Having established a long-standing operational system entailing research and development (R&D), production, marketing, and service based on coal chemical, we at CSCC are also actively moving into the area of carbon materials. Three primary products have been developed: mesophase graphite carbon microspheres, advanced carbon materials, and isotropic graphite. Specifically, mesophase graphites are used as anode materials for power batteries in electric cars, electric buses, electric scooters, consumer electronics, and storage systems, while advanced carbon materials can be applied to AI server power backup systems, supercapacitors for wind power generation and light rail vehicles and lead-acid batteries for start-stop systems in vehicles. Both types of carbon materials are green products that serve as key green materials for a low-carbon environment.

The Company’s light oil plant has an annual production capacity of 120,000 metric tons, while its coal tar plant has a capacity of 280,000 metric tons. Coal tar and light oil are by-products of coke production. In response to global decarbonization trends, major steelmakers worldwide are transitioning from blast furnaces to electric arc furnaces, which will directly affect the upstream supply of coal tar and light oil. China Steel Corporation has clearly planned to gradually convert its No. 1 blast furnace into an electric arc furnace as a key strategy toward achieving carbon neutrality by 2050. In response to this trend, the Company has formulated various measures and is increasing product value by further developing green carbon materials to expand revenue.

The Company continues to advance the development of refined carbon materials and is constructing an R&D building to consolidate its R&D capabilities. Global energy transition and carbon neutrality policies are driving rapid growth in high-efficiency energy storage technologies, leading to rising demand for functional carbon materials used in graphite anodes, supercapacitors, and lithium-ion capacitors. The growing adoption of electric vehicles, energy storage systems, and 5G devices is creating new growth momentum for the high-performance carbon materials market. Meanwhile, geopolitical tensions and the trend toward reducing reliance on Chinese supply chains have increased the importance of materials sourced outside China, creating a key opportunity amid the restructuring of global industries. The Board of Directors has also approved expansion projects for advanced carbon materials and isotropic graphite to meet demand from customers in Taiwan, Mainland China, Japan, South Korea, and Europe. The share of revenue from green energy industries such as carbon materials is expected to increase gradually. Through the development and promotion of high-value-added carbon and graphite materials, the Company seeks to generate long-term growth momentum and support the development of green industries.

To further its ESG initiatives, the Company established the Corporate Governance and Sustainability Committee in 2021 to oversee and manage ESG-related matters. Rolling short-, medium-, and long-term ESG targets are set annually, and implementation status is reported to the Board of Directors every six months. In terms of corporate governance in 2025, two female independent directors were newly elected following the director election at the shareholders' meeting, bringing female representation on the Board to one-third. To promote paperless operations and strengthen system workflows, the Company completed a comprehensive upgrade of its ERP system. Relevant certifications were obtained for intellectual property management and information security maintenance and management, and implementation status was reported to the Board of Directors. The Company also established a Sustainability Information Disclosure Task Force, developed the related implementation schedule, and reported it to the Board of Directors. In the social dimension, the Company continued collective bargaining negotiations with the labor union, promoted ESG management among suppliers and contractors, advanced employee health promotion and occupational safety management, and organized social welfare activities, including a mountain cleanup at Shoushan in Kaohsiung, a beach cleanup in Fangliao, the "Protect Trees, Love the Earth" event in Liugui, and the adoption of Jiadong Sports Park in Pingtung. In the environmental dimension, the Company focused primarily on energy conservation and waste reduction. In response to global decarbonization trends and the government's 2050 net-zero emissions policy target, the Company completed its internal carbon inventory and decarbonization roadmap and established short-, medium-, and long-term carbon reduction targets. The 2025 greenhouse gas inventory showed that combined Category 1 and Category 2 emissions decreased by approximately 20% from 2024. Regarding the government's carbon fee, the Company's application for designation as a business at high risk of carbon leakage was approved, and the Company paid NT$751,000 in carbon fees for 2025. The Company also commissioned the Green Energy and Environment Research Laboratories of ITRI to plan the gradual replacement of equipment with energy-efficient systems to support achievement of the Company's carbon reduction targets.

Looking ahead, we will keep striving for a friendly environment, engaging in innovation, and fulfilling social responsibilities on top of the foundation we have built while maintaining good interaction and communication with various stakeholders. With the issuance of this Report, we endeavor to examine our action strategies and related performance, and make timely revisions to our short-, medium-, and long-term sustainable development strategies while forging progress at all times, so that we can become an excellent enterprise that cares for the Earth and realizes sustainable development.