Chairman’s Remarks for 2024 Shareholders Meeting Taiwan Cement Corporation (TCC)

A Moment That Shook Us

At 7:58 AM on April 3, 2024, we collectively experienced a reality-shaking tremor. The Earth was merely releasing its energy as usual, just as it routinely absorbs the scorching sun, and endures the baptism of wind, rain, thunder, and lightning. For the Earth, it was merely shedding excess energy. The various releases it has made around the world over the past 50 years. It might have been just minor trembles or gentle sneezes.

However, all of this, for humanity, has been a testament to earthquakes, volcanic eruptions, floods, forest fires, tsunamis, hurricanes, heatwaves, and droughts, all underscoring the consensus on abnormal climate patterns and extreme weather conditions.

In the past, these large abnormal releases were occasional, perhaps happening once every few decades or even centuries. This time, it took just 50 years to increase the disasters brought about by global warming by fivefold. Taiwan Cement Corporation's Hoping cement plant,harbor, and Hoping power plant is located in the area of Taiwan that experienced the highest seismic intensity this time around. The magnitude of the disaster (nature's force) has left a profound impact on us.

The Adhesive of Civilization  

To the Earth, what significance do humans, in all their minuteness, hold? 25 years, 50 years, these are but human constructs of time. To the Earth, which has existed for billions of years, we are not a necessity; it is we who need the Earth. Humanity relies on the Earth and must take responsibility for our way of life on this planet, continuously seeking sustainable modes of existence.

This year marks the 200th anniversary of the invention of Portland cement. Today, after a magnitude 7+ earthquake, as we look to rebuild roads and homes, we still rely heavily on cement, just as humans did 12,000 years ago (a particular mixture of lime). From 12,000 years ago to the present day in 2024, cement remains the adhesive of human civilization, firmly securing the ever-progressing realities of human life upon the Earth.

12,000 years ago, when humans used limestone,  the population was one million; 2,000 years ago, with the use of volcanic ash cement, the population reached two hundred million; 200 years ago, with the advent of Portland cement, the population was one billion. This year, as we celebrate the bicentennial of Portland cement, the global population has reached over eight billion.

As we move into 2024, 200 years after the introduction of Portland cement, we finally enter an era of new low-carbon cement and new energy sources. Another new civilization for humanity is about to unfold. Entering the era of low carbon and green energy, Taiwan Cement has developed Ultra-High Performance Concrete (UHPC) energy storage cabinets that bridge low-carbon cement and new energy sources. Taiwan Cement's "Energy Ark" storage cabinets become the link between low-carbon cement and green energy, weaving a tangible cement fantasy. This is our concrete response to entering a new era of low-carbon and green energy.

The Challenge of Time vs. The Trajectory of Response

Humans are born, and they die. So it is with civilizations, nations, societies, and corporations. But the Earth does not measure  time in the same way; time is but the mark of human civilization deliberately sculpted in response to natural changes and challenges.

In 1983, MOTOROLA launched the world's first handheld mobile phone, and in 2011, the company was split and sold. One of Taiwan's first publicly listed companies, "Taiwan Industrial and Mining," after 40 years of operation, was delisted in 2001, marking the end of a 40-year era. Japan's TOSHIBA Corporation, just last year in 2023, ended its 74-year listing on the Tokyo Stock Exchange.

However, Taiwan Cement Corporation, the first company to be listed on the stock exchange in Taiwan with the stock code 1101, I am honored to represent it today, still standing here with everyone.

Cement has always been the most reliable building material for constructing the foundation of human living environments, and Taiwan Cement has always been at the forefront of safeguarding life. Taiwan Cement has always trodden the most challenging paths, braving through thorns and thistles, engaging in long-term exploration with the natural elements upon which humanity relies - sunlight, air, water, soil. We strive to understand the intricate relationship between human circumstances and the natural environment, thereby seeking and realizing the best ways for humans to live on Earth and the best solutions.

Lighting the Torch of Sustainability on Earth

To walk eternally, it is a long journey, and we choose only to walk eternally. The only time scale Taiwan Cement pursues is sustainability: sustainable operations and sustainable development. We must not only be observant and listen attentively to the changes in the world but also with introspection to ensure we stay true to our original intentions. Only then can we steady our steps, maintain the balance between internal operations and development, and achieve long-term success.

62 years ago, in 1962, Taiwan Cement became the first publicly listed company in Taiwan, with the stock code 1101. 7 years ago in 2017, Taiwan Cement had 16 subsidiaries, with over 80% of its revenue still coming from the cement markets on both sides of the Taiwan Strait. Today, in 2024, Taiwan Cement has 27 subsidiaries, spanning 11 industries and operating in 13 global markets.

