CEO of Chiho, interviewed by CGTN: Carbon neutrality goals and the rise of new energy vehicles create new opportunities for recycling industry

April 23, 2021

(Incorporated in the Cayman Islands with limited liability)

CHIHO ENVIRONMENTAL GROUP LIMITED

(Stock Code: 976.HK)

CEO of Chiho, interviewed by CGTN: Carbon neutrality goals and the rise of

new energy vehicles create new opportunities for recycling industry

On the road to carbon neutrality, Rafael Suchan, Chief Executive Officer of Chiho Environmental Group Limited ("Chiho" or the "Group"), was attending the Boao Forum for Asia, a high level economic meeting to talk about how to achieve sustainable and green economic targets. Climate change is an urgent global issue that needs to be resolved as soon as possible. The Chinese strategy with the 2030 carbon peak and the 2060 carbon neutrality goal reflects China's commitment to sustainable green development.

The climate neutrality goals create opportunities for Chiho-Scholz to further implement and enhance circular economy. At the same time, it needs to be addressed at high political level that on a regulatory level, benefits for the emission savings are necessary. The Group plays a vital role by providing solutions which can be implemented immediately with great impact on saving resources and energy, as well as reducing carbon dioxide emissions. So have a look on what Rafael Suchan also said about the future development and how it is connected to our vision and our core business:

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CGTN: China launched the target of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, what opportunities will this bring to the recycling industry?

Rafael Suchan: The 2030 and 2060 strategy, shows the commitment of the Chinese government to the green transmission of the whole economy, and this also shows how important the circular economy has become, and this is where it opens the possibility for us as a recycling company. China nowadays has the biggest industrial landscape in the world, but it's very difficult to transform it with just one or two investments to help it become carbon neutral, so it means recycling has become a very important part.

Just give you two examples, by recycling one ton of steel, CO2 emissions can be reduced by 65 percent. And if we recycle aluminum, CO2 emissions can be reduced by more than 85 percent, and that's the reason why in our first joint venture in China in Shandong Weiqiao in Binzhou in Shandong Province, we actually aim to recycle 500,000 tons of aluminum which will decrease CO2 emissions for those products in Binzhou by 85 percent, and for this together with our partner, we invest over 1.5 billion yuan, which is also, then coming back to the comprehensive agreement on investment, it's part of the circular economy field.

CGTN: Recycling seems to play an important role within the latest EU regulations, the EU requires the reuse or recovery rate of end-of-life vehicles to be over 95 percent. What could be the lessons learned for China?

Rafael Suchan: The reason why the EU introduced them is because it doesn't have sufficient primary raw materials, so for this reason, the EU is pushing a circular economy, meaning the recycling of the materials that can be re-used.

In China, the recycling rate for end-of-life vehicles is approximately 70-80 percent. The recycling of end-of-life vehicles in China right now is mainly done manually, so what we bring in, is we bring shredding technology, and then we bring in sorting technology, which in an automatic way, helps to sort out the materials, and by this, we reach more than 97 percent, and if we look at the residue, we are also able to sort out more than 99 percent of all metals in the residue.

CGTN: What opportunities will China's booming electric vehicles industry bring to the recycling industry?

Rafael Suchan: The electric vehicles in China are booming right now, and we have developed technologies the recycling for vehicles and batteries, this will give us significant opportunities for growth over the next 5 to 10 years in China, especially because almost 50 percent of all-electric vehicles are in China.

And as the Chinese government report stated at the beginning of the year, it's the solid investment in the infrastructure, for the charging and swapping of batteries is necessary, but the report also pointed out that the loop has to be closed, meaning that raw materials that are used in the electric vehicles and the batteries also need to be recycled.

If we look at the traditional industry recycling rate for electric batteries is only around 30 percent. And when we use our newly developed technology, we reach far beyond 90 percent of our recycling rate, so our technology by combining different steps of mechanic recycling, we more than triple the recycling rate of electric vehicle batteries.

We have developed this technology in Germany, with one of the biggest OEMs, and we are now also bringing this technology to China, and we will introduce it in the new metal recycling park, which we are building in Shandong Province in Shangdong Weiqiao right now.

For metal recycling, the technology will come to China this year already, and for battery recycling technology, next year.

CGTN: What are the impacts of the China-Europe Comprehensive Agreement on Investment for the development of Chiho-Scholz in China?

Rafael Suchan: So the investment agreement is actually of great advantage for us because one of the key focus areas of the investment agreement is the circular economy, and the strategy of our company is actually to become a circular economy solution provider globally, focusing on Germany, where we have high very quality and reliable technology and adapted to China's fast and flexible speed.

Of course, there is some slowdown today, but in the end, both regions would still need to continue. China and Europe are two very important economies in the world, and it's very important to have an agreement on the investment, and the comprehensive agreement on the investment set new governance standard for investment, and also opens up a lot of new opportunities for European companies like Chiho-Scholz in China, so it means it is both in the interest of the European Union to continue the ratification of this agreement and thus I am very confident that will progress on this.

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