent magnet production line was expanded to STARTUP STAGE 2019 Mongolia” and was awarded the “Top 100 Private Enterprises investment was implemented further expanding the production 500 tons. DEVELOPMENT STAGE Approval was obtained for the key laboratory of the in Inner Mongolia” and the “Gold Prize of the Patent Award of capacity of high-performance rare earth permanent magnets.Baotou Tianhe’s “Industrialization Project for Rare autonomous region and the Chairman’s Quality Award of Inner Mongolia Autonomous Region”.The sintered SmCo production line was put into operation Earth Permanent Magnetic Materials for New Energy Inner Mongolia Autonomous Region and the second prize of

Awards such as “Best Supplier” “Excellent Supplier” “KeyThe national-level honours of “National Enterprise Technologywith an annual production capacity of 200 tons. Supplier” and “Sustainable Long-term Partner” were granted Vehicles” was rated by the Ministry of Industry and The shareholding system reform was completed. “Rare Earth Science and Technology” from the Chinese Center” and “National Green Supply Chain” were received. by customers.The DFP zero heavy rare earth process was successfully Information Technology as a national key project for Certification under the GB/T 29490-2013 intellectual property Society of Rare Earths were received.developed. the transformation and upgrading of the rare earth management system was obtained.industry.The Company was rated as a National High-tech Enterprise. The Company was rated as an Intellectual Property Advantage

Enterprise of Inner Mongolia Autonomous Region.The Company was rated as a Baotou Intelligent Manufacturing

Technology Demonstration Enterprise.The Company was rated as one of the first batch of innovation-lead-

ing private enterprises in Baotou.

2008 STARTUP STAGE 2017 GROWTH STAGE

The Company was officially established. Equity participation

was held by core personnel.GROWTH STAGE The new electroplating plant in the electroplating industrial

Designed production capacity: 10000 tons. 2013 park was launched and the production capacity of finished Startup Stage （2008-2012）Independently developed and manufactured: rapid products was further expanded.The Company was recognised as the “NdFeB Raresolidification furnace jet mill automatic compaction press Earth Permanent Magnetic Material Engineering Japanese continuous vacuum rapid solidification furnaces

and sintering furnace. Technology Research Center of Inner Mongolia and continuous sintering furnaces were successively putAutonomous Region” and the “Enterprise into operation. Growth stage （2013-2017）Technology Center” of the autonomous region. The DDP diffusion capacity exceeded 1000 tons.Development stage （2018-2025）

07 08DISCOVER THMAG

Discover THMag Tianhe Culture

Company Profile

Baotou Tianhe Magnetics Technology Co.Ltd. abbreviated as “THMag” was established in 2008 and was successfully listed on the

Main Board of the Shanghai Stock Exchange on 3 January 2025 under stock code 603072. THMag is a key National High-tech Enterprise

and technology innovation enterprise specialising in the R&D production and sales of high-performance rare earth permanent

magnetic materials with a principal focus on NdFeB and SmCo rare earth permanent magnets and the company provides integrated

rare earth permanent magnet solutions for customers.Our Name's Implication:

Blessed by heaven geographically rich resources excellent collaboration through team work.NdFeB SmCo

THMag’s 10000-ton production base is located in Baotou the world’s rare earth capital and is supported by a full rare earth permanent Our Mission: Magnetizing A Clean World

magnet industry chain covering rare earth raw material supply blank production finished product processing and surface treatment. The Explanation of Our Mission:To create great value to our customerswe will consistently producehigh energy magnetic materials to

Supported by advanced production technologies high-end product production and R&D capabilities and the design and manufactur- enable products that foster a global clean environment andmobile convenience.ing capabilities for key equipment THMag has developed core strengths in raw material supply technological innovation production

scale quality and cost during its continued growth.Our Vision:To Be An Innovation Leader In Permanent Magnetic Materials Industry

THMag’s product The Explanation of Our Vision:To be a leading supplier and global leader in the R&D of high performancepermanent magnets.Our Values(SDlIR): Safety Dedication Innovation Integrity Responsibility

new energy vehicles energy-efficient various

and automotive wind power household rail intelligent humanoid low-altitude aerospace computers consumer The Explanation of Our Values: The safety is considered our leading core value to be safe healthy& environmental friendly be dedicat-

components generation appliances transit manufacturing robots aircraft electronics

ed in our work to provide innovation to our customers andtreasure our integrity and responsibility with our employees our customers

and our community.......THMag’s products are energy-saving and environmentally friendly and are widely used in new energy vehicles and automotive compo-

nents wind power generation energy-efficient household appliances rail transit intelligent manufacturing aerospace computers

humanoid robots low-altitude aircraft and various consumer electronics.Going forward THMag will continue to uphold the philosophy of sustainable development with independent technological R&D and

innovation as the core. Full reliance will be placed on Baotou’s complete rare earth industry chain to further strengthen its presence in

the field of high-performance rare earth permanent magnetic materials consolidate its advantages in quality and brand promote the

spirit of craftsmanship and build a “Century-old THMag”. Greater contributions will be made to Baotou’s development of two rare

earth bases and efforts will be made to grow into a global leader in the rare earth permanent magnetic materials industry.

09 10DISCOVER THMAG

Product Introduction Awards and Honours

THMag is strategically positioned as a provider of high-performance rare earth permanent magnetic materials and adheres to the product Awards and Honours>

development philosophy of “high performance low resource consumption and green manufacturing”. Driven by independent innovation a

complete technological system has been established covering key links such as multi-component composition regulation grain refinement

grain boundary diffusion efficient green processing and new anti-corrosion coatings thereby forming core product capabilities with indepen- National National

dent intellectual property rights. Green Supply Chain

Green Factory

Management Enterprise

Complete Rare Earth Application Industry Chain> NdFeB> SmCo>

National National

High-tech Enterprise Enterprise Technology Center

THMag has established a complete industry chain THMag’s NdFeB permanent magnets The SmCo permanent magnets

system covering the R&D manufacturing and are mainly composed of neodymium produced by THMag mainly include National Benchmark Enterprise for Digital

application of rare earth materials. Relying on the iron and boron and are the third-gen- the 1:5 type and the 2:17 type. In Intellectual Property Transformation in Manufacturing of Inner

advantages of Baotou’s rare earth resources and eration rare earth permanent magnets addition to products of general

industrial cluster a vertically integrated layout with the strongest magnetic properties grades LT series products are also Advantage Enterprise Mongolia Autonomous Region

has been formed covering rare earth raw materi- currently available in the world. They available in which the effect of

al supply magnet design and R&D blank produc- feature high remanence high coercivity temperature on magnetic property

tion precision machining surface treatment and and excellent magnetic energy variation is minimal (-0.008%/°C:

downstream application solutions. product. 20–200°C). Advanced-level Intelligent Top 30 Private Technology Innovation

Factory of Inner Mongolia

Enterprises in Inner Mongolia

Market Layout Autonomous RegionTHMag has consistently adhered to the three strategic priorities of “technology R&D-driven development high-end market positioning andintelligent production management”. The Company has remained focused on its principal business of rare earth permanent magnetic materials

and has fully leveraged its pivotal role in the midstream of the industrial chain. While its strengths in green and low-carbon sectors such as new Enterprise Technology Center of Key Laboratory

energy vehicles wind power energy-efficient household appliances and 3C consumer electronics have been consolidated forward-looking

efforts have also been made in emerging fields such as robotics and the low-altitude economy. Based in China and serving major global markets Inner Mongolia Autonomous Region of Inner Mongolia Autonomous Region

including Europe Japan South Korea Southeast Asia and Mexico the Company has adhered to a direct sales model to respond precisely to

customer needs and has been committed to building long-term and stable win-win relationships with partners through continuous technologi-

cal innovation and a steady global presence thereby promoting the high-quality and sustainable development of the industry.ESG Evaluation>

CDP Score: B EcoVadis Bronze Medal SAQ 5.0 B91

11GOVERNANCE

With Magnetism as the Foundation The Groundwork Is Strengthened;

with Responsibility as the Bond Development Is Advanced

Upholding the integrated core philosophy of “people environment and benefits” THMag has continuously enhanced

governance effectiveness and operational transparency through multi-dimensional measures such as strengthening

corporate governance reinforcing internal control and audit systems advancing integrity and compliant operations and

continuously improving ESG governance thereby consolidating the governance foundation for the Company’s long-term

stable operation and high-quality development.Corporate management mechanism Compliance management Business ethics

ESG governance Integrity in operations Stakeholder communication 01

*Aligned with the United Nations Sustainable Development Goals

13 14GOVERNANCE: WITH MAGNETISM AS THE FOUNDATION THE GROUNDWORK IS STRENGTHENED; WITH RESPONSIBILITY AS THE BOND DEVELOPMENT IS ADVANCED

Comprehensive Responsibility Governance Strategy >The internal Tianhe Magnetics ESG Medium-term Strategy (2025–2030) was formulated by the Company. With “integrating ESG into the corporateDNA and achieving coordinated growth in economic and social value” as the long-term value orientation the strategic implementation path

ESG Management and key measures were defined and the ESG strategy was integrated into the Company’s overall management.Governance> Strategic Directions

The Sustainability Management Manual was formulated by the Company and a top-down ESG governance structure with clear responsibilities

and authorities was established. A three-tier accountability system was formed featuring decision-making by the General Meeting and the Short term (1–3 years): Establish the ESG governance system and complete baseline assessments of key topics such as

Board of Directors overall coordination by the Strategy and Sustainability Committee and collaborative implementation by senior manage- carbon emissions and supply chain compliance.ment and functional departments. A cross-departmental coordination mechanism was established and multi-dimensional ESG performance

was incorporated into senior management remuneration assessment thereby strengthening management’s long-term accountability for Medium term (3–5 years): Achieve breakthroughs in green technologies and attain an industry-leading ESG rating.sustainable development and ensuring the effective implementation of ESG management. Long term (over 5 years): Become a leader in the ESG ecosystem of the industrial chain and promote sustainable social

development.天和磁材ESG治理架构

Management Structure Main Responsibilities

Highest decision-making body Risk Management >

General Meeting Responsible for deliberating and voting on major ESG strategic directions and key

decisions such as approving long-term ESG investment plans and the initiation of Relying on the existing risk management and internal control systems the Risk Assessment Management Procedures for the Social Responsibility

major environmental governance projects

System were formulated by the Company and ESG-related risks were incorporated into a unified management scope. Key attention was given

to areas including environmental emission compliance energy and resource use efficiency production safety employee health supply chain

Responsible for regularly formulating and updating the overall ESG policies stability and compliance governance. Through regular risk identification and assessment risk levels and responsible departments were

principles and objectives

Decision-making determined and corresponding preventive and response measures were defined. ESG training was conducted on a regular basis. Through

Responsible for approving risk assessments and supervising the implementation of systematic planning and implementation the control of ESG risks was integrated into the Company’s daily operations and strategic

Level ESG topics including climate change energy management environmental manage- decision-making.Board of Directors ment fair competition integrity in operations social contribution and public welfare

Responsible for convening discussion meetings and reviewing the Company’s

annual reports

Responsible for reporting ESG matters with significant impact on the Company to the

General Meeting

Responsible for assisting the decision-making level in formulating the Company’s

ESG strategic principles objectives and topics

Responsible for identifying and supervising the Company’s ESG risks opportunities

Guidance Strategy and and measures and providing guidance and recommendations

Sustainability

Level Committee Responsible for consolidating data and feedback from the execution level and

reporting analysis and recommendations to the decision-making level

Responsible for conducting the preliminary review of the ESG report and reporting

recommendations to the decision-making level

Senior management is responsible for planning the breakdown of ESG principles and

objectives and the related action plans establishing ESG-related procedural

ESG Task Force

Execution documents organising training and communication supervising work progress and Comprising Senior

providing data and recommendations to the decision-making level

Level Management and All

Departments Personnel of all departments are responsible for carrying out tasks in accordance

with the plan providing timely feedback on actual conditions and jointly building an ESG Training in 2025

efficient and closed-loop ESG governance system

15 16GOVERNANCE: WITH MAGNETISM AS THE FOUNDATION THE GROUNDWORK IS STRENGTHENED; WITH RESPONSIBILITY AS THE BOND DEVELOPMENT IS ADVANCED

Indicators and Targets > Stakeholder Communication

To ensure the effective implementation of the ESG strategy clear Sustainability Principles and Targets were formulated and implemented by the Company.Progress against various targets was tracked on a regular basis and the relevant targets for 2025 had been achieved. Low-carbon transformation The maintenance of sound relationships with stakeholders is highly valued by the Company. A regular communication mechanism has been

across the full chain of R&D production and supply chain was advanced in a coordinated manner and the full life cycle management mechanism for established and the needs and expectations of stakeholders are identified through effective channels so that ESG performance can be contin-

green products was continuously improved. Transparency in the Company’s commitment to sustainable development was further strengthened uously improved.through annual ESG report disclosure and third-party assurance thereby promoting the deep integration of high-quality corporate development with

sustainable social value. Stakeholders Expectations and Demands Communication Methods / Channels

· Customer Visits and Business Meetings

Overall Environmental Targets · Product Quality and Customer Service · Contract and Technical Exchanges

Customers · Information Security and Privacy Protection

· Customer Satisfaction Surveys

· Green Products

· Official Website and Information Disclosure

Carbon reduction: By 2030 operational carbon neutrality is to be achieved. Compared with 2023 Scope 1 and Scope 2 emissions are to

be reduced by 42% and Scope 3 emissions by 25%. · Sustainable Supply Chain · Tendering and Procurement Communication

· Business Ethics · Supplier Admission and Evaluation

100% SuppliersEnergy Targets: By 2030 the proportion of green electricity is to be increased to . · Integrity in Operations · Contract Management

· Environmental Management · Audits and On-site Inspections

Certification maintenance: The validity of ISO 14001 is to be continuously maintained.· Protection of Employee Rights and Interests

Biodiversity: The number of vegetation species is to be continuously increased. · Employee Meetings and Training· Health and Safety

· Internal Policy Communication

zero Employees · Talent DevelopmentHazardous waste: Hazardous waste is to be managed and treated in a lawful and compliant manner with violation incidents. · Internal Communication Platform· Diversity and Equality

· Feedback and Grievance Mechanism

· Corporate Management Mechanism

Non-hazardous waste: By 2030 through technological upgrading and process optimisation the waste reuse rate is to reach 5%.· General Meeting

Wastewater and exhaust gas: 100% compliant discharge is to be maintained. · ESG Governance · Periodic Reports and Ad Hoc Announcements

Shareholders / · Corporate Management Mechanism

Investors · Investor Briefings· Compliance Management

· Telephone and Email Communication

· Stakeholder Communication

· On-site Visits

Overall Social Targets

· Compliance Management

· Integrity in Operations · Statutory Information Submission

Government and

Employee well-being: Employee satisfaction is to be maintained at 85% and the minor injury incident rate is to be controlled at 3‰ · Environmental Management · Regulatory Communication MeetingsRegulatory

Authorities · Energy Managementperson-times per year. · On-site Inspections

· Pollutant Emissions · Written Reports

Fairness and inclusion: The proportion of employees with disabilities is to be maintained at 1% and female managers are to be · Climate Change

maintained in management positions. · Social Contribution and Public Welfare · Press Releases and Media Communication

Communities / · Biodiversity · Official Website

the Public / · Water Resource Management · Public Welfare Activities and Community Engagement

Overall Governance Targets Media · Circular Economy

Transparent decision-making: Independent directors are to account for no less than one-third of the Board of Directors; ESG reports are · ESG Governance · Bank-enterprise Matchmaking Meetings

· Compliance Management

to be continuously disclosed from 2024 onwards. Financial · Financing Communication

Institutions · Climate Change

· Financial and ESG Information Disclosure

Compliant operations: Anti-corruption training coverage is to reach 100%; the number of compliance penalties imposed on the · Energy Management

Company by external regulatory authorities is to remain zero.Industry · Technological Innovation · Industry Conferences

Risk control: A risk control system is to be established and risk items identified in 2024 and the coverage rate of risk scenarios is to be Associations / Research · Green Products · Technical Exchanges

increased to over 90% by 2030. Institutions · Circular Economy · Joint Research and Project Cooperation

17 18GOVERNANCE: WITH MAGNETISM AS THE FOUNDATION THE GROUNDWORK IS STRENGTHENED; WITH RESPONSIBILITY AS THE BOND DEVELOPMENT IS ADVANCED

Material Topic Assessment Efficient Management Mechanism

With reference to domestic and international regulatory policy requirements frontier trends in industry sustainability and the Company’s

development strategy 25 key topics with impacts on the Company itself and its stakeholders were systematically identified by THMag. In line Strengthening Corporate Governance

with the principles of materiality completeness and stakeholder engagement two questionnaires on financial materiality and impact materi-

ality were prepared and stakeholders including shareholders and investors employees customers suppliers media representatives and

THMag complies with relevant laws and regulations including the Company Law of the People’s Republic of China the Securities Law of the People’s

government personnel were invited to participate in the survey. Based on the questionnaire feedback an empirical analysis was conducted by

Republic of China the Code of Corporate Governance for Listed Companies and the Basic Standards for Enterprise Internal Control. Systems such as the

the Company from two dimensions namely “financial materiality” and “impact materiality”. For topics assessed as financially material

