Climate Change Data

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Increased output of residual heat power generation from 463 KwH in 2008 to 914 million KwH in 2010, achieving total cost savings of RMB164 million, RMB273 million and RMB347 million in 2008, 2009 and 2010 respectively. Reduced coal consumption per ton of clinker from 156 kg to 143 kg.

Social Achievements

• Awarded the “Quality Award by Governor of Shandong” and recognized by the Ministry of Railways as the only construction material company with the award for “Beijing-Shanghai High-Speed Rail Best Supplier” in 2010.
• Implemented various employee benefit plans, such as pension contribution plans, medical insurance plans, work-related injury insurance plans, unemployment insurance plans and housing funds for our employees.

Governance Achievements

• Established various plans and procedures to remedy prior internal control deficiencies and weaknesses. Provided further training to our financial and accounting staff to enhance their knowledge of the IFRSs and improve our overall corporate governance.

Climate Goals & Targets

Environmental Challenges

• Fluctuations in the supply and costs of raw materials, coal and electricity.
• Difficulties in integrating acquired businesses.
• Intense competition from other cement producers.
• Seasonal changes in demand for products.
• PRC government regulations and policies.
• Environmental laws and regulations.
• Potential operational risks and losses.
• High gearing ratios.
• Liquidity risks.
• Dependence on key management personnel.
• Dependence on successful working capital management.
• Dependence on continuous power supply and availability of utilities.
• Lack of geographical diversity.
• Inability to continue to grow at historical growth rates.
• Difficulties in managing future growth and expansion into new markets.
• Potential product liability claims.
• Potential legal and other proceedings.
• Potential disruptions to business operations and construction of new facilities.
• Potential liabilities for contractors’ failure to comply with laws and regulations.
• Lack of legal titles to some properties.
• Lack of necessary licenses, permits and approvals.
• Potential deficiencies in internal control over financial reporting.
• Potential adverse effects from downturn in global or Chinese economy.
• Uncertainty about the extent to which a global financial and economic crisis and slowdown of the Chinese economy may impact our business in the long term.
• Uncertainty with respect to the PRC legal system.
• Potential adverse effects from natural disasters, acts of God, and occurrence of epidemics.
• Difficulty in enforcing judgments obtained from non-PRC courts against us, our directors or our senior management in the PRC.
• Uncertainty concerning the reconciliation of SAFE rules with other approval or registration requirements.
• Fluctuations in the exchange rate of Renminbi.
• PRC regulations relating to acquisitions of PRC companies by foreign entities.
• Uncertainty under the PRC enterprise income tax law relating to the withholding tax liabilities of our PRC subsidiaries.
• Limited availability of Renminbi outside the PRC and the Renminbi is not freely convertible.

Mitigation Strategies

• Maintaining long-term relationships with coal suppliers.
• Implementing an efficient operational management system and advanced technology in the production process.
• Establishing a strategic development center and integrating internal organizations and human resources.
• Revising and improving management systems, enhancing internal control systems, and strengthening fundamental management functions.
• Centralized purchase of bulk raw materials, fuel and general equipment.
• Optimizing the integrated production-sale business model.
• Implementing strict funds approval and granting procedures.
• Enhancing internal audit and supervision.
• Constructing RHR generators to reduce electricity costs.
• Diversifying product offerings.
• Optimizing internal and external sales of clinker.
• Maintaining an extensive sales network.
• Careful selection of production facility locations.
• Acquiring limestone resources sufficient for at least 30 years of planned production.
• Maintaining an all-risks property insurance policy, public liability insurance, profit loss insurance, machinery break-down insurance and product liability insurance.
• Establishing a pollution control system and installing various equipment to process and dispose of industrial waste and hazardous materials.
• Actively rehabilitating mining areas and installing more RHR generators.
• Implementing safety measures and establishing a safety supervision department.
• Conducting regular training sessions for employees on accident prevention and management.
• Adopting various emergency action plans.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Maintaining long-term relationships with suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Transition Risks

• Regulatory changes

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: IFRS

Certifications: ISO 9000 (most facilities), ISO 14001 (most subsidiaries)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• “AAA Quality Award by Product Quality Association of China”, “Famous Trademark of Shandong Province”, “30-year Reform Meritorious Enterprise Award”, “Beijing-Shanghai High-Speed Rail Best Supplier”