Core Viewpoint - Longking Environmental Protection plans to conduct futures and derivatives hedging business to mitigate the risks associated with price fluctuations of lithium carbonate and cathode copper, thereby stabilizing production costs and enhancing competitiveness [1][4]. Group 1: Trading Overview - The purpose of the trading is to hedge against price fluctuations of lithium carbonate, which constitutes approximately 72% of the cost of producing lithium iron phosphate [2]. - The company plans to invest a maximum of 30 million yuan in the hedging business for lithium carbonate and cathode copper, with a total contract value not exceeding 300 million yuan [2]. - The funding for this hedging business will come from the company's own funds, and the trading will be conducted on the Shanghai Futures Exchange, Guangzhou Futures Exchange, and Shanghai International Energy Exchange [2]. Group 2: Approval Process - The company held the sixth meeting of the tenth Audit Committee on October 16, 2025, to review and approve the relevant proposal, which was subsequently approved by the Board of Directors [3]. - The matter falls within the Board's authority and does not require submission to the shareholders' meeting for approval [3]. Group 3: Risk Analysis and Control Measures - Although the company will only engage in hedging related to raw materials and not speculative trading, there are still risks such as price volatility, operational risks, technical risks, and policy risks [3]. - The company will implement risk control measures by matching hedging activities with contract projects, controlling the scale of funds, and ensuring compliance with laws and regulations [3]. Group 4: Impact and Accounting Treatment - Engaging in futures and derivatives hedging will help the company avoid risks from raw material price fluctuations and enhance its core competitiveness [4]. - The company will use its own funds for this business, ensuring that normal operations are not affected, and will apply hedge accounting in accordance with relevant accounting standards [4].