Articles of Association and the Rules of Procedure for the Board of Directors have been formulated. Adhering to the principle of prudent operationfocused disclosure and in-depth analysis were provided in the report in accordance with the four-pillar framework namely “Governance –the Company has continuously optimized its corporate governance structure and comprehensively strengthened its compliant operationStrategy – Risk Management – Indicators and Targets” so as to enhance the reference value of information disclosure for stakeholders.system and risk management. At present a corporate governance mechanism featuring clear responsibilities sound management effective

checks and balances and efficient operation has been established comprising the General Meeting the Board of Directors and senior

THMag 2025 ESG Materiality Matrix management.Corporate Governance Structure

Product Quality and Customer Service

Talent Development

Strategy and Sustainability Committee

Protection of Employee Rights

and Interests Health and Safety

Integrity in Operations Technological Innovation General Meeting

Corporate Management Mechanism Remuneration and Appraisal Committee

ESG Governance

Waste and Hazardous Materials Management

Board of Directors

Nomination Committee

Pollutant Emissions Information Security and Privacy Protection

Business Ethics Sustainable Supply Chain General Manager

Circular Economy

Ecological Protection

Social Contribution Audit Committee

and Public Welfare Green Products

Compliance Management

Energy Management

Water Resource Management Position Organisational Positioning Key Functions

Environmental Management

Climate Change The ultimate decision-making body of the Company responsi-

Conflict Minerals

General Meeting Highest Authority ble for deciding on major matters such as business policies

significant investments and the election of directors.Stakeholder Communication Accountable to the General Meeting responsible for formulating

Board of Directors Core Decision-making Body

Diversity and Equality the Company’s strategy business plans and internal systems

and leading the committees under it and the management.Importance to the Company’s Financials Appointed by the Board of Directors responsible for implement-General Manager Executive Level ing the resolutions of the Board of Directors and overseeing the

Company’s daily production operation and management.Governance Society Environment

1920

Importance to the Company’s ImpactsGOVERNANCE: WITH MAGNETISM AS THE FOUNDATION THE GROUNDWORK IS STRENGTHENED; WITH RESPONSIBILITY AS THE BOND DEVELOPMENT IS ADVANCED

THMag is committed to building a professional diverse and inclusive

Board of Directors. Regular assessments are conducted on the effective- Compliant and Steady Operations

ness of the operation of the Board of Directors and its relevant special-

ised committees in light of the Company’s actual governance practices.Such assessments are based on self-evaluation and supplemented by Internal Control Audit and Compliance

external professional opinions or third-party perspectives with compre-

hensive reviews conducted on the Board structure deliberation mecha- Governance>

nism performance of duties and decision-making efficiency so as to

Systems including the Internal Control System the Internal Audit Management System and the Internal Audit System for Import and Export Business

continuously promote standardised board operation and improved

have been established and implemented by the Company and a governance structure for compliance internal control and internal audit has

Training on the “First Regulatory Lesson” for governance effectiveness. The Rules of the Nomination Committee of the been formed with the Board of Directors as the highest responsible body the management responsible for overall coordination and dedicat-

Listed Companies Board of Directors were formulated by the Company with a focus on ed departments responsible for specific implementation. Through the establishment of the Chief Compliance Officer position full responsibili-

strengthening the capabilities of directors supervisors and senior management. Through learning and training their performance capabili- ty has been assumed for the design implementation and supervision of the Company’s compliance management system with direct report-

ties and compliance knowledge are enhanced so as to ensure that directors supervisors and senior management remain aligned with ing made to the Board of Directors and the General Manager thereby strengthening the independence and authority of compliance

current requirements. Attention is also given to the diverse composition of the Board of Directors with comprehensive consideration of governance. The Chief Compliance Officer is responsible for the overall advancement of compliance system development implementation of

factors such as gender age educational background professional background and industry experience in order to bring together diverse compliance plans compliance training risk assessment and the handling of violations so as to ensure that the Company’s business activities

perspectives. are conducted in a lawful compliant and orderly manner.In 2025 the Board of Directors of Company Strategy>

Compliance internal control and internal audit have been treated by the Company as important strategic support for steady operations and

sustainable development and have been deeply integrated into corporate governance operational decision-making and the risk manage-

The Board of Directors comprised 9 directors of whom independent directors accounted for 33.33% and female ment system. Focusing on key areas such as R&D activities major investments procurement and sales import and export business and

engineering construction internal control audits and risk assessments covering the full process and all areas have been systematically carried directors accounted for 11.11%. out so that operational and compliance risks can be prevented.

5 General Meetings were convened at which 58 agenda items were considered. Risk Management>

The identification of major risk matters in advance supervision during the

process and rectification afterwards have been strengthened by the Company

Protection of Investor Rights and Interests thereby promoting a shift in risk management from post-event correction to internal and external The coverage rate of compli-front-end prevention. At the same time the rectification of issues identified compliance audits were ance awareness training for

In strict compliance with relevant laws and regulations including the Guidelines for Investor Relations Management of Listed Companies THMag through audits has been incorporated into the accountability assessment conducted employees reachedhas formulated systems such as the Information Disclosure Management System and the Investor Relations Management System. Upholding the system and a closed-loop management mechanism of “audit – rectification –principles of “timeliness fairness completeness accuracy and equality” in information disclosure and guided by investor needs the improvement” has been formed so that operational transparency and 3 100%

governance effectiveness can be continuously enhanced.Company regularly disclosed relevant information through channels such as its Shanghai Stock Exchange (SSE) websiteofficial website

WeChat official account so that the lawful rights and interests of investors could be effectively protected. During the Reporting Period no

violations relating to information disclosure occurred and no penalties were imposed by the CSRC stock exchanges or other relevant author-

ities. Three Lines of Defence for Risk Management

In 2025 the Company First Line of Defence

All functional departments of the Company: identify and analyse risks and design and implement control systems in accordance

with the plans approved by the Audit Committee.

213 announcement documents were disclosed including 4 periodic reports and 209 ad hoc reports. Second Line of Defence

The Audit and Legal Affairs Department and the Audit Committee: responsible for implementing risk management policies conducting

6 investor reception days were held with approximately 67 investor visits received. risk control before and during events and handling major risk incidents.

3 performance briefings were held. Third Line of Defence

The Board of Directors and the General Meeting: responsible for deliberating and deciding on risk control matters.

49 investor questions were answered through the investor interaction platform.

Risk Information Risk Risk Risk Monitoring Supervision and

Collection and Assessment Response and Early Warning Evaluation of Risk Control

Identification

21 22GOVERNANCE: WITH MAGNETISM AS THE FOUNDATION THE GROUNDWORK IS STRENGTHENED; WITH RESPONSIBILITY AS THE BOND DEVELOPMENT IS ADVANCED

Smooth complaint and whistleblowing channels have been maintained by the Company. Standardised management is applied to all complaints

Indicators and Targets> and reports received with item-by-item registration truthful recording and timely decisions on acceptance made in accordance with the law so

as to ensure unobstructed reporting channels transparent handling procedures and traceable results. The lawful rights of employees suppliers

Overall Targets for Risk Management and other relevant parties to make complaints and reports are fully protected. The Management Control Procedures for the Protection of Whistleblow-

ers were established and implemented to encourage employees suppliers outsourced processors and related parties to report violations or

improper conduct through compliant channels. Any retaliation by any department or individual against complainants or whistleblowers in any

To establish a risk management system maintain the healthy orderly and efficient operation of the Company and provide form is expressly prohibited so that the lawful rights and interests of whistleblowers can be effectively safeguarded.support for the achievement of the Company’s strategic objectives and enhancement of corporate value.Whistleblowing and Complaint Channels:

To identify and assess various types of risks effectively prevent such risks and provide a solid basis for efficient resource alloca-

tion and scientific decision-making.Tel：15848881347 18247239899 WeChat：15848881347

To enhance the capability to manage risk events and reduce losses caused by risks.Company Website：http://www.thmagnetics.com Email：audit@thmagnetics.comTo strengthen awareness of risk early warning and improve the capability for risk prevention.To integrate risk management culture into corporate culture continuously strengthen the risk management awareness and Address：THMag (Audit and Legal Affairs Department) No.8-17 Rare Earth Avenue Rare Earth High-tech Industrial Park BaotouIn-

compliance consciousness of all employees and foster a sound corporate culture. ner-Mongolia.Committed to Integrity in Operations Upholding Business Ethics

THMag opposes corruption and bribery in any form and maintains a zero-tolerance attitude towards all conduct that violates the requirements “Honesty and trustworthiness fairness and transparency and law-based compliance” are regarded by THMag as important cornerstones of

of integrity in business conduct. The Anti-corruption and Anti-commercial Bribery Management Procedures were formulated by the Company to corporate governance and a regulated and trustworthy business environment is continuously fostered. The Anti-corruption and Anti-commercial

clarify the responsibilities relating to integrity work of departments including the General Management Department the Audit and Legal Bribery Management Procedures the Policy Procedures on Fair Competition / Prohibition of Collusion and the Investigation Procedures for Cases Involving

Affairs Department and the Finance Department. The anti-corruption management mechanism has been continuously improved and institu- Violations of Business Ethics have been established and implemented by the Company. The main responsibilities of each management leveltional restraint and implementation oversight have been strengthened. namely the “Board of Directors (supervision) – General Manager (person responsible at senior management level) – Audit and Legal AffairsDepartment (department in charge)” have been clarified and a systematic management system covering institutional restraint process

In 2025 the Company control investigation and accountability as well as rectification and prevention has been formed.

100% Any form of monopoly agreement collusion abuse of market dominance or other conduct that excludes or restricts competition is expressly The signing rate of the Employee Commitment Letter on Integrity and Self-discipline reached and no reported incidents of

prohibited. The Company’s business conduct in procurement production sales and finance is regulated and training and communication

corruption or bribery in any form occurred. activities on anti-monopoly and fair competition are actively carried out so that a fair and orderly market competition order can be

3 maintained and employees’ awareness of business ethics can be strengthened. Where any act suspected of violating business ethics occurs training sessions on anti-monopoly and fair competition anti-corruption and anti-commercial bribery were conducted with

100% or is identified a unified investigation will be organised by the Company relevant responsibilities will be pursued in accordance with laws and coverage of senior management.

regulations and rectification and preventive measures will be formulated simultaneously to prevent the recurrence of similar incidents.Small and medium-sized enterprises are treated fairly and equitably by the Company. In the procurement process unreasonable thresholds

Measures for Integrity in Operations and restrictions are removed and no differential or discriminatory treatment is imposed on small and medium-sized enterprises based on

certain specific conditions so that their fair participation in market competition can be ensured.Customers suppliers service providers and contractors having business dealings with the Company are required during contract

signing or tendering to comply with relevant systems and sign the Integrity Agreement and the Supplier Commitment Letter on

Anti-commercial Bribery. If any illegal or non-compliant conduct is identified cooperation with the relevant party will be terminated In 2025 the Company

immediately and the relevant handling personnel of the Company will be dealt with seriously.Special training on supplier social responsibility is organised on a regular annual basis covering topics such as stakeholder The number of legal proceedings arising from monopoly or unfair compe-

complaints and grievances communication management and anti-corruption. tition was0

All employees are organised to sign the Employee Commitment Letter on Integrity and Self-discipline.No fines or administrative penalties were imposed for violations of

Anti-corruption and anti-commercial bribery slogans or signs are displayed and regular integrity education activities covering

relevant laws and regulations in the social and economic fields.national laws and regulations internal rules and regulations integrity and self-discipline requirements and analysis of typical

cases are carried out for employees so as to strengthen their awareness of integrity and self-discipline. No non-compliance relating to product and service information and

Management proactively pays attention to employees’ family and living conditions strengthens professional ethics education and labelling marketing misconduct or similar matters occurred.Training on Anti-monopoly and Fair Competition

the development of internal control systems and prevents corruption and fraud. Anti-corruption and Anti-commercial Bribery in 2025

232405

ENVIRONMENT

Protecting Ecology through Magnetics

and Creating Green Cleanliness

With “efficiency cleanliness low carbon and circularity” as the core principles a sound environmental management system has been

established by THMag and environmental responsibility has been embedded throughout the entire chain of production and operations.Investment in green technology R&D and cleaner production has been continuously increased. Energy and resource use efficiency has

been continuously optimised greenhouse gas and pollutant emissions have been reduced and pathways for enhancing the environ-

mental benefits across the full life cycle of rare earth permanent magnetic materials have been actively explored.Circular Economy Energy Management Climate Change Environmental Management Green Products

Waste and Hazardous Materials Management Ecological Protection Pollutant Emissions Water Resource Management 02

*Aligned with the United Nations Sustainable Development Goals

25 26ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Improving Environmental Management Strengthening Pollution Management

Governance Wastewater and Exhaust Gas Management

THMag strictly complies with laws and regulations including the Law of the People’s Republic of China on the Prevention and Control of Water Pollution

THMag strictly complies with laws and regulations including the Environmental Protection Law of the and the Law of the People’s Republic of China on the Prevention and Control of Atmospheric Pollution. The Regulations on Air and Water Pollution Manage-

People’s Republic of China and the Law of the People’s Republic of China on Environmental Impact Assess- ment were formulated to regulate the conduct and procedures for wastewater and exhaust gas management so that treated wastewater and

ment. A valid environmental management system certification in conformity with GB/T exhaust gas discharges can meet national standards.

24001-2016 / ISO 14001:2015 is currently held and remains valid on an ongoing basis.. With

reference to the relevant requirements of environmental management system certification and in The Company’s wastewater mainly consists of domestic sewage and production wastewater including process wastewater purified water

light of its actual circumstances the Environment Occupational Health Safety and Energy Manage- preparation unit drainage and cooling tower drainage. Domestic sewage and purified water preparation unit drainage are discharged into the

ment Manual was prepared by the Company. A three-tier environmental management structure of industrial park sewage pipeline network together with cooling tower drainage after sedimentation through grease traps and septic tanks and

“General Manager – Management Representative – Functional Departments” was established are then transferred to the Xinnanjiao Wastewater Treatment Plant for treatment. After short-term buffering in wastewater collection tanks

and the environmental protection responsibilities of each department covering wastewater installed in each plant building process wastewater is discharged through the pipeline network to the electroplating wastewater treatment

exhaust gas and solid waste management were clarified to ensure standardised implementation plant specially established within the deep-processing base for treatment. Wastewater discharge has been reduced through measures such

ISO 14001 Environmental Management

System Certification Certificate of management work. as wastewater reuse and recycled use of cooling water.Category Unit 2025

Strategy

Ammonia Nitrogen Emissions ton 4.81

Environmental compliance has been deeply integrated into the Company’s medium- and long-term development plan. Closely aligned

with the national “dual carbon” goals and industry environmental protection requirements strict compliance has been maintained to

ensure that exhaust gas wastewater and hazardous waste are discharged in 100% compliance with national standards. At the same Chemical Oxygen Demand Emissions ton 27.6

time compliance management has been advanced towards green transformation and environmental protection requirements have

been embedded throughout the entire process of product design process upgrading and supply chain management.Wastewater Discharge 10000 tons 15.04

Risk Management During the production process the main air pollutants generated by the Company include particulate matter sulphur dioxide and nitrogen

oxides. Different control equipment and measures have been adopted for exhaust gas from different processes. Professional purifiers are

Documents including the Emergency Response Plan for Environmental Incidents and the Procedures for Identification and Evaluation of Environ-

installed for kitchen fume purification to ensure compliant discharge. Gases such as nitrogen and argon generated from strip casting furnaces

mental Factors have been prepared by the Company. Potential environmental incidents have been classified by level and category and

and sintering furnaces are treated through dual filtration using filter cartridges and filter cotton. Particulate matter generated from surface

02 an emergency response structure has been established under the overall command of the General Manager with dedicated groups for coating and diffusion furnaces is subject to graded filtration through filter cotton and multi-layer filter cartridges respectively. Acid mist electro-emergency rescue security and alert among others. Early warning information reporting emergency monitoring graded response phoresis drying and spraying exhaust gas are all treated through spray tower systems for purification. Third-party institutions are engaged on a and handling procedures have been clearly defined. Targeted measures such as leak containment fire-fighting and pollutant collection monthly basis to test exhaust gas emissions so that safe discharge can be ensured. Exhaust gas emissions have been reduced through measures have been formulated and internal coordination and external linkage mechanisms have been established including mutual assistance such as replacing high-volatile raw and auxiliary materials with low-volatile alternatives and upgrading exhaust gas treatment facilities.agreements signed with neighbouring companies. Supporting measures covering communication funding materials and human resources have also been put in place. Annual training and drill requirements have been specified and a dynamic revision mechanism covering plan review filing and retrospective assessment every three years has been established. Post-incident recovery accident Category Unit 2025investigation and reward and penalty systems have also been defined so that a comprehensive environmental safety defence line can be built. Nitrogen Oxides ton 5.61Indicators and Targets Sulphur Oxides ton 0.10The General Manager is responsible for organising the formulation of the Company’s management targets and decomposing such targets among functional departments and department heads are responsible for supervising the achievement of the targets and Volatile Organic Compounds (VOCs) ton 1.25indicators of their respective departments (for specific targets see the section headed “ESG Management”). In 2025 no major admin-istrative penalties or criminal liabilities arising from pollutant emissions were incurred no major environmental incidents occurred and Suspended Particles and Particulate Matter (PM) ton 1.24

environmental protection investment amounted to RMB 1.0277 million.Total Exhaust Gas Emissions ton 9.21

27 28ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Waste Management To ensure the comprehensive implementation of climate governance and the achievement of climate-related targets a regular supervision mechanism has been established by the Company. Through annual management reviews energy audits and assessments of emission

reduction performance progress against climate management targets is tracked and action plans are optimised and adjusted in a timely

