Stock Code: 002340

Stock ID: GEM Announcement No.:2022-086

Announcement of GEM Co., Ltd. on Signing a
Strategic Cooperation Agreement with SUNWARD
on the Electrification of Construction Machinery andBattery Recycling
The Company and all members of the Board of Directors ensurethat the information disclosed is true, accurate and complete, andthat there are no false records, misleading statements or majoromissions.
Special notes:
1. The strategic cooperation agreement signed this time is a frameworkagreement on the willingness and basic principles of cooperation between the twoparties. There are still uncertainties in the specific implementation process. The Boardof Directors of the Company will actively pay attention to the progress of this matterand fulfill the obligation of information disclosure in a timely manner. Investors areadvised to make decisions with caution and pay attention to investment risks.
2. The signing of this strategic cooperation agreement will not have a significant
impact on the Company’s financial position and operating results this year.
I. Overview
At present, carbon peaking and carbon neutrality have become national strategies.
Green and low-carbon development is not only a social responsibility to be fulfilled
by enterprises, but also a major event related to the sustainable development andsurvival of enterprises. In recent years, with the application of electrification andenergy storage developing explosively, the demand for lithium-ion batteries has also
grown rapidly. With the release of the production capacity of large-scale enterprisesthat entered into power and energy storage lithium-ion batteries business in the earlystage, the competition of lithium-ion batteries has evolved from pure productcompetition to the competition of the whole industry chain of power batteries.
Therefore, it is necessary to establish and build a closed-loop industry chain ofenterprises. It has become an urgent strategic problem for enterprises in thelithium-ion battery industry chain for power and energy storage lithium-ion batteries.
To this end, GEM Co., Ltd. (hereinafter referred to as "GEM", "Company" or "PartyB") and Sunward Intelligent Equipment Group (hereinafter referred to as"SUNWARD" or "Party A") decided to combine the advantages of all parties and to
jointly sign the "Strategic Cooperation Agreement on Electrification of Construction
Machinery and Battery Recycling" (hereinafter referred to as the "Strategic
Cooperation Agreement") on July 24, 2022. They will build a closed-loop industrial
chain of lithium-ion batteries for power and energy storage, and promote thecommercialization of cascade utilization of power battery, seize the market
opportunity of the electrification of construction machinery, and explore a model forthe green development of the global new energy industry.
According to the "Articles of Association" and other relevant regulations, theStrategic Cooperation Agreement signed by the Company does not need to besubmitted to the Board of Directors and the general meeting of shareholders forconsideration and approval. The signing of the Strategic Cooperation Agreement does
not constitute a connected transaction, nor does it constitute a major asset
reorganization stipulated in the "Administrative Measures for Major Asset
Restructuring of Listed Companies", which does not require approval from relevant
departments. The Company will perform its information disclosure obligations in time
based on subsequent actual progress.
II. Introduction of the partner
Company Name: Sunward Intelligent Equipment Group
Legal representative: Jing Guangjun
Registered capital: 1,087,212,465 RMB
Date of establishment: July 29, 1999
Registered address: No. 1335 Liangtang East Road, Economic and Technological
Development Zone, Changsha
Scope of business: Licensed items: special equipment design, special equipment
manufacturing, general aviation services, design and production of civil aircraft partsand components, road motor vehicle production, road cargo transportation (excluding
dangerous goods); General items (Business activities can only be carried out with theapproval of relevant departments. The specific items are subject to the approval
documents or licenses of relevant departments.): research and development of
mechanical equipment, mechanical equipment sales, mechanical equipment leasing,special equipment sales, special equipment manufacturing (excluding licensed
equipment manufacturing), research and development of intelligent robots, intelligent
robot sales, manufacturing of intelligent unmanned aerial vehicle, intelligent
unmanned aerial vehicle sales, construction machinery manufacturing, construction
machinery sales, manufacturing of agricultural machinery, agricultural machinerysales, forestry machinery services, manufacturing of mining machinery, mining
machinery sales, manufacturing of material handling equipment, sales of material
handling equipment, manufacturing of hydraulic power machinery and components,
sales of hydraulic power machinery and components, processing of mechanical partsand components, development of artificial intelligence software, retail of computer
hardware and software and ancillary equipment, technical services, technology
development, technical consultation, technical exchange, technology transfer,technology promotion, sales of metal products, manufacturing of pneumatic andelectric tools, manufacturing of metal structures, manufacturing of industrial
automatic control systems, manufacturing of gas compression machinery, 5G
communication technology services, auto parts retail, manufacturing of oil drilling
special equipment, sales of oil drilling special equipment, optical instrument
manufacturing, optical instrument sales, optoelectronic device manufacturing,
optoelectronic device sales, manufacturing of instruments and apparatus, sales of
instruments and apparatus, manufacturing of metal cutting and welding equipment,
sales of metal cutting and welding equipment, manufacturing of metallurgical special
equipment, mineral washing and processing, special equipment repair, motor vehicle
repair and maintenance, import and export of technology; import and export of goods(except for items subject to approval according to law, business activities are
independently carried out in accordance with law by business license).
SUNWARD has no associated relationship with the Company and its controllingshareholders, actual controllers, directors, supervisors, and senior managers.
SUNWARD has good operating and financial status, and has a good reputationand contract performance capabilities. After inquiries, SUNWARD is not a defaulter
subject to enforcement.
III. Core content of the cooperation agreement

