Announcement on Capital Increase in Baowu Group Environmental Resources Technology Co., Ltd. through 1.032% Equity in Baowu Water Technology Co., Ltd.

Announcement on Capital Increase in Baowu Group Environmental Resources Technology Co., Ltd. through 1.032% Equity in Baowu Water Technology Co., Ltd.

The company and all members of the board guarantee that the content of this announcement is true, accurate, and complete, with no false records, misleading statements, or significant omissions.

I. Overview of Related Party Transactions

1. Basic Situation of the Transaction
   To create a comprehensive environmental governance green industry platform integrating solid, water, and gas management, and to enhance the return on equity investments, Zhongnan Steel plans to collaborate with 16 shareholders of Baowu Water Technology Co., Ltd. (hereinafter referred to as "Baowu Water") to convert its 1.032% equity in Baowu Water into shares in Baowu Group Environmental Resources Technology Co., Ltd. (hereinafter referred to as "Baowu Environmental"). After the completion of this capital increase, Zhongnan Steel will no longer directly hold equity in Baowu Water and will become a shareholder in Baowu Environmental, with an expected holding ratio of 0.34% (final value to be determined by assessment). This transaction does not involve cash payment.

2. This Transaction Constitutes a Related Party Transaction
   The counterparty for this transaction is Baowu Environmental, which is a subsidiary of Baowu Group, the controlling shareholder of Zhongnan Steel. According to the relevant provisions of the Shenzhen Stock Exchange Listing Rules, Baowu Environmental is a related party of the company, and this transaction constitutes a related party transaction.

3. Board Meeting Approval
   The company's board of directors held the second interim meeting of the 10th board on May 27, 2026, where the proposal regarding the capital increase in Baowu Environmental through the 1.032% equity in Baowu Water was approved with 5 votes in favor, 0 against, and 0 abstentions. Related directors Mr. Xie Qi and Mr. Lai Xiaomin abstained from voting on this proposal, which was also approved by a majority of independent directors at a special meeting.

4. Not a Major Asset Restructuring
   This transaction does not constitute a major asset restructuring as defined by the Measures for the Administration of Major Asset Restructuring of Listed Companies, nor does it constitute a restructuring listing.

II. Basic Information of Related Parties

1. China Baowu Steel Group Co., Ltd.

   • Legal Name: China Baowu Steel Group Co., Ltd.
   • Unified Social Credit Code: 91310000132200821H
   • Legal Representative: Hu Wangming
   • Established Date: January 1, 1992
   • Registered Capital: 52.897 billion yuan
   • Registered Address: No. 1859 Expo Avenue, Shanghai Free Trade Zone, China
   • Main Office Address: No. 1859 Expo Avenue, Shanghai Free Trade Zone, China
   • Major Shareholder/Actual Controller: State-owned Assets Supervision and Administration Commission of the State Council
   • Relationship with Target Company: Controlling shareholder
   • Main Business: Retail and wholesale of publications (subject to approval).

2. Financial Data for the Last Year and Period

   Item	March 31, 2026 (Unaudited)	December 31, 2025 (Audited)
   Total Assets	132,939,284.62	131,781,764.01
   Total Liabilities	72,012,151.24	71,606,343.78
   Total Equity	60,927,133.39	60,175,420.24
   Debt-to-Asset Ratio	54.17%	54.34%
   Revenue	16,788,126.59	74,018,661.51
   Net Profit	460,267.51	1,618,924.79

3. Baosteel Development Co., Ltd.

   • Legal Name: Baosteel Development Co., Ltd.
   • Unified Social Credit Code: 913101131334389465
   • Legal Representative: Zhang Jun
   • Established Date: June 1, 1989
   • Registered Capital: 2.413 billion yuan
   • Registered Address: No. 8, Keshan Road, Baoshan District, Shanghai
   • Main Office Address: 26th Floor, No. 370 Pudian Road, Pudong New District, Shanghai