THMag strictly complies with laws and regulations including the Law of the People’s Republic of China on the Prevention and Control of Environmental Pollution manner. The Climate Management Assessment System Plan was formulated under which core climate change indicators are linked to depart-

by Solid Waste. Systems such as the Regulations on Solid Waste Management and the Responsibility System for the Prevention and Control of Environmental mental performance and employee promotion. In addition emission reduction training for employees has been strengthened and special

Pollution by Hazardous Waste have been formulated. Adhering to the principles of harmlessness reduction and resource utilisation full-process funds for emission reduction have been established for key projects such as the R&D of energy-saving and carbon-reduction technologies

environmental safety supervision is applied to solid waste so that the adverse environmental impacts of waste can be minimised. equipment upgrading and process improvement. Government policy support has also been actively pursued in order to obtain resourcessuch as green loans fiscal subsidies and tax incentives thereby building a sustainable investment and financing system featuring “internalThe Company’s solid waste mainly consists of hazardous waste and non-hazardous waste. Hazardous waste mainly includes waste tank liquid support + external support”.(sludge) waste phosphating solution waste passivation solution electrophoresis waste tank liquid used filter cartridges at tank sides paint residue

and acid solution packaging drums. Non-hazardous waste mainly includes general industrial solid waste domestic waste and kitchen waste. Strategy

For non-hazardous waste regular external sales are made to third parties for comprehensive utilisation or compliant disposal is carried out by

sanitation authorities. For hazardous waste the Hazardous Waste Management Plan is updated annually by the Company dedicated hazardous waste A comprehensive review was conducted by the Company of the climate-related risks that may be faced and their potential financial impacts. High-

temporary storage rooms have been established and a leading group for the prevention and control of hazardous waste pollution headed by the and low-greenhouse-gas-emission scenarios were established the challenges and opportunities arising from climate factors under each scenario

General Manager has been set up. Hazardous waste in-and-out inventory ledgers have been established and information such as the type quantity were analysed and the financial impacts of climate factors were comprehensively assessed11.flow storage and disposal of hazardous waste is truthfully recorded. Disposal is ultimately entrusted to qualified entities holding hazardous waste The low-emission scenario (SSP1-2.6 with temperature rise not exceeding 2.0°C) and the high-emission scenario (SSP5-8.5 with temperature rise

operation licences. Through measures such as waste sorting process upgrading encouraging material recycling reusing packaging materials in approaching or exceeding 4.4°C) under the Shared Socioeconomic Pathways (SSPs) set out in the IPCC Climate Change 2023: Synthesis Report (AR6)

circulation extending the service life of certain hazardous auxiliary materials and process improvement the recovery and utilisation level or use were selected for the assessment of physical risks. The Net Zero Emissions by 2050 Scenario (NZE with temperature rise not exceeding 1.5°C) and the

efficiency of various types of waste has been improved thereby reducing waste generation (for specific performance see the section headed Stated Policies Scenario (STEPS with temperature rise exceeding 3°C) were adopted for the assessment of transition risks and climate-related opportu-

“Promoting Cleaner Production”). nities. Based on these scenarios the potential impacts of climate change risks and opportunities on the Company’s operations in the short term (2026)

medium term (2030) and long term (2050) were analysed.Category Unit 2025

Climate

Non-hazardous Waste Generated ton 1302.51 Scenario

SSP 1-2.6 SSP 5-8.5

Under this scenario the world gradually moves towards a more This scenario represents a pathway under which

of Which: General Industrial Solid Waste ton 1035.2

Non-hazard- sustainable direction. It aims to limit the increase in global future greenhouse gas emissions continue to

ous Waste Physical Risk average temperature to well below 2°C in line with the increase and radiative forcing reaches a high level

Recycling Rate of General Industrial Solid Waste % 99.6 Scenario greenhouse gas reduction ambition of the Paris Agreement assuming that no new climate policy intervention is

Description and global temperature is projected to rise by approximately introduced. By the end of the 21st century the

Non-hazardous Waste Intensity ton/RMB million Revenue 0.56 1.8°C above the pre-industrial level by 2100. global average temperature may rise by more than

4°C above the pre-industrial level.

Hazardous Waste Generated ton 102.65 Scenario Intergovernmental Panel on Climate Change (IPCC) (Sixth Assessment Report (AR6))

Hazardous Source

Waste

Hazardous Waste Intensity ton/RMB million Revenue 0.04

Climate

Scenario NZE STEPS

Addressing Climate Change The International Energy Agency has proposed the Net Zero This scenario is an analysis based on currently

Transition Risk / Emissions by 2050 pathway under which recommendations are implemented policies and announced policy

Opportunity made on technologies and emission reduction solutions proposals that have not yet been fully implemented.Governance Scenario international cooperation and energy sector transition and the There is a 50% probability that temperature will rise

Description increase in global average temperature is expected to be by 2.4°C by 2100.Against the backdrop of global climate change low-carbon development has become an essential path for corporate sustainable development. limited to 1.5°C.Climate-related topics have been incorporated into the Company’s core decision-making system and climate risks and opportunities have been

fully considered in major decisions such as strategic planning project investment and process upgrading. A leading group on emission reduction Scenario International Energy Agency (IEA)

Source

headed by senior management was established by the Company to formulate carbon reduction strategies targets and action pathways and to

coordinate the resources and responsibilities of all functional departments in a comprehensive manner. A departmental coordination mechanism

featuring “unified leadership division of responsibilities and coordinated advancement” has been established to promote energy saving and

carbon reduction in an overall manner and to ensure that all targets and tasks are implemented in detail.

1 THMag’s assessment of the potential financial impacts of climate-related risks constitutes forward-looking statements. In view of the many uncertainties in

the external environment actual future developments may differ from the projections contained in this report.

29 30ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Analysis of Material Climate Risk Impacts and Response Measures Identification of Climate-related Opportunities

Analysis of Impact Severity under

Risk / Opportunity Financial Different Climate Scenarios Potential

Category Impact Pathway Impact Response Measures Short Medium Long Short Medium Long Opportunity Opportunity Analysis Potential Financial Impact

Term Term Term Term Term Term

Physical Risks SSP1-2.6 SSP5-8.5

Active participation in climate action can Increased Revenue: Active participation in mainstream

Reputational demonstrate the Company’s commitment to international ESG disclosure completion of the CDP Climate

The occurrence of extreme weather sustainability and enhance its reputation Change Questionnaire improvement of rating performance

events such as earthquakes typhoons Increased OpportunitiesReal-time monitoring and early

thunderstorms heavy rain and dense among society and stakeholders. and timely response to stakeholder expectations.Acute Costs warning are carried out and fog may lead to supply chain Reduced response mechanisms and emergen-

Risks disruption lower employee efficiency Low Medium Medium Medium High HighRevenue cy plans for extreme weather risks

damage to operating equipment and Increased Revenue and Reduced Costs: Process optimisa-Asset are formulated. Emergency drills and Technological innovation such as green

impacts on the storage quality of raw Impairment training on natural disaster incidents Technological tion is carried out through zero / low heavy rare earth

materials. are conducted on a regular basis. energy substitution and process optimisation

Opportunities substitution and grain refinement and green short-pro-Warehouse safety is maintained and can create room for energy efficiency improve-

minimum safety stock levels are cess recycling technology and rare earth waste recycling

determined in a timely manner to ment. and utilisation are promoted.Chronic risks such as drought ensure raw material supply.extreme high / low temperatures Energy-saving technological upgrad-

and intensified El Ni?o effects ing of existing equipment is promot-

Chronic caused by sea level rise may affect Increased ed to improve energy efficiency. Increased Revenue: Green supply chains and green employee health and safety or Costs Asset Climate-resilient infrastructure is Low Medium Medium Medium High High Market Opportu- Growing demand for low-carbon rare earth Risks factories are developed active participation in EcoVadis increase operating costs such as Impairment given priority such as nities permanent magnetic materials creates market energy consumption equipment earthquake-resistant wind-resistant ratings is pursued strong certifications are obtained and

wear and damage to raw materials lightning-protection and fire-resis- opportunities for the R&D of green products. growth in green market share is promoted.and finished products. tant designs.Transition Risks NZE STEPS Risk Management

Changes in climate policies in China and Climate-related risks have been incorporated into the overall risk management system. Through three steps namely risk and opportunity

Supportive low-carbon transition overseas are tracked a regular reporting

policies and more stringent emission mechanism is established emission identification risk and opportunity assessment and risk and opportunity monitoring and response physical risks transition risks and oppor-

reduction policies introduced by reduction targets and action pathways tunities that may affect the Company’s assets are identified prioritised and managed. Measures for risk mitigation transfer or control have

Policy governments may affect energy price are adjusted in a timely manner and fluctuations. Lower-emission green Increased internal management measures are been adopted the Decarbonisation Management Procedures have been formulated and four major emission reduction action pathways have

Risks Medium Medium High Low Low Mediumenergy may need to be used to replace Costs adjusted when appropriate. Active been established. A number of feasible emission reduction measures have been identified in areas including education and training and

existing high-emission energy thereby participation is made in the carbon

increasing compliance costs for green emissions trading market distributed incentive mechanism development strengthening internal management optimising operating methods improving production process

operations or carbon trading costs. energy systems are promoted and the control upgrading and retrofitting equipment and resource conservation and comprehensive utilisation.proportion of green electricity used is

increased.THMag’s Emission Reduction Action Pathways

Suppliers may face higher operating Strategic cooperation is established with

costs due to carbon reduction high-quality partners to strengthen the Energy System Optimisation and Renewable Energy Synergy: Focusing on energy leakage control (closed-loop prevention and

Market policies resulting in rising raw response capability for supply chain material prices. Customers’ increas- risks. Supplier carbon management control for compressed air and natural gas systems) system energy efficiency improvement (energy-saving equipment retrofitting

Risks Reduced ing requirements for green and Revenue questionnaires are formulated suppliers Medium Medium High Low Low Medium replacement of high-energy-consuming equipment and waste heat recovery) renewable energy substitution (distributed photovol-

low-carbon products may also affect with high carbon emissions are taic systems and green electricity procurement) and digital empowerment (energy management platform and digital carbon

market competitiveness profit screened carbon reduction solutions are

margins or revenue. provided and a dynamic assessment emission system) a clean and low-carbon energy use system is being built.and incentive mechanism is established.Green Upgrading of Process Technologies and Circular Development: Production processes are being optimised through zero / low

heavy rare earth substitution product optimisation and alloy ratio improvement. Green short-process recycling technology and

Stakeholders are paying increasing Greenhouse gas emissions data are

attention to the Company’s climate disclosed on a regular basis and high-performance recycled rare earth permanent magnetic material technology are being developed and applied and the recycling

Reputa- change performance and public Reduced third-party verification is adopted to and utilisation of rare earth waste are being strengthened so that a green production system can be built.Medium Medium Medium Low Low Medium

tional opinion pressure may be faced Revenue ensure data reliability.Risks thereby affecting brand image and Supply Chain Carbon Management and Green Procurement Synergy: Key suppliers are being screened supply chain carbon data

market acceptance. are being collected high-carbon-emission suppliers are being identified and differentiated carbon reduction strategies are being

formulated. A green supplier list and dynamic assessment mechanism are being established to promote coordinated emission

Rapid development of new process Cooperation is carried out with reduction across the upstream and downstream value chain.technologies may render current research institutes to tackle

Technolo- product technologies obsolete and Increased low-carbon core technologies. Strengthening Employee Participation and Building a Low-carbon Culture: Low-carbon training is being conducted to disseminate

gy Risks greater R&D investment may Costs Following laboratory-scale and pilot-scale validation large-scale Medium Medium High Low Low Low relevant knowledge a reward mechanism for green suggestions has been established to collect emission reduction ideas low-car-therefore be required to maintain

market competitiveness. application is promoted digital bon themed activities are being organised and participation in energy saving and emission reduction is being incorporated into

transformation is advanced and performance assessment so that employee engagement in emission reduction can be stimulated.market presence is expanded.

31 32ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Indicators and Targets Building a Green Industrial Park

Since 2023 comprehensive accounting of greenhouse gas emissions covering the Company’s operating locations has been conducted by

THMag in accordance with the ISO 14064 and GHG Protocol standards. With reference to the Science Based Targets initiative (SBTi) and taking Improving Energy Efficiency and Reducing Consumption

into comprehensive consideration multiple factors such as production stability and data availability 2023 was selected as the base year for

the Company’s greenhouse gas accounting. Annual carbon emission targets through 2030 for the Company’s own operations and upstream Energy Management>

and downstream value chain have been formulated (for overall targets see the section headed “ESG Management”) and product carbonfootprint assessments and calculations have also been carried out for certain customer products. Adhering to the energy management policy of “energy saving and low carbon cleaner production;improved energy efficiency and continuous improvement” THMag strictly complies with relevant laws and

Overall Emission Reduction Targets for 2030 regulations applicable in its places of operation including the Energy Conservation Law of the People’s Republic

of China the Renewable Energy Law of the People’s Republic of China and the Cleaner Production Promotion Law of

the People’s Republic of China. The Company has obtained the GB/T 23331-2020/ISO 50001:2018 Energy

Actual Carbon Planned Carbon

Overall Target Management System certification and the certificate remains valid. Documents including the Energy Review Emissions in 2023 Emissions in 2030

Control Procedures and the Regulations on Energy Saving and Consumption Reduction Management have been

formulated. Energy-saving targets have been set and progress has been tracked on a regular basis (see the

Scope 1 & 2: Carbon Emissions from Own Operations 50897.51 29520.55

section headed “ESG Management / Indicators and Targets”). The effectiveness of energy management

has been evaluated through multiple mechanisms including internal audits management reviews and

Scope 3: Upstream and Downstream Carbon Emissions 120659.28 90494.46 ISO 50001 Energy Management compliance evaluations. A standardised energy data collection system has been established and each

System Certification Certificate

department is required to record energy consumption data and report such data regularly.Through the introduction of digital systems equipment upgrading and process optimisation the potential for energy saving has been

Other Management Targets comprehensively explored and energy use efficiency has been continuously improved. AI-based electricity trading decision-making and

integrated energy dispatch optimisation have been introduced to achieve planned rational and optimal electricity use. Registers of major

Within 2 years energy audits will be conducted on production equipment including natural gas boilers to identify energy use energy-consuming equipment have been established full life cycle management has been implemented for high-energy-consuming

efficiency and energy leakage risks. equipment and regular maintenance and energy efficiency assessments have been carried out. Production processes and operating

procedures have been optimised control standards for key energy consumption parameters have been clarified and energy waste has been

Within 2 years product carbon footprint analysis will be conducted for key products to identify emission reduction potential.reduced through process optimisation. Operational and behavioural energy-saving practices have been promoted employee energy use

A systematic survey of the carbon management level of core suppliers will be completed in 2026 and a comprehensive assess- behaviour has been standardised and awareness of energy saving among all employees has been enhanced. In 2025 the Company’s total

ment of the carbon management level of all suppliers will be achieved by 2030. comprehensive energy consumption amounted to 17859.15 tons of standard coal.Based on the emissions data contained in the carbon verification report for the year2 and in comparison with the previous year effective In 2025 the Company’s Energy-saving and Consumption-reduction Measures (Partial) Were as Follows

analysis was conducted on the relevant data for various emission activities and emission scopes and effective solutions and corresponding

control measures were formulated. THMag’s greenhouse gas emissions data for 2025 (location-based) were as follows：

Priority was given to clean energy equipment such as new energy electric forklifts and electric transfer vehicles.Category Unit 2025 2024

In the batching process automated intelligent batching production lines were fully adopted. Required raw materials can be

accurately retrieved by the system from the intelligent three-dimensional warehouse according to preset formulas and precise

Greenhouse Gas Emissions (Scope 1) tCO2e 1353.90 1992.77

proportioning can be completed through a high-precision weighing and closed-loop control system.Greenhouse Gas Emissions (Scope 2) tCO2e 73821.47 80783.90 In the machining process optimisation of the coolant formulation for multi-wire cutting machines was carried out. The new

formulation provides better heat dissipation performance and chip removal capability effectively reducing temperature rise and

Greenhouse Gas Emissions (Scope 3) tCO2e 155521.62 126926.38 blockage risks during the cutting process.In the wafer spin-drying process the traditional in-furnace air-cooling method before strip casting discharge was optimised into

Total Greenhouse Gas Emissions tCO2e 230696.99 209703.05 a post-furnace water-cooling process effectively avoiding the impact of in-furnace cooling on continuous production.Greenhouse Gas Emissions Intensity tCO2e/RMB million revenue 0.32 0.32

2 The verification boundary covers THMag headquarters only and does not include Tianzhihe.

33 34ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Case: THMag Implemented a Waste Heat Recovery Project Promoting Cleaner Production

In October 2025 the waste heat recovery project was officially put into operation by Material Recycling>

THMag. Core equipment including three first-grade energy-efficiency water-source

The Company thoroughly implements the development concept of efficient resource recycling and low-carbon sustainability. It prioritizes resource

heat pumps and six first-grade energy-efficiency circulating water pumps was

recovery in production processes and integrates relevant management into core production control. A diversified circular material utilization model

installed and a dual system for waste heat recovery and domestic hot water was

has been established combining internal closed-loop recycling with supplementary external recycled raw materials.established. The outlet water temperature was stably maintained at 53–55°C meeting

the demand for hot water and heating in dormitory buildings canteens and other The Company implements material circulation management across the entire production and operation process. Reusable materials generated

facilities. According to calculations electricity consumption during the heating season during production are recycled and reintroduced into manufacturing procedures. Other waste materials are uniformly entrusted to qualified and

is expected to be reduced by 57% after the implementation of the project. compliant professional partners for standardized disposal recycling and refining enabling effective recovery of rare earth metals and promoting

resource regeneration and reuse. Meanwhile the Company actively procures compliant recycled rare earth raw materials from the market and

steadily increases the proportion of recycled materials helping reduce the overall carbon footprint of the industrial chain.Water Resource Management In 2025 the Company