(1) Cooperation principle
1. Both parties recognize each other as their strategic partner on a global scale
and actively promote each other to jointly build a good brand and reputation aroundthe world.
2. The cooperation between the two parties should be based on the principle ofmutual benefit and win-win results, and the two parties should maintain a high degreeof mutual trust and communication.
3. When carrying out relevant specific business, the two parties will give priority
to the other party as a partner under the same conditions and without affecting theirrespective business interests and existing cooperative relations with third parties.
4. Both parties should discuss and actively promote the implementation of eachspecific cooperation project under this strategic cooperation agreement, and sign thecorresponding specific project agreement in due course and implement it.
(2) Cooperation content
1. By uniting industry forces, integrating upstream and downstream channels,
and injecting green concepts into the development of construction machinery, bothparties will jointly develop lithium battery systems for construction machinery. Party
A will give priority to purchasing and promoting party B's lithium battery systems,
especially promoting the cascade utilization of the power battery system. Party B
identifies Party A as the most important strategic customer, gives Party A a
preferential price, and guarantees timely and high-quality supply, and Party A has thepriority to pick up the goods.
2. Party B shall give priority to adopting and purchasing construction machineryand electrified products produced by Party A in the subsidiaries of GEM Group,
mainly including but not limited to: aerial work platforms, boom trucks, forklifts anddeep processing of battery materials and intelligent equipment for recycling of urban
mine resources.
3. Based on the advantages of Party B in the field of waste recycling and therecycling and processing of retired power batteries, through the integration of
empowerment and resource sharing, the two parties will jointly build a shared
recycling service network and a recycling service system for construction machineryand lithium batteries for construction machinery. The two parties will jointly develop
the recycling and utilization of lithium battery metal materials and further promote theresource sharing and win-win benefits of lithium batteries in the application of

construction machinery.
4. The two sides will jointly promote the relevant science and technology,
product equipment, application and service supporting content of the green andlow-carbon development of construction machinery based on their advantages in theirrespective fields, and promote exchanges, exhibitions, trade and cooperation between
upstream and downstream enterprises in the industry.
5. Based on the new products that both parties are currently supplying,developing and will develop, the expected supply and demand quantities of bothparties in 3 years are:

