From March 23 to 24, 2023, GEM joined hands with South Korea's SK On Co., Ltd. (SK On) and ECOPRO MATERIALS Co., Ltd. (ECOPRO) to invest in the establishment of a precursor manufacturing joint venture in South Korea. It plans to invest 1.21 trillion won to build a manufacturing plant of a new generation of precursor cathode active material (PCAM) for secondary power batteries and a supporting nickel-cobalt-manganese raw material system in the Saemangeum Industrial Complex, Jeollabuk-Do, South Korea. For phase I, a 43,000-ton PCAM project will be built, and related products will be exported to the North American market. This cooperation is an important strategic measure for GEM to effectively respond to and satisfy the US Inflation Reduction Act (IRA), EU Critical Raw Materials Act (CRMA) and other relevant bills, and will also meet the market demand resulting from South Korea's and global new energy boom.

On March 23, 2023, Professor Xu Kaihua, Board Chairman of GEM, and Jiang Miao, deputy general manager of GEM, visited the SK On headquarters building in South Korea to attend the signing ceremony of the "Memorandum of Understanding" between GEM, SK On and ECOPRO on investing in the establishment of a precursor manufacturing joint venture. The three parties will build a PCAM project with a production capacity of 43,000 tons in South Korea to further meet the demand for precursor orders from overseas markets such as South Korea. This is another major strategic measure to help GEM stabilize its position in the core market of South Korea.

On March 24, in order to promote the realization of the 43,000-ton PCMA production capacity, GEM Korea New Energy Materials Co., Ltd., a subsidiary of GEM, signed the "Memorandum of Understanding (MOU) on the Investment of a New Secondary Battery Precursor Manufacturing Plant" with the Saemangeum Development Office of South Korea, Jeollabuk-Do·Gunsan City, and Korea Rural Community Corporation, reaching an agreement on the Company's investment in building a manufacturing plant of a new generation of PCAM for secondary power batteries and a supporting nickel-cobalt-manganese raw material system in South Korea.

According to the MOU, GEM will take the lead and cooperate with upstream and downstream enterprises such as SK On and ECOPRO to invest 1.21 trillion won (approximately RMB 6.4 billion) in the form of a joint venture between 2023 and 2026 to build a phase-I project of a new generation of PCAM and its supporting nickel-cobalt-manganese raw material system with an annual output of 43,000 tons. In the future, it will be gradually expanded to a construction scale of no less than 100,000 tons according to market demand, so as to meet the demand for precursor materials of ECOPRO or CAM Joint Venture, a SK On's affiliated joint venture in North America.

The South Korean side promised that GEM will enjoy the highest preferential treatment of investors, including administrative and financial support, taxation, energy, talents and other preferential policies, if the company successfully moves in within the time limit set by the local government for investment promotion in South Korea.

"This is a historic moment for the world's new energy industry! Now, we are celebrating the moment in Gunsan!" Professor Xu Kaihua, Board Chairman of GEM, said that this signing marks that the world's leading raw material company GEM has joined hands with the world's leading material manufacturer ECOPRO and the world's leading battery manufacturer SK On, to build a key battery raw material and key battery material supply chain model featuring "development of nickel resources in Indonesia - materials made in Korea - batteries made in Korea - facing the global market", which will meet South Korea's and the world's demand for the development of new energy.

In August 2022, the United States issued the IRA; in March 2023, the European Union issued the CRMA, which established restrictions on the entry of key raw materials for batteries into the US and EU markets.

GEM’s investment and factory building in South Korea this time is not only an effective way to deal with the challenges posed to the Company’s development strategy by the US IRA, EU CRMA and other bills, but also helps the Company stabilize its position in core Korean market, navigate its way through the US market and the EU market, and safeguard its position in the global industry. At the same time, it will further enhance the Company's influence in the entire industrial chain of the global new energy industry, continuously improve the Company’s core competitiveness and sustainable profitability, protect the interests of investors, and create an excellent example of outstanding companies from China and South Korea working together to build a green future, and ensure the effective supply of raw materials for new energy power batteries in the world.

Picture 1 Signing Ceremony of GEM, SK On and ECOPRO on Investment in the Establishment of a Precursor Manufacturing Joint Venture

Picture 2 Professor Xu Kaihua, Board Chairman of GEM, Inspecting the Project Site in Saemangeum

Picture 3 GEM Korea New Energy Materials Co., Ltd., signed the "Memorandum of Understanding (MOU) on the Investment of a New Secondary Battery Precursor Manufacturing Plant" with the Saemangeum Development Office of South Korea, Jeollabuk-Do·Gunsan City, and Korea Rural Community Corporation