THMag’s water resources are mainly sourced from two channels namely municipal water supply and surface water abstraction and no obstacles

have been encountered in obtaining suitable water resources. The Company strictly complies with relevant laws and regulations applicable in its Recycled rare earth raw materials accounted for 25.58% of the Company’s total annual rare earth material consumption.places of operation including the Water Law of the People’s Republic of China. The Measures for Water Resource Management were formulated to clarify the

specific responsible persons at senior management level and the main responsibilities of the department in charge so that full-process control over

water use can be implemented and the efficiency of water utilisation and the standardisation level of water resource management can be continu-

ously improved. Reusable Packaging Materials>

The Company’s main production plants are located in Baotou a region with water scarcity. However the production of rare earth permanent magnet- Guided by the General Specifications for Product Packaging Design THMag has optimised its packaging methods and packaging materials and

ic materials is not a water-intensive industry. At least one environmental inspection of the area surrounding water intake points is organised by the has built a reusable packaging system through lightweighting and standardisation. In material selection environmentally friendly recycled

Company each year. Water abstraction permits are lawfully obtained and water resource assessment work is carried out so that the ecological materials are prioritised. In structural design excessive packaging is avoided and clear recycling labels are provided simultaneously so that

environment of water sources can be effectively protected. To reduce water consumption advanced water-saving technologies and equipment have the environmental attributes of packaging can be controlled at the source. Internally general designs are adopted for packaging materials

been promoted water-saving inspection and supervision have been strengthened and anti-seepage treatment inspection and maintenance of the such as blister boxes vacuum bags foam boxes and pearl cotton cartons and the repeated use of returnable packaging materials is promot-

water supply network have been regularly carried out to reduce leakage losses. The Company has also conducted themed education and training on ed with one-time packaging being replaced by reusable returnable packaging. Externally packaging recycling is promoted in collaboration

water conservation promoted water-saving concepts enhanced water-saving awareness among all employees and fostered a sound atmosphere with customers and discarded packaging materials are handed over to qualified institutions for standardised resource recovery treatment. In

in which “water conservation is everyone’s responsibility”. In 2025 the Company’s freshwater consumption amounted to 284.50 megalitres and the 2025 the total amount of packaging materials used for the Company’s products was 328.11 tons of which 153.77 tons were environmentally

water recycling and reuse rate for the whole plant reached 99.69%. friendly packaging materials accounting for 46.87%.Before After Before After

Optimisation Optimisation Optimisation Optimisation

One-time carton packaging was replaced with KLT reusable Plastic tube packaging was changed to bulk packagingOath-taking Activity on “Protecting the Clear Waters Publicity on Water Conservation returnable boxes increasing the transport volume per vehicle by reducing the use of plastic products.of the Yellow River and Practising Green Responsibility” in Plant and Daily Life 50% and indirectly reducing carbon emissions by 40%.Water-saving Facility Development of the Company

Before After Before After

Optimisation Optimisation Optimisation Optimisation

A full-level water metering system was established to accurately record water

abstraction and consumption data.Drift eliminators were installed on cooling towers and a manual concentration ratio

control system was adopted to reduce evaporation and blowdown losses.Closed-loop circulation was adopted for the cooling systems of all core production One-time carton packaging was replaced with Internal cushioning materials were changed from

equipment to avoid water waste. foldable pallet box packaging that can continue to be non-recyclable pearl cotton to recyclable paper packaging.used at the customer end.RO integrated water-saving equipment was adopted for purified water preparation

and the water recovery rate of the first-stage reverse osmosis system reached 75%.

35 36ENVIRONMENT: PROTECTING ECOLOGY THROUGH MAGNETICS AND CREATING GREEN CLEANLINESS

Practising Green Office Risk Management>

THMag has deeply integrated the concept of green office into daily operations through the The Biodiversity Risk Assessment Process was formulated by the Company and a full-pro-

posting of environmental signs the carrying out of dedicated training activities and daily cess and standardised risk control mechanism was established. Biodiversity risk assess-

environmental management and its low-carbon commitment has been practised through ments are actively carried out during new product development project construction and

concrete actions in everyday details. Paperless office practices have been fully promoted by process improvement. Based on the assessment results management strategies such as

the Company. The use of paper consumables has been reduced through digital approval monitoring adjustment and risk mitigation are formulated and the assessment results

electronic document circulation and online meeting systems while an office waste paper and management plans are communicated to relevant stakeholders in a timely manner

recycling mechanism has been established to enable resource recycling and utilisation. so that the transparency and credibility of biodiversity protection work can be enhanced.Standards for the use of equipment such as air-conditioning and lighting in office areas have Electricity-saving Sign Water-saving Tap The Company is committed to creating a more ecological and biodiverse office park so On-site Ecological Landscape

Development of the Company

been regulated energy-saving office equipment has been promoted and water-saving and electricity-saving reminder signs have been installed that employees can enjoy the beauty of nature beyond their work.so that energy consumption can be reduced at source. Green commuting has been encouraged and employees have been encouraged to travel by

public transport cycling or carpooling thereby fostering an office atmosphere of “moderation in saving greenness and efficiency” throughout the Biodiversity Risk Assessment Process

Company and comprehensively enhancing employees’ awareness of conservation.Case: THMag Organised the “Green Action for the Earth Identify the Assessment Describe the Assess the Materiality and Risk Communica-Walking Together with Low Carbon” Earth Day Walking Event Object Assessment Object Uncertainty of Impacts tion

In April 2025 33 employees were organised by THMag to take part in a themed walking event Identify Ecological Assess Potential Impacts Determine Manage-

at Saihantala Urban Grassland. The event was centred on a 5-kilometre walk along an ecologi- Receptors on Ecosystems and ment Strategies

cal greenway and interactive activities such as a waste sorting competition and an environ- Biodiversity

mental knowledge relay were arranged. An online check-in and like-sharing campaign was

launched simultaneously through which employees shared creative environmentally themed Ecological Protection Measures during Project Construction

photos to broaden the reach of the concept. At the environmental sharing session held at the

finish point low-carbon reflections were exchanged by employees and all event waste was sorted and disposed of in a centralised manner.Succulent plant sets were provided by the Company as commemorative gifts so that the environmental protection concept could be extended Main Stage Key Actions

to family settings. Through the coordinated integration of online and offline activities the concept of ecological civilisation was practised and

the Company’s sense of responsibility in protecting the Earth was demonstrated.The ecological protection red line system is strictly observed to ensure that projects avoid red line areas

and that damage is not caused to ecologically important areas or ecologically sensitive and fragile areas.Site Selection and

Design Stage Environmental investigation and assessment are actively carried out and environmental impact assess-

Ecological Protection Actions ment procedures are fully performed so that the compliance and sustainability of project construction can be ensured.Governance> Environmentally friendly construction materials and processes are adopted construction management is

strengthened the construction scope is minimised as far as possible and all construction activities are

THMag actively responds to the Convention on Biological Diversity the Kunming-Montreal Global Biodiversity Framework and the China Biodiversity Conservation strictly confined within the construction area so that surrounding vegetation systems can be protected.Construction

Strategy and Action Plan (2023–2030). Although the Company’s plants are neither located in nor adjacent to ecologically sensitive areas ecological Stage In accordance with environmental impact assessment requirements relevant materials are disclosed in a

responsibility has still been taken as the guiding principle. A biodiversity conservation vision highly aligned with the Company’s values has been timely manner and opinions and suggestions are widely sought.established the General Management Department has been designated as the department in charge of biodiversity-related work and the deepen-

Post-construction and Ecological restoration is carried out and the impacts of the project site on the surrounding ecological

ing of such work has been steadily advanced through institutional development and target setting. Operation Stage environment are regularly monitored and assessed.Strategy> Indicators and Targets>

In 2025 the Biodiversity Conservation Commitment Letter was publicly issued by the Company under which five core commitments were made: Core Targets for the Company’s Biodiversity Protection Include

governance systems and environmental protection communication will be improved ecological protection will be prioritised throughout the full

project process and environmental protection concepts will be fostered among all employees; green operations will be advanced relevant laws To uphold the mission of biodiversity protection and proactively reduce the direct and indirect impacts of production and operations

and regulations will be observed environmental footprints will be reduced through technological innovation and participation in local ecological on ecosystems.protection projects will be undertaken; a green supply chain will be developed responsible procurement will be promoted and cooperation with To optimise production processes and product design reduce environmental footprints and support ecosystem restoration and

suppliers will be strengthened to reduce ecological impacts across the full value chain; multi-party collaboration will be advanced relevant biodiversity enhancement.awareness-raising activities will be carried out and cooperation with all sectors will be sought; open communication and continuous learning will To build a sustainable business model integrate biodiversity protection into all aspects of production and supply chain management

be maintained stakeholder opinions will be heard and protection strategies will be optimised so that ecological balance can be protected and and promote the coordinated development of industry and ecology.sustainable development can be supported through practical actions.

37 38PRODUCTS

Connecting Industry through Magnetics

and Leading Innovation with Intelligence

THMag has remained deeply engaged in the rare earth permanent magnet sector. Development has been underpinned by the

“zero-defect” quality philosophy technological innovation has been driven by process iteration and digital technologies and the

supply chain ecosystem has been optimised through the concept of collaborative and mutually beneficial development. By connecting

the upstream and downstream value community of the industrial chain and advancing comprehensively in all aspects industrial

momentum has been activated and the high-quality advancement of the industry has been led.Product Quality and Customer Service Technological Innovation Information Security and Privacy Protection

Sustainable Supply Chain Conflict Minerals 03

*Aligned with the United Nations Sustainable Development Goals

39 40PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

Building High-quality Magnetic Materials Stage Product Design / Process Design

Product standards stricter than customer requirements and national standards have been

Optimising Quality Management established. All products are customised products with one standard for each order.Based on product components failure analysis is carried out for subcomponents and subprocesses

Governance> at all levels and severity occurrence frequency and detection are scored for each failure. Risk values

are calculated and improvement priorities are determined according to severity.THMag has taken the lead in obtaining IATF 16949 automotive industry quality management system FMEA Quality Tool High-standard testing is carried out in accordance with the verification plan design results are

certification and the certificate has remained valid. A total of 1368 documents including management validated and multi-party review panels are organised based on the validation results.systems operating specifications and process documents such as the Quality Management Manual the

Nonconforming Product Control Procedures the Customer Complaints and Claims Handling Procedures and theMeasures for Quality Management Assessment have been formulated so that “everything has standards andevery step has rules”. Stage Product and Process Verification

Special audits and certifications covering internal and external quality systems products processes and

Trial production is carried out according to the results of product and process design to verify

key procedures are regularly carried out by the Company each year. The Advanced Product Quality Planning

production stability. All operating procedures inspection standards and testing standards are

(APQP) full life cycle quality management process has been adopted. A quality management system has

standardised and 300 physical sample standards have been established.IATF 16949 Quality Management System Certification been established under the leadership of the General Manager to drive the implementation of the quality

strategy. Under the Quality Management Department the Quality System Section Quality Engineering A BI online data collection system is adopted to monitor key process parameters in real time.Section Quality Assurance Section Process Inspection Section and Finished Product Inspection Section have been established and are respec- QC teams have been established and internal and external quality communication is carried out

tively responsible for core tasks such as the establishment and maintenance of the quality system development of inspection technologies through regular and ad hoc quality meetings special improvement meetings management

handling of customer complaints and process inspection. Departments including sales production procurement and R&D perform their respec- reviews and customer audits.tive duties covering key quality management processes such as product planning design and development process verification mass produc-

A three-level inspection model of “self-inspection + patrol inspection + special inspection” is

tion control and after-sales service thereby forming a PDCA closed loop of “plan – do – check – act”.Physical Sample Standards implemented. First-piece and last-piece inspections and SPC control are applied to each batch to

prevent batch defects.Strategy>Closely aligned with its overall development strategy the Company adheres to the quality policy of “technology and innovation to create valuefor customers; quality and cost with the pursuit of zero defects” and has established the quality objective of “customer satisfaction and thepursuit of zero defects”. Focusing on high-end sectors such as new energy vehicles and various consumer electronics the stability and consisten- Stage Initial Containment and Mass Production

cy of product quality are ensured through stringent standards and precise control.Risk Management>

03 Through the establishment of a strict quality control system a comprehensive risk assessment mechanism and efficient product traceability and recall procedures together with digital measures the Company ensures that every stage from production to delivery meets the highest standards. The Risk Analysis and Response Control Procedures were formulated under which risks are identified based on unintended outputs in each process and response measures are developed by level. Risk assessments are conducted annually to ensure comprehensive risk identifica-tion and effective response measures.Full Life Cycle Quality Control System Cleanliness Testing Laboratory and Equipment Configuration Final Product Cleanliness Inspection RoomStage Product Planning High-precision testing equipment has been deployed to strictly monitor the quality of incoming materials processes and finished products. By the end of the Reporting Period 33 AI automatic inspection devices had been put into use.Supplier qualification review and on-site audits are conducted suppliers’ quality assurance capabilities are evaluated and high-quality suppliers are selected. A cleanliness testing laboratory of Class 100000 with an area of 100 square metres and a final product cleanliness inspection room of Class 100000 with an area of 1000 square metres have been established.80% of incoming inspection standards are stricter than national standards. In accordance with the Control Procedures for Employee Competence Evaluation Education and Training the competence of each Suppliers are evaluated quarterly from five dimensions namely “quality cost delivery risk inspector is evaluated every six months. Integrated training and enhancement are provided based on the weaknesses of each inspec-control capability and self-development capability”. tor so that inspectors can gradually be developed into multi-skilled personnel.In accordance with the New Product Development Control Process resources for new product Supplier On-site Audits in 2025 R&D are evaluated and allocated.

41 42PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

Traceability and Recall Indicators and Targets>

The Product Traceability Control Procedures were formulated by the Company. By integrating the U9 system data middle platform software produc-

Anchored to the Company’s future strategic objectives forward-looking and operational company-level annual quality targets are

tion record repository and a 100-square-metre retained sample product repository and through the linkage of the ERP and MES systems product

formulated by THMag. Throughout the full quality management process including design and material selection incoming inspection

packaging traceability codes and on-site work records real-time traceability has been achieved across all stages including raw material procure-

production and shipment department-level performance and quality indicators for each position that are stricter than the compa-

ment production processes testing data personnel and equipment and delivery logistics. The retained physical samples can fully reproduce the

ny-level targets are set and controlled. Regular review management and supervision are also carried out to track the progress of

condition of products at the time of shipment.product quality targets.In addition defect determination criteria have been clarified by the Company in accordance with the Product Quality Law of the People’s Republic of

China and supporting documents such as the Quality Integrity Guarantee System and the Emergency Plan have been established. Where necessary a In 2025 the Company

dedicated recall task force will be formed immediately and wholesalers retailers and consumers will be informed through multiple channels

such as announcements and letters with recall procedures defect information and contact details clearly specified so that all defective products

can be fully recalled and scrapped or reworked in accordance with the Nonconforming Product Control Procedures. At the same time a graded

response mechanism has been established under which matters are escalated progressively to middle management the General Manager and Customer Satisfaction ≥ 94%

even the Chairman according to severity and containment analysis and disposal measures can be launched rapidly so that customer risks and

brand impacts can be minimised. During the Reporting Period no penalties were imposed by competent authorities and no product recalls Finished Product Delivery PPM for Automotive Customers = 0

occurred as a result of product or service quality issues.Product Recalls 0

Quality Culture Development

Driven by full participation momentum for quality improvement has been activated by the Company. Employees are actively encouraged to offer

suggestions rational proposals for quality improvement are widely collected and diversified activities such as thematic quality training and skills

competitions are regularly carried out so that learning can be promoted through competition and capabilities can be enhanced through training.In this way quality awareness and professional practical competence have been strengthened among all employees in a comprehensive manner. Providing Quality Services>

In 2025 148 employee rationalisation proposals were received with an adoption rate of 100% and an improvement rate of 100%. THMag upholds the corporate mission of “Customer First” and has established a standardised full-process customer service manage-

ment system. Systems such as the Customer Satisfaction Management Procedures the Customer Complaints and Claims Handling Procedures

and the Management Specifications for Identification of Customers’ Special Requirements have been formulated by the Company and profes-

employee rationalisation sional product sales and customer service teams have been established. Timely communication with customers is maintained through

an adoption rate of an improvement rate of

proposals were received video conferences emails telephone calls and on-site visits and the quality of customer service at all stages including pre-sales

100 100 communication in-sales service and after-sales satisfaction has been continuously improved thereby gaining high recognition from 148 % % customers around the world.。

Case: THMag Organised a Skills Competition for Finished Product Inspection Positions 01 Pre-sales Communication