Year
2023
Quantity (units)
58,600GWh
1.02(3) Confidentiality

2024
103,100
1.867

2025
328,200
5.5

Total
489,900
8.387

Both parties guarantee the documents and materials that the other party has notreleased (including but not limited to trade secrets, company plans, operating
activities, financial information, business information, technology information,
process equipment parameters, quantity, price, drawings and other trade secrets)
known in the course of discussing, signing and executing this Strategic Cooperation
Agreement, as well as the opinions, suggestions, propositions and other information in
the negotiation process of the two parties on cooperation matters shall be kept
confidential, and shall not be all or partly disclosed to any third party without thepermission of the other party. Otherwise, the breaching party shall pay a liquidated
damages of RMB 1 million to the other party. If the liquidated damages are notsufficient to cover the losses of the other party, additional compensation shall be made.
This clause is valid until three years from the date of termination of this Strategic
Cooperation Agreement.
(4) Term of cooperation and renewal of agreement
This Strategic Cooperation Agreement will take effect after being signed by thelegal representatives of both parties or their authorized representatives and affixedwith the official seal or special contract seal and will be valid for three years. During
the validity period, if both parties have not reached an agreement on any specificcooperation project, the Strategic Cooperation Agreement will be terminated after the
expiration of the validity period. If Party A and Party B are satisfied with thecooperation between them, after the agreement expires, a renewal agreement may besigned by mutual consent. The termination of this Strategic Cooperation Agreement
does not affect the validity and performance of the agreement on the specific projects
carried out by both parties before the termination.
IIII. Impact on the Company
SUNWARD was founded in 1999 by Professor He Qinghua of Central South
University. It has now developed into an international Group and has a certain
influence at home and abroad with Sunward Intelligent Equipment Group, a listedcompany as its core, Changsha as its headquarter, and equipment manufacturing as its
main business. With the strategy of "one point, three lines" and "one body and twowings", SUNWARD focuses on equipment manufacturing, and develops in an
all-round way in the three major fields of engineering equipment, special equipment
and aviation equipment. SUNWARD takes Hunan and Guangdong as two strategic
locations and continuously launches products having worldwide influence. GEM wasestablished based on the ideal of green and ecological manufacturing, and took thelead in proposing the green and low-carbon industry concept of "limited resources andunlimited circulation" in China. GEM actively advocates "eliminating pollution andregenerating resources" through the business model of resource recycling andpromoting recycling social development. GEM has built 16 waste recycling parks in
11 provinces and cities in China to draw a global green industry map by recycling andprocessing waste power batteries, E-waste, scrapped cars and strategic resources ofnickel, cobalt, lithium and tungsten, and manufacturing high-tech green products of
new energy materials. GEM has built 5 power battery recycling and disposal bases in
Wuhan, Jingmen, Wuxi, Tianjin and Shenshan, forming a power battery recycling
system that covers China's core areas like Yangtze River Delta, Pearl River Delta,
Central China and Beijing-Tianjin-Hebei region. Three companies of GEM Group
have been included in the announcement of the Ministry of Industry and Information
Technology: Industry Specifications for Comprehensive Utilization of Waste Power
Batteries for New Energy Vehicles, and GEM plans to start business of waste power
battery recycling and processing bases in Europe, North America, and Southeast Asia.
The Company signing a strategic cooperation agreement with SUNWARD isbeneficial for both parties to take advantage of their own, seize the opportunity ofelectrification of construction machinery, and open up the market. The two parties
will jointly build a recycling service system for construction machinery and lithium

batteries for construction machinery, jointly develop the recycling of metal materials
from lithium batteries, further promote resource sharing and win-win benefits in theapplication of lithium batteries in construction machinery, and realize the full life
cycle value chain of the new energy automobile industry by switching from "green
manufacturing to manufacturing green products". It is helpful to promote thecommercialization of cascade utilization of power battery, continuously increase
GEM's market share in power battery recycling, comprehensively consolidate theCompany's core position in the global power battery recycling and new energy
materials industry, and realize the coordinated development of economic andenvironmental benefits. The signing is in line with the Company's strategic
development and the interests of the majority of investors.
The signing of this Strategic Cooperation Agreement has no impact on the
independence of the Company's business and operations, and will not have asignificant influence on the Company's financial status and operating results of thisyear. The successful implementation of this Strategic Cooperation Agreement is
expected to have a positive effects on the Company's future business development.
V. Risk WarningThis Strategic Cooperation Agreement is a framework and intentional agreementon cooperation willingness and basic principles. It is affected by relevant policy
adjustments, macro economy, market environment change and other factors, so there
are still uncertainties. If a formal cooperation agreement is signed between the twoparties in the future, the Company will conduct review procedures in strict accordancewith the requirements of laws and regulations and fulfill the obligation of information
disclosure in a timely manner. Investors are advised to make decisions with caution
and pay attention to investment risks.
VI. Other relevant instructions
1. The framework agreements disclosed by the Company in the last three years
are as follows:
The “Memorandum of Understanding on Promoting the Cascade Utilization of
New Energy Vehicle Battery and Recycling Projects” signed by the Company with
Pohang Municipal Government and ECOPRO, the “Memorandum of Understanding(MOU) for the Supply of High-nickel Precursor Materials such as 8 series and 9 series
NCM for Power Batteries” signed by the Company with South Korean ECOPRO BM,
the "Memorandum of Understanding (MOU) Related to the Investment Agreement on

