Chairman's Message on the Sustainability Report

Altruism is not a trivial matter; Mindfulness serves to propel the journey forward

On behalf of the Board of Directors, I am pleased to present the Sustainability Report of China Sunsine Chemical Holdings Ltd. (“China Sunsine”, together with its subsidiaries, collectively the “Group”) for the financial year ended December 31, 2023 (“FY2023”).

2023 was another challenging year for many businesses and industries. Various uncertainties increased, including an economic environment with high interest rates, the Russia-Ukraine conflict, conflicts in the Gaza region, geopolitical tensions, and weakening international trade. These factors, combined with intensified industry competition, have brought about greater challenges for the survival and development of an enterprise.

However, the Group withstood the pressure in a difficult environment and resolutely implemented the “Higher sales volume leading to higher production, which in turn stimulates even higher sales” (also called “Sales and Production Equilibrium”) strategy. We responded to market competition with a more flexible price strategy. The scale of our production capacity provided essential support for us to obtain such a large number of orders, and to meet the needs of our customers for our products to the greatest extent. As a result, the Group achieved a record high of more than 10% growth in both production and sales volume in FY2023. The Group’s share in the Chinese and international markets has been further expanded, and its competitive advantages, further strengthened. The Group remained the world’s largest rubber accelerator producer and China’s largest rubber chemicals enterprise in FY2023.

Two major expansion projects had also made significant progress in FY2023. The ongoing Phase 2 of the 30,000-tonne insoluble sulphur project is slated for completion by the end of 2024. In addition, Phase 1 of the 20,000-tonne continuous production high-quality MBT project (with a total project of 60,000-tonne capacity per annum, built in two phases) has been completed and is undergoing a trial run. It is expected to commence commercial production in the second half of FY2024.

The MBT project adopts a continuous solvent MBT production innovation process which was developed jointly by the R&D team of Shandong Sunsine and Tsinghua University. The successful implementation of the project will fill the gaps in China’s continuous solvent high-performance MBT market and promote the transformation of China’s rubber chemicals industry towards clean, automated, and continuous production. It has great strategic significance for the rapid development of China’s rubber chemicals, tyres, and even the automobile industry.

In a highly competitive environment, our average selling price is under great pressure, and how to maintain cost advantage has become an important issue. While using automated continuous production to greatly improve productivity and reduce wastage, it is also necessary to optimize all links, reduce wastages, compress costs, eliminate waste, and achieve energy conservation and efficiency improvement in the whole process from raw materials entering the factory to product sales collection.

The Group has continuously pursued its commitment to promoting ‘green production’. Every year, a lot of manpower and material resources are invested in energy conservation and emission reduction, waste treatment, recycling, environmental protection equipment renewal and maintenance, and strengthening the training of environmental protection personnel, so as to build a lowcarbon operating model and propelling the enterprise towards high-quality development.

In this Sustainability Report 2023, we published our first climate-related disclosures and deepen our understanding of the climate-related risks and opportunities, and TCFD Recommendations (“TCFD”).

Over the years, the Group has been actively engaged in public welfare undertakings, culture, charity, poverty alleviation and other public welfare undertakings, and insisted on donating to schools and paying attention to the disadvantaged.

Adhering to the shared values of “putting people first” and “mindfulness and altruism,” the Group, along with customers, employees, shareholders, and other stakeholders, forms a community of shared interests to realise common values. This embodies the Group’s greatest social value.

We look forward to jointly building a green rubber industry chain with our customers to achieve sustainable development in the rubber industry. We also aim to collaborate with our peers to create a ‘green’ brand awareness, and further enhance our Group’s global position as a leading brand in the rubber chemicals industry.

“Altruism is not a trivial matter; mindfulness serves to propel the journey forward”. Let’s work together to create a greater new height!

Yours sincerely

Xu Cheng Qiu
Executive Chairman
March 2024

Sustainability Report 2023