In December 2025 a skills competition for finished product inspection positions was organised by THMag. Focusing on key Focusing on customers’ core needs dedicated liaison teams

aspects of finished product appearance quality control the professional competence of frontline inspectors was tested and have been formed by the Company for customers in different

enhanced through practical competition. Group-based contests were arranged for different categories of finished products application fields such as new energy vehicles wind power and

and common quality defects such as scratches and burrs were accurately identified with inspection accuracy operational energy-efficient household appliances. Customers’ personalised

standardisation and work efficiency being comprehensively assessed. and special requirements relating to product performance

specifications delivery lead time and factory audits are proac-

tively and thoroughly understood and comprehensive product

information customised solutions and efficient service support

are provided.Customer Visit Communication

43 44PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

02 In-sales Service Information Security and Privacy Protection

Governance>

During the supply of magnetic materials a full-process closed-loop customer complaint manage-ment mechanism has been established. After complaints or return requests are raised by customers Adhering to the philosophy of “enhancing confidentiality awareness ensuring informationthrough letters faxes visits telephone calls or returns a prompt response is made by the Sales and security improving control measures and achieving continuous improvement” THMag has

Marketing Department timely communication is conducted to understand the basic situation formulated a series of internal systems including the Information Security Management

response timelines are strictly controlled corrective measures are formulated by the responsible Manual the Information Security Compliance Management Procedures and the Information Securi-

departments and the effectiveness of such measures is tracked and verified by the Quality Manage- ty Incident Management Procedures. In accordance with the information security requirements

ment Department. A rapid response board has also been established to ensure that customer After-sales Training for Customers of TISAX (Trusted Information Security Assessment Exchange) a reliable information securi-

complaints can be resolved in a timely and effective manner.ty management system has been established. The General Manager serves as the highest

To improve the quality of customer service the professional development of the service team has person responsible for information security and is responsible for decision-making and

been continuously strengthened and dedicated training on product knowledge technical standards THMag TISAX Certification overall coordination on major information security matters of the Company. Management

and communication skills has been regularly carried out so that employees’ overall capability in reviews are also regularly organised to continuously assess the adequacy and effectiveness of the operation of the information securitycustomer liaison and problem-solving can be enhanced. A working model of “dedicated personnel management system. A representative for information security management is appointed by the General Manager. Heads of eachfor liaison and coordinated handling” has been established and the division of responsibilities

department serve as the persons responsible for information security management within their respective departments and all

among the Sales and Marketing Department the Quality Management Department the Production

employees are required to consciously fulfil their information security and confidentiality obligations in accordance with the require-

Department and other departments in customer complaint handling and order follow-up has been Quality Improvement Training

clarified so that service responses can remain efficient and process coordination can remain smooth. ments of confidentiality commitments.In 2025 Customer Complaints of the Company Strategy>

Satisfaction Rate of Complaint Handling Dedicated Training Sessions Were Conducted Participant-times The deep integration of the information security management system with the principal business R&D activities and supply chain

100 16 247 management has been continuously advanced by THMag. Focusing on key business links such as R&D and design production and % operations supplier management and customer data protection important information assets are systematically identified by the

Company graded and classified management is implemented and the overall information security protection capability is enhanced

through a combination of institutional development and technical controls.

03 After-sales Support

Risk Management>

To gain a full understanding of customers’ genuine perceptions and suggestions regarding the Company and to meet their current and

future needs and expectations a linked mechanism of “satisfaction surveys + customer scorecards” has been established by THMag. A systematic information security risk management mechanism

Annual or regular customer satisfaction surveys are conducted to understand customer satisfaction across multiple dimensions has been established by the Company. In accordance with the

including the quality price delivery and service of products and services. Customer opinions are collected feedback information is Information Security Risk Assessment Control Procedures risk assess-

received and recorded and a Customer Satisfaction Evaluation Report is generated. Satisfaction evaluation results and trends are ments of information assets are conducted on a regular basis. Each

analysed and targeted plans for improvement and enhancement of satisfaction are arranged and formulated. In 2025 31 customer

department is responsible for identifying its principal information

questionnaires were issued to domestic and overseas customers and 23 were returned representing a response rate of 74%. A customer

satisfaction evaluation system covering 9 key indicators including annual satisfaction surveys customer complaints or grievances new assets and supporting assets. Threat identification vulnerability

order / new product requirements and customer scorecards has been established by the Company. Monthly statistics and tracking are analysis and risk assessment are organised by the Information

conducted and an annual overall satisfaction result is formed on a weighted basis. In 2025 the Company’s overall customer satisfaction Security Management Team and risk levels are determined based

score reached 95.86% achieving the quality target of customer satisfaction ≥ 94%. on a comprehensive assessment of asset value threat frequency

and degree of vulnerability. For identified information security

In recent years the Company has repeatedly received awards and recognition from multiple customers. This demonstrates THMag’s core risks management strategies such as acceptance reduction

competitiveness and overall strength in technological innovation and operational management and also serves as the best recognition

avoidance or transfer are adopted by the Company so that risks

of the dedicated efforts of our team.can be controlled within an acceptable range.An information security incident management mechanism has been established by the Company under which incident classification

standards and handling procedures are clearly defined. Graded response and closed-loop management are applied to incidents such

as unauthorised access information leakage and system interruption so that information security incidents can be identified in a

timely manner handled effectively and continuously improved and the impact on business operations and relevant parties can be

minimised to the greatest extent possible.Volvo Cars BOSCH 2025 Daikin Excellent Brose 2025

“Sustainable Long-term Partner Award” Global Supplier Award Supplier Award Key Supplier Award

45 46PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

For the protection of customer information and data assets technical means and

management mechanisms have been combined by the Company to continuously Adhering to Technological Innovation

improve the information security management system. A data security encryption

system has been introduced under which automated and mandatory encryption

management is applied to design drawings technical documents and various types of Strengthening R&D Capabilities

business data. Without affecting employees’ normal office work and business

activities real-time encryption control is applied throughout the entire process of file Governance>

generation storage and use so that data can only be accessed within the Company’sauthorised environment. For files that must be shared externally approval and decryp- Guided by the product upgrading principle of “producing one generation trial-manufacturing one generation researching one generationtion authorisation procedures are strictly implemented and dedicated personnel and conceptualising one generation” THMag has established a comprehensive and efficient R&D management system. A series of

management and full-process traceable control are applied. During the Reporting documents including the R&D Project Management System and the Management System for the Transformation of Scientific and Technological Achieve-

Period 8 information security-related training sessions were conducted and no ments have been formulated and standardised procedures covering the full life cycle of R&D projects from proposal feasibility analysis

incidents involving leakage of customer privacy occurred. design and development trial production and appraisal to achievement transformation have been clearly defined.THMag R&D Management System

During the Reporting Period

General Manager’s Office Meeting Chief Engineer

8 information security-related training sessions were conducted and no incidents involving leakage of customer privacy occurred. R&D decision-making body responsible for supervis- Responsible for leading the preparation of R&D plans

ing the full process of R&D projects and organising the and coordinating the resolution of major issues arising

evaluation and assessment of achievements during implementation

Indicators and Targets>

A series of information security management targets have been formulated and implemented by the Company. At least one management R&D Center Sales and Marketing Department General Manage-

review is conducted each year. In accordance with the internal Control Strategy for Information Security Management System Objectives the ment Department Supply Chain Department and Other Department in charge responsible for coordinating

achievement of information security targets is systematically monitored and assessed and necessary resources are allocated in a timely Departmentsproject initiation implementation acceptance and

manner based on the review results so that continuous improvement and ongoing enhancement of the information security management achievement management Respectively responsible for market demand collection

system can be promoted. R&D personnel allocation material procurement support

and related work

Indicator Name Target Value Evaluation Cycle Target Attribute Progress against 2025 Target

System Availability 99.5% Quarterly Availability Achieved Strategy>

The Company’s medium- and long-term strategic objectives for intellectual property are as follows

Enterprise LAN Coverage Rate 95% Semi-annually Availability AchievedIn the field of innovation efforts are made to build an industry technology source and achieve the transition from “followinginnovation” to “leading innovation”;

Training Plan Completion Rate 100% Semi-annually Confidentiality Availability and Integrity Achieved

In patent layout a high-value patent pool supporting global business is to be developed and the international deployment and

value realisation of patents are to be advanced;

Number of Information Leakage Incidents per Year 0 Semi-annually Confidentiality Achieved In brand protection an all-channel brand protection system is to be established and a benchmark brand in the global rare earth

permanent magnetic materials sector is to be built;

In trade secret protection a full-process security control mechanism is to be established so that confidentiality capability can be

Number of Information Security Incidents 2 Semi-annually Confidentiality Availability and Integrity Achieved

transformed into a core competitive advantage.

47 48PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

Risk Management> Major R&D and Innovation Progress of the Company in 2025

Core risks in the R&D process are systematically identified by THMag and quantified assessments are carried out for the identified risks. Tools

such as risk matrices and risk probability and impact scoring are applied to determine risk levels. Based on the risk level priorities for response

strategies are set and urgent measures are taken for high-risk items. Through regular mechanisms such as monthly performance evaluations For humanoid robots the Company has established a special R&D project team. During the reporting period it cooperated with

quarterly performance assessments and annual technical evaluations R&D risks are continuously monitored. multiple customers on R&D and sample delivery and small-batch product delivery has been completed for individual projects.The Company continued to upgrade technologies including high-performance heavy rare earth diffusion technology (DDP)

Description of Main Business Risks Response Measures low-heavy rare earth technology (DLP) and heavy rare earth-free technology (DFP). In response to market and end-customer

demands a series of new heavy rare earth-free products have been developed.Insufficient scientific validation or inadequate Industry-university-research collaboration: Long-term cooperation is established

demonstration of research projects may lead to with top domestic universities and research institutes to jointly tackle key technical The Company kept accelerating new product development and proactively laid out bonded magnets radial magnetic rings

insufficient innovation or waste of resources. challenges. magnetic components and other product categories. This has laid a solid foundation for the Company to expand its product

Unreasonable allocation of R&D personnel or weak An independent R&D center is established to strengthen R&D capabilities. portfolio and upgrade from a sintered rare earth permanent magnet material supplier to an integrated provider of rare earthmanagement of the R&D process may lead to The R&D talent pipeline is improved through the combination of “introducing permanent magnet materials and magnetic application solutions.excessive R&D costs fraud or R&D failure. high-end talent + internally cultivating key personnel”.Insufficient transformation and application of An incentive mechanism for R&D innovation is established and the assessment and

research achievements or inadequate protection incentive system for R&D personnel is standardised.measures may lead to damage to the Company’s R&D funds are prioritised for core fields such as high-performance materials

interests. heavy-rare-earth-free materials bonded magnet / injection-moulded magnet

technologies and magnetic assemblies so that the progress of technological R&D Case: Intelligent Continuous Furnace Project

can be ensured.Relying on the advantages of Baotou’s rare earth industry and policy support and based on independent R&D the Company has deepened THMag has upgraded and renovated its production equipment through independent R&D replacing traditional single furnaces

collaborative innovation with relevant domestic and overseas institutes key universities and leading enterprises along the industrial chain. with intelligent continuous furnaces. This initiative optimizes the furnace insulation structure and temperature control logic.Through the joint development of R&D cooperation platforms new technologies and resources have been introduced to support innovation in While realizing full-process automated operation it greatly improves product consistency and qualification rates. The production

equipment and process R&D. Through the optimisation of key processes independently developed by the Company including multi-compo- cycle is shortened by approximately 5%–10% compared with conventional single furnaces thereby cutting greenhouse gas

nent composition regulation grain refinement technology and one-time compaction technology the magnetic properties corrosion emissions per unit product. It effectively enhances resource utilization efficiency and product quality stability providing strong

resistance and reliability of products have been successfully improved. Through the independent development of key production equipment support for the Company’s green and low-carbon development.such as jet mills and one-time compaction presses the localisation of equipment has been successfully achieved.THMag R&D and Innovation Platform

Internal documents such as the Performance Assessment System for R&D Personnel and the Measures for Employee Incentive Management have been

formulated by the Company. A target-setting group has been established to formulate specific performance targets in accordance with the

Company’s annual production and operation plan. Upon approval of the performance targets a Performance Target Responsibility Letter is

signed between the Company and the design and R&D personnel. Dedicated R&D incentive awards have been established for achievements

in innovation and R&D including patents and technological development so that employees can be encouraged to participate in technical

improvement and patent application thereby fostering an innovation-oriented atmosphere across the Company.

49 50PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

Indicators and Targets> The development of an intellectual property culture has been incorporated into the overall corporate development strategy. Anonymous

reporting channels have been established to encourage employees to raise concerns relating to intellectual property compliance and fair and

Closely aligned with technological development trends in the rare earth permanent magnetic materials industry the Company focuses on

impartial investigations and analyses are carried out in cases of suspected non-compliance. Through various forms such as thematic trainingemerging application fields such as new energy vehicles wind power and energy-efficient household appliances and has defined “mate-internal document communication external cooperation and publicity and meeting-based communication the Company’s intellectual propertyrial innovation process innovation application innovation and green manufacturing technology” as its core R&D directions. Clear core

policies objectives and compliance requirements are communicated to all employees thereby enhancing their awareness of intellectual proper-

targets for technological innovation have been established: by 2030 R&D intensity is to reach over 4% and cumulative patent applications

ty and their capability for protection.are to exceed 150.As of the End of the Reporting Period the Company In 2025 the Company Case: THMag Participated in the “One-to-one” Customised Patent Service Organised by the Market Regulation and Emergency Management Bureau of the Rare Earth High-tech Zone

Held 110 patents including 85 invention patents. R&D investment amounted to RMB 112 million In February 2025 THMag actively participated in the “one-to-one” customised patent service on intellectual property organised by

49 61 and 157 R&D personnel were employed. the Market Regulation and Emergency Management Bureau of the Rare Earth High-tech Zone. Through on-site investigation and Held overseas patents and domestic patents.

discussion with the expert team the optimisation directions for patent application and the transformation and utilisation of patents

Had obtained 40 trademarks. were further clarified by the Company. In light of its own development needs requests were submitted to the relevant authorities for

continued access to patent reports and navigation services relating to key industries in the rare earth sector so that the global layout

Protecting Intellectual Property Rights of rare earth patents the competitive landscape and technological development trends could be fully understood thereby providing

strong support for avoiding technological risks and promoting secondary innovation.Intellectual property is an important component of the Company’s core competitiveness and a key support for technologi-cal innovation and sustainable development. Adhering to the intellectual property policy of “innovation-drivensafeguarded by confidentiality founded on compliance and based on win-win cooperation” THMag strictly complies Empowering Intelligent and Digital Manufacturing

with the Patent Law of the People’s Republic of China and has formulated rules and systems such as the Intellectual Property

Compliance Management Manual the Measures for Intellectual Property Compliance Management and the Measures for THMag is committed to building an intelligent factory. Relying

Performance Evaluation of Intellectual Property Compliance Management. In line with the overall development strategy and on the industrial internet platform a system featuringintellectual property objectives a detailed annual intellectual property work plan is formulated each year and the types “autonomous perception intelligent decision-making andof intellectual property to be prioritised and acquired during the year are clearly defined. A three-tier organisational structure for intellectual dynamic optimisation throughout the full production

property compliance management has been established namely “General Manager (Top Management) – Management Representative (Chief process” has been established covering all stages fromEngineer) – All Departments” under which the main responsibilities at each level are clearly defined and the Company’s strategic planning “raw material inbound – production and processing –daily supervision deployment operation licensing and litigation relating to intellectual property are comprehensively managed and finished product inspection – logistics outbound” with the

implemented. In 2025 recertification under the GB/T 29490-2023 Intellectual Property Compliance Management System was successfully aim of building a benchmark intelligent factory in the

obtained. magnetic materials industry. At present platform-based

management for multi-organisation collaborative operation

The identification prevention control and response to intellectual property risks have been embedded into all aspects of the Company’s

has been achieved by the Company through various

operations and management. A regular mechanism for intellectual property due diligence compliance review and graded management has AAA Certificate for the Integration AAA Digital

Management System of automated manufacturing and management software

been established and compliance reviews are conducted and records are retained at key stages such as contract signing information release Transformation Certificate Informatization and Industrialization systems comprehensively enhancing the digitalisation level

and product promotion. Through internal and external audits and management reviews the effectiveness of the system the fulfilment of compli-

ance obligations and the extent to which targets have been achieved are regularly evaluated. Corrective and preventive measures are formulated of product R&D production management and customer service and promoting the efficient operation of personnel flow material flow informa-

for issues identified through audits thereby forming a closed-loop management mechanism of “review – evaluation – improvement”. tion flow and capital flow.In 2025 “THMag Advanced-level Intelligent Factory of the Autonomous Region” was successfully included in the list of Advanced-level

Case: THMag Conducted the Annual Management Review of the Intellectual Property Compliance Management System Intelligent Factories of Inner Mongolia Autonomous Region for 2025.On 30 September 2025 the annual management review of the intellectual property compliance

management system was conducted by THMag in accordance with the GB/T 29490-2023

standard. The review covered core elements including policies and objectives system operation Core Targets for THMag Intelligent Manufacturing

and resource allocation and confirmed that human financial and technical resources were

adequately allocated and that the system was operating effectively and in compliance with the By 2030 new intelligent factories are to be built to drive industrial upgrading.standard requirements. Follow-up actions will include the continued implementation of person-

nel training and system upgrading in accordance with the review recommendations the tracking

of the implementation of improvement measures and the dynamic optimisation of the system to

meet development needs.

