According to the Zhitong Finance App, Olefite Electric Vehicle New Materials (06128) announced that starting in 2023, the Group will carry out a number of cooperative projects with the Nanshu Town People's Government, Laixi City, Qingdao City, Shandong Province, People's Republic of China on the production and processing of lithium battery anode materials. Recently, the company and the Nanshu Town People's Government plan to cooperate again to advance the second phase of the project in Nanshu Town to further promote the development of the lithium battery new energy industry in Nanshu Town.

The company and the Nanshu Town People's Government intend to jointly build the second phase of the graphite deep processing project in the Nanshu Graphite Industrial Cluster Area. The estimated investment amount for the Phase 2 project is RMB 2 billion, while the Phase 2 project is mainly engaged in the production and processing of lithium battery anode materials. As a partner, the Nanshu Town People's Government will provide the Group with a number of preferential policies and a good business environment, and assist the Group in applying for various licenses, plans, and EIA for Phase 2 projects. In return, the Group must invest in the Phase 2 project and pay taxes to the Nanshu Town People's Government.

The contracting party also intends to obtain a plot of 80 acres (about 53280 square meters) of land located in Nanshu Town through tender and auction to operate the second phase of the project. It is anticipated that after all relevant plans and approvals are in place, the land can be tendered and auctioned within 6 months. If the company successfully acquires the land, the company expects the second phase of the project to commence within 4 to 6 months after the land is auctioned.

The construction area of the Phase 2 project is about 50,000 square meters. It is estimated that after the completion of the second phase of the project, after approval of the energy assessment and environmental assessment, it will produce 20,000 tons of natural graphite anode materials and 100 tons of graphene oxide, with an annual output value of about RMB 1 billion. The contracting parties will set up a joint working group to jointly complete such preliminary work before the land is tendered and auctioned. In addition, the contracting parties intend to further establish the “Land Cooperation Agreement between the Nanshu Town People's Government and Oenshi Electric Vehicle New Materials Holdings Co., Ltd.” to record the respective responsibilities of the contracting parties in managing the land.

The company experienced a number of challenges during phase 1 of the project. The company obtained the energy license for the Phase 1 project in August 2024 and is awaiting approval of the environmental license. However, the company was notified by the local power supply authority that the current electricity supply is insufficient for the factory in the Phase 1 project. The company has consulted a local power engineering company on this issue and is discussing possible remedies with the owners and the Nanshu Town People's Government. Due to this situation, the implementation of the Phase 1 project will be delayed. The company plans to resolve this situation by the end of 2024.