High Nickel Precursor Materials for Power Battery" signed by Fuan Qingmei Energy
Materials Co., Ltd., a subsidiary of the Company, with South Korean ECOPRO,“MOU for the supply of Power Battery High Nickel Precursor (NCA&NCM) from2021-2023 between ECOPRO&GEM” signed by the Company with South Korean
ECOPRO BM, the “Strategic Cooperation Framework Agreement on Ternary
Precursor” signed by the Company and its wholly-owned subsidiary Jingmen GEM
Co., Ltd. with Hunan Brunp Recycling Science and Technology Co., Ltd., Guangdong
Brunp Recycling Science and Technology Co., Ltd. and Foshan Brunp Recycling
Science and Technology Co., Ltd., the “Memorandum of Directional Recycling of
10,000-ton Recycled Nickel Product” signed by the company with EVE Energy Co.,
Ltd., the “Strategic Cooperation Framework Agreement on the Construction of Waste
Power Batteries and Battery Waste Green Treatment Industry Chain” signed by theCompany with Farasis Energy (GanZhou) Co., Ltd., the “Framework Agreement on
Strategic Supply Cooperation of Ternary Precursors and Cobalt Tetroxide between
XTC New Energy Materials (Xiamen) Ltd. and Jingmen GEM Co., Ltd.” signed by
the Company’s subsidiary Jingmen GEM Co., Ltd. with XTC New Energy Materials(Xiamen) Ltd., The “Strategic Cooperation Framework Agreement on Integration of
Phosphorus Resource Chemical Industry and New Energy Materials Industry Chain"signed by the Company with Xinyangfeng Agricultural Technology Co. Ltd., the“Rongbay-GEM Strategic Cooperation Agreement” signed by the Company with
Ningbo Ronbay Lithium Battery Material Co., Ltd., the “Memorandum ofUnderstanding on the Production of High-nickel Precursor for New Energy Vehicles
and the Recycling Project of End-of-Life Power Batteries” signed by the Company
with the Hungarian Consulate General in Shanghai,The “New Generation Ternary
Precursor Product Cooperative Development Agreement” signed by the Company and
XTC New Energy Materials (Xiamen) Ltd. The above agreements are all is being
fulfilled.
The “Memorandum of PT. QMB NEW ENERGY MATERIALS”, signed by theCompany’s subsidiary Jingmen GEM Co., Ltd. signed with Ningbo Brunp and CATL
Co., Ltd., Hong Kong Brunp Recycling Science and Technology Co., Ltd., Yongqing
Technology Co., Ltd., New Express International Ltd., PT. Indonesia Morowali
Industrial Park, has been fulfilled.
The “ECOPRO BM & GEM MOU of Supplying High-nickel Precursor forPower Batteries (NCA&NCM) from 2024-2026)” signed by the Company and SouthKorean ECOPRO BM has been terminated. The “MOU of Medium and Long-Term
Supply for High-nickel Precursor for Power Batteries” will be implemented in the
future.
2. On March 25, 2022, the Company disclosed the “Announcement on the
Completion of the Implementation of the Plan for Some Senior Management of theCompany to Increase Shareholding in the Company” (Announcement No.: 2022- 030).
As of March 25, 2022, Mr. Mu Menggang, Deputy General Manager, Chief Financial
Officer and Acting Secretary of the Board of Directors, and Mr. Jiang Miao, Mr. Lou
Huiyou, and Mr. Jiao Hua, Deputy General Managers of the Company, increased theirholdings of 580,500 shares of the company through the trading system of Shenzhen
Stock Exchange through centralized bidding, with a cumulative amount of 5,093,141
RMB. By the date of this announcement, the Company has not received any noticefrom controlling shareholder, shareholder holding more than 5%, and director andsupervisor and senior manager that they intend to reduce their holdings of theCompany’s shares in the next three months. In the next three months, there is nosituation that the restricted shares held by the controlling shareholder, shareholders
holding more than 5% shares and director and supervisor and senior manager will be
lifted.
VII. Documents available for inspection
The “Strategic Cooperation Agreement on Electrification of Construction
Machinery and Battery Recycling” signed by SUNWARD and GEM

This announcement is hereby made.

The Board of Directors of GEM Co., Ltd.
July 24, 2022