51 52PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

THMag Digital Systems Through the continuous adoption of the “theory + practice” model interdisciplinary digital talent is being cultivated by the Company and the deep

integration of digital technology with business operations is being advanced thereby providing talent and technical support for the Company’s

intelligent manufacturing strategy. In addition although THMag’s product R&D and design activities are not directly subject to review under the

Production Side national Measures for the Review of Scientific and Technological Ethics (Trial) great importance is still attached by the Company to the governance of

scientific and technological ethics. During the digitalization process it is ensured that technological innovation not only meets market demand but

Manufacturing Execution System (MES): Real-time collection and monitoring of production progress equipment status and quality also aligns with social ethical values.data are achieved.Case: 2025 Special Training on Enhancing the Application Capability of THMag Intelligent Manufacturing Systems

Quality Management System (QMS): Quality data across the full product life cycle are systematically managed.Automated Guided Vehicle (AGV) System: Driven by production demand just-in-time (JIT) delivery of materials is achieved. In March 2025 the “Intelligent Manufacturing and Digital Empowerment” training series was

Recipe Management System (RMS): Consistency security and traceability of recipes in R&D and production are ensured. launched by THMag to build a talent pipeline for the development of its “intelligent factory”. The first

round of training featured mindset upgrading capability focus and full coverage and was delivered

Artificial Intelligence (AI): AI-based identification is carried out through industrial CCD cameras to determine product quality and AI

to key personnel from various plants and departments. It focused on two modules namely business

industrial models are introduced for data analysis.intelligence and data analysis and the production coordination system covering the functions of the

BI platform and the relevant production reporting operations on the THMag Cloud Platform thereby

strengthening the foundation for application.Building a Shared Responsibility Chain

Intelligent Factory Management Platform Automated Guided Vehicle (AGV) System Sustainable Supply Chain

Social responsibility compliance risk control and sustainable development requirements have been deeply integrated by THMag into the full life

cycle management of suppliers. Normative documents such as the Supplier Management Procedures the Supplier Code of Conduct the Supplier Social

Responsibility Assessment the Supplier Sustainable Development Questionnaire and the Partner Compliance Commitment Letter have been formulated.Business Side Among them the code includes 36 specific requirements for suppliers in the three areas of human rights and labour business ethics and environ-

ment and such requirements have been incorporated into the full-cycle supplier management system. A full-process social responsibility manage-

Enterprise Resource Planning (ERP): Core modules including finance supply chain production and sales are integrated to achieve ment mechanism covering new supplier admission and existing supplier management has been established by the Company and the Sales and

business process standardization and data unification. Marketing Department the Production Department and the Supply Chain Department have been designated as responsible departments with the

responsible Vice General Manager in charge of approving qualified suppliers.Business Intelligence (BI): A business intelligence analysis platform is established to integrate multi-system data and provide

visualized reports and in-depth analytical insights for management decision-making.Supply Chain Management Targets of the Company

Green Procurement: By 2030 100% of suppliers are to pass environmental compliance audits and 50% of core suppliers areCase: The “Intelligent Design and Optimized Control Solution for Rare Earth Permanent Magnet New Material to achieve carbon neutrality targets.Processes” Jointly Developed with the Participation of THMag Was Selected for the Ministry of Industry and

Information Technology’s “Open Call for Leadership” Project on Intelligent Manufacturing System Solutions Logistics Emission Reduction: By 2030 carbon emission intensity from logistics and transportation is to be reduced by 20%.In December 2025 the “Intelligent Design and Optimized Control Solution for Rare Earth Permanent Magnet New Material Processes”

jointly developed by THMag and multiple institutions was successfully selected for the Ministry of Industry and Information Technology’s In 2025 the Company

“Open Call for Leadership” project on intelligent manufacturing system solutions and became the only selected project from Inner

Mongolia Autonomous Region. Targeting pain points such as the long traditional R&D cycle high cost low efficiency in smelting processes The total number of suppliers was 622 including 220 in Inner Mongolia Autonomous Region and 402 in other regions.and high burn-off loss of rare earth permanent magnetic materials this solution established an AI-based R&D and application system

covering the full process from “formula design – process control”. Through intelligent optimization the formula R&D cycle can be The signing rate of the Supplier Code of Conduct reached 100%.shortened from several months to several weeks by more than 50% while the success rate of formula design can be increased by 50%. At

The proportion of newly introduced suppliers signing the compliance code reached 100%.the same time production energy consumption and rare earth burn-off loss can be reduced thereby achieving dual optimization in both

R&D and production. 0 suppliers had their cooperation terminated due to non-compliance.

53 54PRODUCTS: CONNECTING INDUSTRY THROUGH MAGNETICS AND LEADING INNOVATION WITH INTELLIGENCE

Full Life Cycle Supplier Management System Supporting Industry Development

Admission THMag fully recognises that the healthy and sustainable development of the industry depends on collaborative efforts and corporate responsi-

Risks relating to basic qualifications legal proceedings and related-party relationships are screened through multiple channels such bility. Through deep participation in domestic and international industry conferences and exhibitions industry standard-setting has been

as telephone interviews websites and news media so that bribery offences commercial bribery and similar issues can be prevented. promoted. The Company has also proactively joined authoritative industry associations such as the Association of China Rare Earth Industry

the China Nonferrous Metals Industry Association the Shanghai Society of Rare Earth the China Electrical Equipment Industry Association the

Suppliers’ performance in areas such as labour and human rights business ethics and carbon reduction management is comprehen-

Rare Earth Industry Association of Inner Mongolia Autonomous Region and the Inner Mongolia Rare Earth Society. In this way the Company

sively assessed and a score below 85 is deemed unqualified.has been supported in accurately grasping the technological frontier market trends and policy direction of the global magnetic materials

industry while its innovation achievements and technical strength have been fully demonstrated thereby promoting in-depth connection and

Assessment and Supervision resource integration across the upstream and downstream industrial chain and injecting strong momentum into the high-quality development

Suppliers’ social responsibility performance is reviewed either through supplier self-assessment or through the Company’s regular of the magnetic materials industry.on-site audits and a Supplier Social Responsibility Assessment Report is issued.As of the End of the Reporting Period the Company

Correction Improvement and Exit

had cumulatively participated in the formulation / revision of 17 standards including 10 national standards.Non-conformities identified during supplier inspections are recorded corrective measures are required to be formulated and

the implementation process and effectiveness of rectification are tracked. Suppliers that refuse to make rectification or score

below 60 will be directly eliminated. National or Industry Standards in the Preparation of Which THMag Participated (Published Partial)

Raw material suppliers are required to submit RoHS reports annually and the validity period of such reports is tracked. Coopera-

tion with suppliers whose certification expires and is not renewed will be suspended. XB/T 814-2023 Evaluation Requirements for Green Factory of Sintered NdFeB Industry Standard

2022-0576T-XB 2:17 Type Sintered SmCo Permanent Magnetic Materials Industry Standard

Communication and Empowerment

GB/T 42160-2022 Grain Boundary Diusion NdFeB Permanent Magnetic Materials National Standard

Special training on supplier social responsibility is regularly organised every year. The training focuses on

frontier industry policies and the Company’s sustainable supply chain institutional system and systematically XB/T 617.8-2023 Chemical Analysis Methods for NdFeB Alloys — Part 8: Determination of Hydrogen Content — Inert Gas Fusion-Thermal Conduc-

explains the completion requirements and practical methods for various assessment questionnaires. Feedback tivity Method or Infrared Absorption Method Industry Standard

and suggestions from participating suppliers are collected through post-training questionnaires.GB/T 43489-2023 Constant Damp Heat Test for Sintered NdFeB Permanent Magnets National Standard

Critical Minerals Management GB/T 42668-2023 Samarium-Iron-Nitrogen Bonded Permanent Magnetic Powder National Standard

Adhering consistently to the core principle of “responsible procurement and full-chain control” THMag has integrated the concept of respon-

sible management of critical minerals into the strategic planning and daily operation of its supply chain. Strict compliance is maintained with

the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains and the compliance safeguard measures of the Responsible Minerals

Initiative (RMI). The Policy Procedures for Prohibiting the Procurement of Conflict Minerals and the Due Diligence Guidelines / Policy for Responsible Raw

Material Procurement have been formulated under which a clear commitment is made not to procure or use any conflict minerals that finance

armed groups in conflict-affected areas or violate international humanitarian standards including 3TG minerals such as tantalum tin

tungsten and gold as well as other high-risk minerals.To respond accurately to customer requirements and international compliance requirements a standardised management mechanism for

completion of RMI (Responsible Minerals Initiative) questionnaires has been established by the Company and dedicated personnel have been

assigned to coordinate the completion of various compliance questionnaires including the Conflict Minerals Reporting Template (CMRT) and

the Extended Minerals Reporting Template (EMRT). In addition conflict minerals control requirements have been embedded throughout the full

process of supplier admission cooperation and dynamic evaluation. At the supplier admission stage the principal manufacturers from which IEMC 2025 SMM (5th) Coiltech Italy 2025

the Company procures have all passed RMI compliance certification and “no use of conflict minerals” has been clearly defined as a core Motor Annual Conference and Industry Chain Expo

admission requirement. All downstream critical minerals suppliers are required to sign a Commitment Letter on Non-use of Conflict Minerals. For

existing suppliers a regular supervision mechanism has been established under which the implementation of conflict minerals control by

suppliers is periodically reviewed and suppliers are required to provide timely feedback on changes in the upstream supply chain so that

control requirements can be effectively transmitted to all upstream links.In 2025 the Company

The accuracy and timeliness of completion of RMI-related questionnaires both reached 100%.The proportion of suppliers subject to conflict minerals traceability investigation reached 100%.The number of suppliers found to have used conflict minerals in violation of requirements was 0. Coiltech North America 2025 CWIEME Shanghai 2025 Shanghai

International Coil Exhibition

555602

SOCIETY

Bringing Together Strength through Magnetics

and Creating Shared Benefits for All Parties

Employees are regarded by THMag as the most important creators of corporate value. Labour laws and regulations and compliant

employment requirements are systematically implemented and the principles of fair just and equal employment are upheld. The

remuneration incentive and welfare protection system is continuously improved and mechanisms for employee participation and

democratic communication are kept open. In this way talent vitality and organisational resilience are continuously released the results

of corporate development are shared with employees and society and long-term and sustainable social value is actively created.Health and Safety Talent Development Protection of Employee Rights and Interests

Diversity and Equality Social Contribution and Public Welfare 04

*Aligned with the United Nations Sustainable Development Goals

57 58SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Building a Talent-driven Enterprise Remuneration and Benefits>

A remuneration and benefits system balancing internal fairness and external competitiveness has been established by the Company.Systems such as the Remuneration and Benefits Management Procedures and the Benefits Management System have been formulated and

Protecting Employee Rights and Interests implemented and a Remuneration and Appraisal Committee has been established. Through fair transparent and scientific assessment

and incentive mechanisms together with welfare arrangements such as paid annual leave statutory holidays and various special

Democratic Communication> allowances employees’ sense of gain satisfaction and belonging is enhanced.THMag strictly complies with the relevant provisions of the Trade Union Law of the People’s Republic of China. The Articles of Association of

the Employee Representative Congress have been established employee representative congresses are convened on a regular basis Statutory Benefits Company Benefits

grassroots employee representatives are elected in accordance with the law and employees are supported and assisted in lawfully

establishing trade union organisations. The Company solemnly undertakes that trade unions and their representatives or representa-

Social insurance and Provides various types of monetary gifts: holiday bonuses for the Spring Festival

tives of lawfully established organisations for freedom of association will not be subject to any form of unjustified interference

housing provident fund International Women’s Day the Dragon Boat Festival and other occasions as well as

obstruction or discrimination in the course of performing their duties and exercising their lawful rights. Employees’ rights to informa- birthday gifts condolence payments and gifts to celebrate academic achievements

tion participation expression and supervision are effectively protected and employees’ freedom of association is fully respected. Statutory holidays

Annual health check-ups are organised for employees and reimbursement is provid-

The Peaceful Assembly System and the Management Procedures for Freedom of Association and Provision of labour ed for pre-employment and exit medical examinations.Collective Bargaining have been established and implemented by the Company. Full respect is given to protection supplies

all forms of lawful associations spontaneously formed by employees in accordance with the law and Heatstroke prevention and cooling allowances are provided.it is effectively ensured that trade unions and employee representatives are not subjected to discrimi-

nation or interference in the course of performing their duties. Collective wage consultation and Travel accident insurance is provided for employees on business trips.collective contract signing are regularly carried out by the Company and full and equal communica- Night shift allowances are provided for frontline employees engaged in physical work

tion and consultation are conducted with employee representatives on matters such as remuneration during night shifts.distribution labour conditions and employees’ immediate interests so that harmonious and stable

Internal Employee Symposium labour relations can be continuously promoted.Employee satisfaction surveys are conducted annually through online and anonymous questionnaires so that the views and suggestions of all

employees on dimensions such as remuneration and benefits working environment and work pressure can be understood. Based on the survey

results a series of improvement measures are adopted and an annual Satisfaction Survey Analysis Report is ultimately issued.In 2025 the Company

The valid response rate for employee satisfaction questionnaires reached 84.33% and the overall satisfaction rate was 86.68%.

04 Employee Rights and Interests Grievance>The rights of employees and other stakeholders to lodge grievances are protected by the Company in accordance with the law. The Grievance Mechanism Management Procedures have been established and implemented internally and employees and stakeholders are Weekend Basketball Activity Academic Achievement Badminton Competitionencouraged to raise their concerns and issues through lawful and compliant channels. Upon receipt of grievance information from Gifts for Employees’ Childrenemployees timely investigation analysis and rectification will be carried out. After rectification the handling results will be fed back to the grievant and a satisfaction evaluation will be conducted.Grievance Channels:Grievances or reports may be submitted in person by email online complaint letter telephone visit or other means and may also be submitted through an authorised representative.Suggestion Boxes: Canteen; South Entrance Hall of No. 3 PlantReporting Email: bthr@thmagnetics.com Reporting Hotline: 0472-5240512 (Internal Grievance Hotline); 0472-5223562 (External Grievance Hotline) Noon Table Tennis Activity “Love on 520 · Encounter at THMag” Trade Union Summer Cooling ActivityAnonymous Forum: WeCom Platform – THMag; Company Website: http://www.thmagnetics.com Social Networking Activity

Mailing Address: No. 8-17 Xitu Street Rare Earth Application Industrial Park Baotou Rare Earth High-tech Industrial Development Zone

59 60SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Case: THMag Golden Autumn Study Tour Outing and Camping Activity Diversity and Equality

In October 2025 a golden autumn study tour outing and camping activity was organised by THMag for employees and their Compliant Employment>families with the participation of more than 100 people. Centred on the theme of “getting close to nature strengtheningTHMag strictly complies with relevant laws and regulations including the Labour Law of the People’s Republic of China the Labour Contractthe team and promoting parent-child co-education” diversified activities such as fruit and vegetable picking farming

Law of the People’s Republic of China and the Social Insurance Law of the People’s Republic of China. Employment management is standardised

culture experience intangible cultural heritage handicraft making and camping barbecue were arranged so that employ-

in accordance with the law the lawful rights and interests of employees are protected and an open diverse and inclusive organisation-

ees and their children could learn about farming culture and enhance parent-child interaction through practical experience.al culture is continuously fostered.Through group collaboration and immersive activities communication and coordination among employees were strength-

ened and employees’ sense of belonging and well-being was effectively enhanced. Internal systems such as the Procedures for Prohibiting the Use of Child Labour the Employment Management Procedures the Anti-discrimina-

tion Management Procedures the Management Procedures for Minors and the Management Procedures for Religious Belief have been

established by the Company. Any form of discrimination in recruitment remuneration training promotion benefits and separation on

the grounds of race religion region gender age language physical ability or height is strictly prohibited. Forced labour and the use

of child labour are firmly prohibited. Recruitment is strictly controlled at source to ensure that no child labour is employed. In 2025 no

incidents relating to child labour or forced labour occurred in the Company.In 2025 the Company

100%100%100%1:1100%

Case: THMag Dragon Boat Festival Folk Culture Experience Activity The labour contract The social insurance The proportion of The basic salary ratio of The proportion of

signing rate reached coverage rate reached employees covered by male to female employees covered by

the minimum basic employees was Company benefits

In May 2025 a Dragon Boat Festival folk culture experience activity was organised by THMag so that employees could wage reached reached

experience the charm of traditional culture through immersive participation. Interactive sessions were arranged around

traditional Dragon Boat Festival activities such as pitch-pot shooting at the five poisons and weaving five-coloured cords

combining festive customs knowledge cultural meanings and team participation so that employees could understand the As of the end of the Reporting Period the Company had a total of 1226 employees of whom employees with disabilities accounted for

cultural connotations behind Dragon Boat Festival customs in a relaxed atmosphere. In this way employees’ identification 1.31% and ethnic minority employees accounted for 5.38%.with traditional culture was deepened team cohesion was further enhanced and a warm and harmonious working

atmosphere was created. The breakdown of employees by gender age educational background and job grade is as follows

Gender Age Educational Background Job Grade

202520252025

Male 834 30 and Below 285 Postgraduate and Above 27 Senior Management 8

Female 392 30-50 896 Bachelor’s Degree 209 Middle Management 19

50 and Above 45 Junior College and Below 990 Other Managers and Employees 1199

61 62SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Care for Female Employees> Valuing Talent Development

THMag fully respects and protects the lawful rights and interests of female employees. The Women Protection Management Procedureshave been formulated and the relevant provisions on labour protection for female employees have been strictly implemented. Employ- THMag implements the employment principle of “the capable are promoted the average give way and the underperforming arement stability and career development rights of female employees during pregnancy and maternity are effectively protected. It is reassigned”. The Management System for Job Promotion Appointment and Removal has been formulated under which promotion paths

expressly prohibited to make pregnancy testing contraception or similar matters a condition for recruitment or continued employment promotion procedures appointment and removal procedures and related matters are clearly defined. In line with employees’ own

and labour relationships must not be terminated on the grounds of pregnancy or childbirth. aspirations and individual characteristics dual career pathways combining horizontal and vertical development together with

cross-sequence position transfer are provided to meet the career aspirations and development needs of different employees.As of the end of the Reporting Period women accounted for 22.73% of management personnel and female employees accounted for

31.97% of the total workforce. During the Reporting Period 13 employees took maternity leave or childcare leave and the Promotion Path

return-to-work rate was 100%.Technician Engineer Supervising Engineer Chief Engineer

Section Department

General Staff Frontline Personnel Level - Deputy Level - Deputy

Vice General

Section Level Department Level Manager

General Technical Assistant Junior Intermediate Senior

Operator Technician Technician Technician Technician

Promotion ProcessTHMag Mother and Baby Room “Flowers Bloom on International Women’s DayWarmth Delivered to Women” Themed Activity

Determine the Position Nominate / Self-recommend Promotion Promotion Determine the Final

Proposed for Promotion Suitable Candidate(s) Assessment Presentation Candidate(s)

Promoting Local Employment>

THMag continuously expands its recruitment channels and provides diversified employment opportunities through a combination of

online and offline methods. In employment arrangements priority is given to employees with Inner Mongolia household registration Focusing on the goals of high-quality development and fulfilment of social responsibility the Training Management System has been

and local labour resources are actively absorbed thereby supporting regional employment stability and local economic and social formulated by the Company and a multi-dimensional training system covering safety and compliance production technology

development. management empowerment talent development and sustainable development has been established. Adhering to the training

The Company actively participates in dedicated recruitment activities for veterans and persons with disabilities and equal employment principles of “relevance continuity diversity and effectiveness” an internal trainer management system has been established and

opportunities are provided to these groups thereby supporting stable employment for key groups. At the same time the Company has multi-level multi-stage and multi-theme training programmes are orderly provided for new employees and employees at all levels

participated in university campus recruitment fairs on multiple occasions and school-enterprise recruitment cooperation has been fully matching the practical needs of different positions and functions. A training approach combining “internal + external” methods

carried out with local universities and educational institutions so that outstanding graduates can be attracted and the localisation of is adopted. Internal training is carried out through internships coaching mentoring and guidance arranged by supervisors and experi-

talent cultivation and employment linkage can be promoted. enced colleagues or through systematic training organised by internal or external trainers. External training is organised according to

position needs and employees are arranged to participate in training provided by external training institutions and colleges thereby

comprehensively promoting employee growth and the steady enhancement of organisational capability.The Company consistently attaches importance to employees’ career development and personal growth and actively encourages and

supports them in enhancing their academic qualifications and capabilities through continuing education. To help ease employees’

learning burden partial tuition subsidies will be provided to employees who are internally recommended and successfully enrolled in

academic advancement programmes thereby effectively supporting their self-improvement and injecting sustained momentum into

the shared growth of both individuals and the Company.

2025 Dedicated Recruitment Event for the Women’s Day Job Fair

Special Action on Employment Services for Veterans

63 64SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

In 2025 the Company Case: THMag Organised a Section Chief Training Programme to Empower Grassroots Management

336 training sessions were conducted with a training coverage rate of 100%. From September to November 2025 Phase I of a three-month section chief training programme was organised by THMag for

section chiefs and reserve cadres of various plants. Focusing on topics such as managers’ role awareness leadership enhance-

Total employee training investment amounted to RMB 88900. ment and workshop management practice the programme adopted a combination of case discussion and after-class coaching

to systematically advance the development of grassroots management capability. Through this training deep integration of

Employee training participation reached 13241 participant-times total training hours amounted to 59479.50 hours frontline production scenarios with management practice will be promoted with the support of the internal trainer team the

and average training hours per employee reached 50.10 hours. combination of learning and application will be strengthened and the transformation of training outcomes into on-site manage-

ment effectiveness will be facilitated.During the Reporting Period a survey was conducted on the training delivered during the year and the Analysis Report on Training Needs Survey

for 2026 was prepared based on feedback from 654 valid samples. In 2026 focus will be placed on employees’ core needs with priority given

to hybrid practical training and courses related to production quality and safety so that practical capabilities such as problem-solving and

lean production can be strengthened. Through comprehensive and targeted training empowerment support will be provided for employee

growth and the Company’s sustainable development. In 2025 employee satisfaction with training reached 96.21%.Case: THMag World Book Day Empowerment Training Series

2In April 2025 THMag organised the “Empowering Growth Embarking on a New Journey Together” training series in conjunction

with World Book Day through which a three-day systematic learning and empowerment programme was delivered to employees.Focusing on the three themes of professional mindset communication practice and structured thinking the Company combinedthematic lectures case analysis and practical exercises so that employees could reshape their understanding through an “emptycup mindset” enhance communication capability through photography and writing practice and strengthen problem analysis and Case: THMag Held the Third Internal Trainer Certification Assessment

collaboration efficiency through structured thinking training.From 7 to 8 August 2025 the third internal trainer training and certification assessment was conducted by THMag with the aim

of building a high-quality internal trainer team promoting the sharing of internal knowledge and experience and improving

training quality. Outstanding internal trainers from previous rounds were invited to serve as judges and assessment was

carried out from multiple dimensions such as professional knowledge and teaching skills. The participating trainees performed

strongly. In the end 7 employees were appointed among whom 4 were accredited as two-star internal trainers and 3 as

one-star internal trainers. These internal trainers will support the Company’s knowledge dissemination capability enhance-

ment and sustainable development.

65 66SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Protecting Safety and Health Strategy

Adhering to the work safety policy of “safety first prevention first and comprehensive management” the Company issued the Implementation

Governance Plan for the Three-year Action to Strengthen the Foundation of Safety. Key actions for four stages of work safety were clearly defined.The Company strictly complies with laws and regulations including the Law of the People’s Republic of China on the Prevention and Control of Occupa- Completion

tional Diseases and the Work Safety Law of the People’s Republic of China. The Compilation of Safety Management Systems has been formulated Stage Period Key Actions Status

covering target management risk assessment hazard investigation special operation management contractor safety management and

emergency rescue. Through document management training and communication as well as supervision and inspection the effective The Safety and Environment Section formulated a detailed plan in light

implementation of all systems is ensured. Stage I: Mobilisation and April 2024 of actual conditions clarified task assessment methods and complet- Completed

Deployment ed publicity and mobilisation

A full-staff work safety responsibility system has been comprehensively implemented by

the Company. In accordance with the principles that Party and administrative leaders share

Weekly self-inspections and semi-monthly cross-inspections were

the same responsibilities one position bears dual responsibilities and business manage-

conducted by all departments and branch plants hazard rectification

ment must also manage safety the Chairman and the General Manager have been Stage II: Inspection and May to December 2024 Completed

ledgers were established and rectification was carried out during

designated as the first persons responsible for work safety. Management personnel at all Rectification inspection so that major hazards could be dynamically eliminated

levels workshop heads and team leaders assume graded safety responsibilities and the

performance of safety duties has been incorporated into the performance assessment and

reward and penalty system so that safety responsibilities can be decomposed level by Focused action was advanced and key and difficult issues were

Stage III: Focused Action 2025

Completed

rectified through on-site promotion meetings and special measures

level and fully enforced.ISO 45001 Occupational Health and Safety Management System certification has been

obtained by the Company and regular maintenance and updating are carried out to The Safety and Environment Section will summarise the implementa-

Stage IV: Consolidation and Continuous

ensure the continued effective operation of the system. In daily operations the Safety 2026 tion assess task completion and submit annual and three-year action Improvement Improvement

Production Management Committee has been established in accordance with the system reports to the Board of Directors

standards. The Committee is responsible for formulating annual work safety targets and

plans regularly assessing safety risks reviewing major safety matters and coordinating

hazard management emergency management and safety investment so that safety Risk Management

management requirements can be effectively implemented at all levels. At the same time safety and environmental management functions From multiple dimensions including risk identification emergency management and awareness enhancement the Company has comprehen-

have been established under the Management Department and dedicated safety management personnel are responsible for daily safety sively strengthened its capability for safety risk prevention and control and work safety control measures have been implemented at every level.supervision inspection training and system implementation thereby promoting specialised and routine safety governance. The List of Graded Safety Risk Control for Work Safety (Equipment Units) has been established. Systematic risk identification is carried out throughout

the full production process and comprehensive and systematic identification and graded control of risk sources are conducted for all categories

In 2025 the Company of equipment and facilities involved in production activities. For identified safety risks monthly safety hazard investigations are organised by the

Company and a Summary Table of Hidden Problems Identified in Safety Inspections is prepared for the month with rectification responsibilities and

rectification measures implemented item by item. In 2025 the rectification rate of identified hazards reached 100%.The certification rate of special operation personnel reached 100%.The occupational injury insurance coverage rate of employees reached 100%. Safety Emergency Response>

The number of work-related deaths was 0. To effectively respond to accidents and emergency rescue needs various Emergency Response Plans have been formulated by the Company.Emergency drills are regularly carried out in accordance with the annual emergency drill plan and coordination and linkage between the

The number of work-related injuries was 0. emergency command headquarters and relevant units have been continuously strengthened thereby enhancing organisational command

rapid response and on-site handling capabilities in the event of accidents. In 2025 26 safety emergency drills were conducted by the Company.The number of lost workdays due to work-related injuries was 0.Investment in work safety amounted to RMB 8600000.The employee health examination coverage rate reached 100%.Both the monitoring rate and compliant monitoring rate of occupational disease hazard factors

reached 100%.The incidence rate of occupational diseases was 0%.Emergency Drill for Electroplating Emergency Drill for Night-time Emergency Drill for Emergency Drill for

Chemical Burn Accident Fire Accident in the Electroplating Branch Plant Mechanical Injury Accident Confined Space Accident

67 68SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Safety Training> Safety Assurance for Related Parties>THMag regards the cultivation of safety awareness as an important foundation for work safety governance. Guided by the concept of “prevention Great importance is attached by the Company to the safety management of related parties such as contractors and suppliers and they have beenfirst and full participation” systematic promotion of safety awareness has been carried out. In accordance with the annual safety training plan incorporated into the work safety and sustainable development control system. Through the establishment and improvement of the Management

a tiered and classified training system covering new employees on-the-job employees team leaders special operation personnel and manage- System for Related Parties and External Workers (Units) admission standards have been clarified and core elements such as qualification

ment personnel has been established by the Company. Through diversified courses including Level 3 Safety Training communication on the work

certificates safety management systems operating capabilities and the allocation of special operation personnel are strictly reviewed. The Safety

safety responsibility system and position safety operating procedures and through the selection of some employees to participate in external

safety training on occupational health firefighting operations safety management and special equipment use employees’ understanding and Management Agreement for Related Parties is signed with related parties so that the safety level of partners can be controlled at source. During

recognition of safety laws and regulations risk prevention and control and standardised operations have been continuously strengthened. cooperation the safety responsibilities rights and management requirements of both parties are clearly defined in relevant agreements.Dedicated personnel are assigned for on-site supervision to urge related parties to strictly comply with the Company’s safety rules and to

In 2025 the Company eliminate operational hazards in a timely manner. At the same time contractor and supplier archives have been improved and qualification

materials contract terms and operation records are fully archived thereby achieving full-process traceability of safety management.

29 safety education and training sessions were conducted with 3607 participant-times and total training hours of 13608 hours.

Average safety education and training hours reached 11.71 hours per person.The coverage rate of safety education and training reached 100%. Indicators and Targets

The coverage rate of safety risk protection training reached 100%. In 2025 the following work safety targets were set and successfully achieved by the Company

External safety training investment amounted to RMB 28600 with 59 participant-times and total training hours of 964 hours.Work-related deaths and occupational disease incidence rate：zero

Case: THMag Carried out the 2025 “Work Safety Month” Series of Activities

Serious work-related injuries：zero

From 30 May to 30 June 2025 THMag systematically carried out the “Work Safety Month” series of activities under the theme of

“Everyone Talks about Safety Everyone Knows Emergency Response — Identifying Safety Hazards Around Us”. Special actions were Minor injury accidents：≤3‰

personally deployed and launched by senior management. Through safety publicity intensive training warning education hazard

investigation emergency drills and safety knowledge competitions work safety management was comprehensively strengthened.During the event safety training achieved a coverage rate of 100%. Plant-wide safety inspections were organised and 80 hazards

zero major equipment accidents zero collapses of plants and supporting facilities such as office buildings and

were rectified. At the same time a comprehensive emergency drill for a magnetic sludge fire was completed through which the

emergency response mechanism was tested and improved. dormitory buildings zero fire accidentszero major traffic accidents for which major or full responsibility is borne

and zero collective food poisoning incidents.

100% of new employees have completed the three-level safety training; 100% of employees in specialized roles

hold the required certifications; 100% of all employees have completed refresher safety training.Protective or warning devices were installed in 100% of high-risk work injury areas or positions prone to collision

injuries burns or scalds.Deployment of “Work Safety Month” Activities Safety Knowledge Competition

The maintenance servicing and inspection rate of all special equipment including regular inspection and certifica-

tion reached 100%; the timely maintenance servicing and overhaul rate of important and auxiliary equipment

reached 100%.Work Safety Warning Education Activity On-site Safety Hazard Investigation

69 70SOCIETY: BRINGING TOGETHER STRENGTH THROUGH MAGNETICS AND CREATING SHARED BENEFITS FOR ALL PARTIES

Creating Social Value Together Case: THMag Carried out a Campus Sports Equipment Donation Activity

THMag actively fulfils its corporate social responsibility. Adhering to the principles of compliant operations shared responsibility and harmoni- On 17 June 2025 in active response to the “double reduction” policy and the orientation towards quality education THMag carried

ous co-development a standardised and traceable community management system has been established. A three-tier public welfare out an educational public welfare donation activity at Minxin Road Primary School in Baotou donating 205 items of sports equipment

management system featuring “Board supervision – senior management approval – dedicated department execution” has been established including basketballs footballs badminton equipment and softballs to support the school’s physical education teaching and

extracurricular exercise needs. This activity helped improve campus sports facilities stimulated students’ enthusiasm for participating

by the Company with clear division of rights and responsibilities at each level. The Public Welfare Donation and Community Relations Management

in sports and reflected THMag’s continuous concern for youth development and its active fulfilment of corporate social responsibility

System has been formulated covering public welfare donations community interaction and volunteer services. The Company continuously

through concrete actions.integrates its own development into the process of social progress and improvement of people’s livelihoods and strives to co-create and

share development achievements with all sectors of society through diversified practices such as public welfare actions community co-devel-

opment support for rural revitalisation volunteer services and livelihood care.In 2025 the Company

Charitable donations amounted to RMB 12100

Total investment in rural revitalization: RMB 30700

Total number of beneficiaries covered by rural revitalization initiatives: 70

Case: THMag Encouraged Employees to Participate in Voluntary Blood Donation

In December 2025 in response to the Notice on Carrying out the 2025 Voluntary

Blood Donation Activity issued by the Administrative Committee of Baotou

Rare Earth High-tech Zone THMag advocated and organised employees to

participate collectively in the voluntary blood donation public welfare

activity. Through internal mobilisation and unified registration employees

were encouraged to participate voluntarily and corresponding incentives

and support were provided to those who successfully donated blood Case: THMag Carried out a Public Welfare Donation Activity to Support Rural Revitalisation

thereby effectively supporting employees’ participation in public welfare.On 7 November 2025 THMag was invited to participate in the public welfare donation activity of “Supporting Education and DisabilityAssistance Supporting Rural Revitalisation” through inspirational care packages. At the Kunbei Branch of Baotou No. 3 Primary

School “Inspirational Care Packages” containing sportswear insulated cups skipping ropes and other supplies were donated to

Case: THMag Employee Donated Hematopoietic Stem Cells beneficiary students. Through these concrete actions care was shown for the growth of young people and support was provided for

rural revitalisation and the Company was therefore awarded the honour of “Caring Enterprise” by the organiser.In September 2025 after learning that his hematopoietic stem cells

had been successfully matched with a patient suffering from a

blood disorder THMag employee voluntarily decided to donate and

successfully completed the hematopoietic stem cell collection

becoming the 219th hematopoietic stem cell donor in Inner Mongo-

lia Autonomous Region. High recognition care and support were

extended by the Company for his act of kindness and the spirit of

dedication was promoted through internal communication and the

sharing of his story.

71 72APPENDIX

Key Performance Table

Category Unit 2025 Category Unit 2025

Environmental Environmental

Environmental Management Pollutant Emissions — Wastewater and Exhaust Gas

Total Environmental Protection Investment Nitrogen Oxides (NOx) ton 5.61RMB 10000 102.77

Sulphur Oxides (SOx) ton 0.10

Energy Management

Suspended Particles and Particulate Matter (PM) ton 1.24

Steam ton 4533.95

Volatile Organic Compounds (VOCs) ton 1.25

Natural Gas 10000 m3 60.17

Diesel litre 19133.85 Waste and Hazardous Materials Management

Gasoline litre 16338.47 Total Hazardous Waste ton 102.65

Purchased Electricity 10000 kWh 3311.59 Hazardous Waste Intensity ton/RMB million Revenue 0.04

Purchased Heat GJ 12058.49 Total Non-hazardous Waste ton 1302.51

Purchased Green Electricity 10000 kWh 10377.30 of Which: General Industrial Solid Waste ton 1035.2

Proportion of Renewable Energy Consumption % 75.95 Recycling Rate of General Industrial Solid Waste % 99.6

Total Energy Consumption ton of Standard Coal 17859.15 Non-hazardous Waste Intensity ton/RMB million Revenue 0.56

Compliance Rate of RoHS and REACH Testing for Raw

Energy Consumption Intensity ton of Standard Coal/RMB 10000 Revenue 0.08 Materials % 100

Verification Rate of Hazardous Substances in Raw

Materials % 100

Climate Change Pass Rate of Hazardous Substance Testing for %

Finished Products 100

Greenhouse Gas Emissions (Scope 1) tCO2e 1353.9 Number of Hazardous Substance Non-compliance case 0

Incidents

Greenhouse Gas Emissions (Scope 2) tCO2e 73821.47

Circular Economy

Greenhouse Gas Emissions (Scope 2) tCO2e 155521.62

Greenhouse Gas Emissions tCO2e 230696.99 Total Packaging Materials ton 328.1

Greenhouse Gas Emissions Intensity (Scope 1+2) tCO2e/RMB 10000 Revenue 0.32 Total Environmentally Friendly Packaging Materials ton 153.77

Pollutant Emissions — Wastewater and Exhaust Gas Water Resource Management

Freshwater Consumption megalitre 284.50

Total Wastewater Discharge 10000 ton 15.04

Water Use Intensity Megalitre/RMB 10000 Revenue 0.0012

Chemical Oxygen Demand (COD) ton 27.60

Total Water Recycling and Reuse megalitre 92822.83

Ammonia Nitrogen (NH3-N) ton 4.81

Water Recycling and Reuse Rate % 99.69

Total Exhaust Gas Emissions ton 9.21

73 74APPENDIX

Categor Unit 2025 Categor Unit 2025

Social Social

Diversity and Equality Health and Safety

Total Number of Employees in Service person 1226

Work Safety Investment RMB 10000 860

Male person 834

Occupational Disease Incidence Rate % 0

By Gender

Female person 392

Number of Work-related Deaths person 0

Below 30 person 285 Number of Work-related Deaths per RMB 100 Million of Revenue person/RMB 100 million revenue 0

By Age 30 to 50 person 896 Number of Work-related Injuries person 0

50 and Above person 45 Work-related Injury Rate % 0

Postgraduate and Above person 27 Lost Workdays Due to Work-related Injuries day 0

By Educational

209

Background Bachelor’s Degree person Injury Rate per Million Working Hours % 0

Junior College and Below person 990 Hazard Rectification Rate % 100

Senior Management person 8 Number of Safety Emergency Drills session 26

By Job Grade Middle Management person 19 Number of Safety Education and Training Sessions session 29

Other Management Personnel and Employees person 1199 Participation in Safety Education and Training participant-times 3607

Ethnic Minority Employees in Service person 66 Total Safety Education and Training Hours hour 13608

Employees with Disabilities in Service person 16 Average Safety Training Hours per Employee hour 11.71

Socially Responsible

Recruitment Proportion of Local Employees Employed %

41.35

Coverage Rate of Safety Risk Protection Training % 100

Veterans in Service person 20

Talent Training

Protection of Employee Rights and Interests

Employee Training Investment RMB 10000 8.89

Total Employee Turnover Rate % 12.97

Number of Employee Training Sessions session 336

Employee Satisfaction % 87

Employee Training Coverage Rate % 100

Number of Employees Receiving Hardship Assistance person 9

Employee Training Hours hour 517

Labour Contract Signing Rate % 100

Employee Training Participation participant-times 13241

Proportion of Employees Covered by the Minimum Basic Wage % 100

Total Employee Training Hours hour 59479.5

Proportion of Employees Covered by Mandatory Social Insurance

and Housing Provident Fund % 100 Average Training Hours per Employee hour 50.1

Basic Salary Ratio of Male to Female Employees / 1:1 Employee Training Satisfaction % 96.21

Proportion of Employees Covered by Company Benefits % 100

75 76APPENDIX

Category Unit 2025 Category Unit 2025

Social Social

Sustainable Supply Chain Social Contribution and Public Welfare

Total Number of Suppliers company 622 Investment in Rural Revitalization RMB 10000 3.07

Inner Mongolia Autonomous Region company 220 Number of Beneficiaries of Rural Revitalization Programs person 70

Supplier

Other Regions company 402 Charitable Donations RMB 10000 1.21

Number of ESG Training Sessions Conducted for Suppliers session 1 Average Volunteer Service Hours per Person hour 2.1

Duration of ESG Training Conducted for Suppliers hour 2 Other Violations and Non-compliance

Number of Suppliers Covered by ESG Training item 55 Marketing-related Cases case 0

Proportion of Suppliers Subject to Conflict Minerals % 100 Number of Customer Information Leakage Incidents case 0Traceability Investigation

Number of Suppliers Found to Have Used Conflict Minerals company 0 Environmental Violations and Non-compliance Incidents case 0in Violation of Requirements

Proportion of Procurement Expenditure to Local Suppliers % 73.96

Supplier Code of Conduct Signing Rate % 100

Proportion of Newly Introduced Suppliers Signing the % 100

Compliance Code

Technological Innovation

R&D Investment RMB 10000 11232

R&D Investment as a Percentage of Main Business Revenue % 4.79

Total Number of R&D Personnel person 157

Proportion of R&D Personnel in Total Employees % 12.81

Number of Valid Patents case 110

Number of Invention Patent Applications in the Year case 9

Number of Invention Patents Granted in the Year case 3

Number of Valid Patents per RMB Million of Revenue case/RMB million 0.05

Cumulative Number of Trademarks case 40

National High-tech Enterprise item 1

Nationally Recognized Enterprise Technology Center item 1

77 78APPENDIX

Indicator Index GRI Standards Disclosures Chapter

GRI Content Index

material topics

Baotou Tianhe Magnetics Technology Co.Ltd. has reported the information for the period

Statement of Use

from 1 January 2025 to 31 December 2025 with reference to the GRI Standards. 3-1 Process to determine material topics

GRI 3 3-2 List of material topics ESG Management

GRI 1 Used GRI 1：Foundation 2021 Material Topics 2021

3-3 Management of material topics

Applicable GRI Sector Standard(s) No applicable GRI Sector Standards. 201-1 Direct economic value generated and distributed 2025 Annual Report of the Company

GRI 201 201-2 Financial implications and other risks and opportunities due to climate change Addressing Climate Change

Economic Performance 201-3 Defined benefit plan obligations and other retirement plans Protecting Employee Rights and Interests

GRI Standards Disclosures Chapter 2016 201-4 Financial assistance received from government Omitted

GRI 202 202-1 Ratios of standard entry level wage by gender compared to local minimum wage

2-1Organizational details Discover THMag 2025 Annual Report of the Company

Market Presence 2016 202-2 Proportion of senior management hired from the local community

2-2Entities included in the organization’s sustainability reporting Reporting Scope and Boundary

GRI 203 203-1 Infrastructure investments and services supported

2-3Reporting period frequency and contact point Report Release and Access Indirect Economic Impacts 2016 Creating Social Value Together203-2 Significant indirect economic impacts

2-4Restatements of information No restatements of information is required for this report GRI 204 Procurement 204-1Proportion of spending on local suppliers Sustainable Supply Chain Practices 2016 Key Performance Table

2-5External assurance Assurance Statement 205-1 Operations assessed for risks related to corruption

2-6Activities value chain and other business relationships GRI 205 Discover THMag

Anti-corruption 2016 205-2 Communication and training about anti-corruption policies and procedures Committed to Integrity in Operations

2-7 Employees Protecting Employee Rights and Interests 205-3 Confirmed incidents of corruption and actions taken

2-8 Workers who are not employees Not applicable as the Company does not involve non-employee workers GRI 206 Anti-competitive 206-1 Legal actions for anti-competitive behavior anti-trust and monopoly practices

Behavior 2016 Upholding Business Ethics

2-9 Governance structure and composition Strengthening Corporate Governance ESG Management 207-1 Approach to tax

2-10 Nomination and selection of the highest governance body Strengthening Corporate Governance 207-2 Tax governance control and risk management Internal Control Audit and ComplianceGRI 207 Protecting Employee Rights and Interests

2-11 Chair of the highest governance body Strengthening Corporate Governance Tax 2019 207-3 Stakeholder engagement and management of concerns related to tax

2-12 Role of the highest governance body in overseeing the manage-

ment of impacts Strengthening Corporate Governance 207-4 Country-by-country reporting Not applicable

2-13 Delegation of responsibility for managing impacts ESG Management 301-1Materials used by weight or volume

GRI 2 General GRI 301 2-14 Role of the highest governance body in sustainability reporting Strengthening Corporate Governance 301-2 Recycled input materials usedMaterials 2016 Promoting Cleaner Production

Disclosures 2021 2-15 Conflicts of interest Upholding Business Ethics 301-3 Reclaimed products and their packaging materials

2-16 Communication of critical concerns ESG Management 302-1 Energy consumption within the organization

2-17 Collective knowledge of the highest governance body Strengthening Corporate Governance 302-2 Energy consumption outside of the organization

GRI 302 Improving Energy Efficiency and

2-18 Evaluation of the performance of the highest governance body Strengthening Corporate Governance 302-3 Energy intensityEnergy 2016 Reducing Consumption

2-19 Remuneration policies 302-4 Reduction of energy consumption

Key Performance Table

Protecting Employee Rights and Interests

2-20 Process to determine remuneration 302-5 Reductions in energy requirements of products and servicesProtecting Employee Rights and Interests

303-1 Interactions with water as a shared resource

2-21 Annual total compensation ratio Omitted

303-2 Management of water discharge-related impacts

2-22 Statement on sustainable development strategy ESG Management Improving Energy Efficiency and GRI 303 Reducing Consumption

2-23 Policy commitments ESG Management Water and Effluents 2018

303-3 Water withdrawal

Key Performance Table

303-4 Water discharge

2-24 Embedding policy commitments Upholding Business Ethics

303-5 Water consumption

2-25 Processes to remediate negative impacts Internal Control Audit and Compliance

304-1 Operational sites owned leased managed in or adjacent to protected

2-26 Mechanisms for seeking advice and raising concerns Strengthening Corporate Governance areas and areas of high biodiversity value outside protected areas

2-27 Compliance with laws and regulations Please refer to the relevant sections of this report GRI 304 304-2 Significant impacts of activities products and services on biodiversity

Biodiversity 2016 Ecological Protection Actions

2-28 Membership associations Supporting Industry Development 304-3 Habitats protected or restored

2-29 Approach to stakeholder engagement ESG Management 304-4 IUCN Red List species and national conservation list species with habitats in

areas affected by operations

2-30 Collective bargaining agreements Omitted

79 80APPENDIX

GRI Standards Disclosures Chapter GRI Standards Disclosures Chapter

material topics material topics

305-1 Direct (Scope 1) GHG emissions GRI 411 Rights of Indigenous Peoples 2016 411-1 Incidents of violations involving rights of indigenous peoples

Not applicable

413-1 Operations with local community engagement impact assessments and

305-2 Energy indirect (Scope 2) GHG emissions development programs

Addressing Climate Change GRI 413 Local Communities 2016 Not applicable413-2 Operations with significant actual and potential negative impacts on local

GRI 305 305-3 Other indirect (Scope 3) GHG emissions Key Performance Table communities

Emissions 2016 305-4 GHG emissions intensity 414-1 New suppliers that were screened using social criteriaGRI 414 Supplier Social Assessment 2016 Sustainable Supply Chain

305-5 Reduction of GHG emissions 414-2 Negative social impacts in the supply chain and actions taken

Key Performance Table

305-6 Emissions of ozone-depleting substances (ODS) Not applicable as the Company is not

GRI 415 Public Policy 2016 415-1 Political contributions 2025 Annual Report of the Company

involved in the import of ODS.Strengthening Pollution Management 416-1 Assessment of the health and safety impacts of product and service

305-7 Nitrogen oxides (NOx) sulfur oxides (SOx) and other significant air emissions Key Performance Table GRI 416 Customer Health and Safety 2016 categories Building High-quality Magnetic Materials

416-2 Incidents of non-compliance concerning the health and safety impacts Key Performance Table

306-1 Waste generation and significant waste-related impacts of products and services

306-2 Management of significant waste-related impacts 417-1 Requirements for product and service information and labeling

GRI 306

Waste 2020 GRI 417 Marketing and Labeling 2016 417-2 Incidents of non-compliance concerning product and service

Building High-quality Magnetic Materials

306-3 Waste generated Strengthening Pollution Management information and labeling Key Performance Table

Key Performance Table

306-4 Waste diverted from disposal 417-3 Incidents of non-compliance concerning marketing communications

418-1 Substantiated complaints concerning breaches of customer privacy Building High-quality Magnetic Materials

306-5 Waste directed to disposal GRI 418 Customer Privacy 2016 and losses of customer data Key Performance Table

GRI 308 Supplier Environmen- 308-1 New suppliers that were screened using environmental criteria Sustainable Supply Chain

tal Assessment 2016 Key Performance Table

308-2 Negative environmental impacts in the supply chain and actions Index against the Guidelines No. 14 of Shanghai Stock Exchange for Self-Regulation of Listed Companies—Sustainability

Report (Trial) issued by the Shanghai Stock Exchange.

401-1 New employee hires and employee turnover

GRI 401

Employment 2016 Sustainable Supply Chain401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

Key Performance Table Dimension Number Topic Chapter

401-3Parental leave

GRI 402 Labor/Management Addressing Climate Change

Relations 2016 402-1Minimum notice periods regarding operational changes

Omitted 1 Climate change tackling

2 Pollutant discharge Strengthening Pollution Management403-1Occupational health and safety management system

3 Waste disposal Strengthening Pollution Management403-2 Hazard identification risk assessment and incident investigation

4 Ecosystem and biodiversity protection Ecological Protection Actions403-3 Occupational health services Environment

Improving Environmental Management

403-4 Worker participation consultation and communication on occupational health and safety 5 Environmental compliance management

GRI 403 Improving Energy Efficiency and Reducing Consumption403-5 Worker training on occupational health and safety Protecting Safety and Health 6 Energy usage

Occupational Health and Safety

2018 Key Performance Table 7 Usage of water resources Improving Energy Efficiency and Reducing Consumption403-6 Promotion of worker health

403-7 Prevention and mitigation of occupational health and safety impacts 8 Circular economy Promoting Cleaner Productiondirectly linked by business relationships

Creating Social Value Together

403-8Workers covered by an occupational health and safety management system 9 Rural revitalization

403-9 Work-related injuries 10 Contributions to the society

Creating Social Value Together

Supporting Industry Development

403-10 Work-related ill health 11 Innovation-driven Adhering to Technological Innovation

GRI 404 404-1Average hours of training per year per employee 12 Ethics of science and technology Adhering to Technological Innovation

Training and Education 2016

404-2Programs for upgrading employee skills and transition assistance programs Valuing Talent Development Society 13 Supply chain security Sustainable Supply Chain

Key Performance Table

404-3Percentage of employees receiving regular performance and career 14 Equal treatment to small and medium-sized enterprises Upholding Business Ethicsdevelopment reviews

GRI 405 Diversity and Equal Building High-quality Magnetic Materials405-1Diversity of governance bodies and employees 15 Safety and quality of products and services

Opportunity 2016 Providing Quality ServicesProtecting Employee Rights and Interests

405-2Ratio of basic salary and remuneration of women to men 16 Data security and customer privacy protection Information Security and Privacy Protection

17 Building a Talent-driven EnterpriseGRI 406 Non-discrimination 2016 406-1Incidents of discrimination and corrective actions taken Protecting Employee Rights and Interests Employees Protecting Safety and Health

407-1 Operations and suppliers in which the right to freedom of association

GRI 407 Freedom of Association and Collective Bargaining 2016 and collective bargaining may be at risk Sustainable Supply Chain Key Performance Table 18 Due diligence Comprehensive Responsibility Governance

Sustainablity

GRI 408 Child Labor 2016 408-1 Operations and suppliers at significant risk for incidents of child labor Sustainable Supply Chain Key Performance Table 19 Communications with stakeholders Comprehensive Responsibility Governance

related

409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor Sustainable Supply Chain Key Performance Table 20 Anti-commercial bribery and anti-corruption Committed to Integrity in OperationsGRI 409 Forced or Compulsory Labor 2016 governance

410-1 Security personnel trained in human rights policies or procedures Not applicable 21 Anti- unfair competition Upholding Business EthicsGRI 410 Security Practices 2016

81 82APPENDIX

Assurance Statement

83 84Feedback Form

Dear Reader

Thank you very much for reading the 2025 Environmental Social and Governance （ESG） Report of Baotou Tianhe

Magnetics Technology Co.Ltd. We sincerely hope that you will evaluate this report and provide your valuable

comments. Your opinions and suggestions are an important basis for helping us continuously improve the

report. Please complete the feedback form below and send it to us by email at project@thmagnetics.com.Feedback Form on the 2025 Environmental Social and Governance（ESG） Report of Baotou Tianhe Magnetics Technology Co.Ltd.Name

Position

Telephone

Email

1. What is your overall evaluation of this report

Excellent Good Average Poor Very Poor

2. How do you rate the accuracy completeness timeliness and clarity of the information disclosed in this report

Excellent Good Average Poor Very Poor

3. Do you think the content arrangement and design style of this report are easy to read

Excellent Good Average Poor Very Poor

4. Which topics are you concerned about

5. What information that you consider necessary to know has not been reflected in the report

6. Do you have any other comments on THMag’s work in environmental social and governance aspects

85