62 years ago, Taiwan Cement was a simple cement supplier; Today , Taiwan Cement has advanced to become a developer of low-carbon building materials, resource recycling, and green energy. It is no longer just a supplier of raw materials but can compete and break new ground alongside high-tech and electronics industries, becoming a pioneer among its peers.

We cannot predict any earthquake or any extreme climate disaster. We must closely understand  the constantly evolving  carbon lexicon in this Carbon Era: carbon sinks, carbon fees, carbon taxes, carbon credits, carbon audits, carbon leakage, CBAM, ETS...

We hope to take the lead in pulling in the reins on global warming, to race against the increasing momentum  of climate change, and to create and realize possible solutions on the path to net-zero emissions. Taiwan Cement has spent a long time at the forefront of protecting life, deeply understanding the laws of nature and how the  world  changes. We realize that there are no coincidences in this world, and no flukes, but rather one foot, one step at a time, through  the accumulation of sweat and experience drop by drop. Over the past seven years, the  Taiwan Cement team has started from zero, from nothing, holding torches high in the long, dark tunnel, illuminating the exploration of this new journey towards human civilization.

Carrying the light source, we maintain  a healthy and robust financial statement. Many people have asked, "Can environmental protection and economic development go hand in hand?" It used to be a question people were unsure about or hesitated to answer. Today we ask again: "Is   economic development achievable without carbon reduction and concern for the environment ?" Through our exploration these past few years, the answer is now a hundred percent affirmative. Environmental health and economic health can advance side by side and will become the direction every company seeks to turn towards because we have already led the way through this journey. This is the main topic we face 365 days a year, 24 hours a day, every minute, every second.

Sustainability, for Taiwan Cement today, is a word but  rather a  continuous action. It strides powerfully, producing one healthy, robust, and future-oriented financial statement after another. Before 2018, Taiwan Cement's business in Taiwan and mainland China, where it originated, accounted for over seventy percent of its revenue, serving as the two pillars supporting the company. At that time, Taiwan Cement had already foreseen that the Chinese market might plateau after reaching its peak. Therefore, starting from 2018, it began to explore markets beyond the strait. The first step was establishing a joint venture with Turkey's OYAK, followed by acquiring ultra-low carbon alternative fuels in Africa through Portugal's Cimpor. This move, utilizing calcined clay as a substitute for limestone clinker to produce ultra-low carbon cement, positioned Taiwan Cement as a global leader in the cement industry with the lowest carbon production.

To date, the low-carbon cement from Europe has already provided benefits to Taiwan Cement. In 2023, approximately 45% of the profits came from the contribution of European low-carbon cement. At the end of November last year, Taiwan Cement decided to expand its investment in the low-carbon cement market in Europe, Asia, and Africa. The stake in Turkey's OYAK was increased from 40% to 60%, and the stake in Portugal's Cimpor was raised from 40% to 100%. Although production might become a burden in an era where carbon has a price, we have decided to mitigate this burden with more low-carbon products. Low-carbon building materials are set to become our main competitive edge in the European market. The international layout in Turkey, Europe, and Africa undoubtedly creates a stable third pillar for Taiwan Cement's future operations.

Over the past six years,we have dedicated ourselves to a low-carbon transformation, investing in green energy that can be stored, managed, and aggregated for use and trade. We have established energy storage sites that regulate energy like reservoirs, provided stable power supply frequencies, enhanced energy efficiency through smart grids, and produced reliable, high-power lithium-ion batteries. We have fully realized a new, clean, friendly, renewable, and infinitely recyclable way of using energy.

These new energy ventures, supporting and extending the future of human civilization, extend our reach  into the future. Not only have they brought stable profits, but they have also allowed Taiwan Cement to accumulate numerous cross-disciplinary patents and technologies. We firmly believe that we will stand strong  in the competition of carbon reduction and energy in the future.

The new energy sector is the support that enables Taiwan Cement to transform, to completely shed its historical role, and to erect a brand new pillar for Taiwan Cement.

In the fiscal year 2023, we presented a financial statement that is balanced on four legs: diversified income, risk dispersion, innovative synergy, and ample cash flow, demonstrating a healthy and robust financial status.

We proactively take on and respond to societal needs and expectations, setting traceable, step-by-step, and verifiable short, medium, and long-term goals for 2025, 2030, and 2050. Taiwan Cement's healthy and robust financial statement is no accident; it is the result of  experience and a step by step process with the concerted effort of all at Taiwan Cement. It is a solid proof of our never-retreating, publicly credible commitment, a health check won through self-challenge.

Aiming for the North Star, we sail towards a new course for a new Taiwan Cement. This low carbon era is a new epoch about sustainability and energy transformation actions and reflections. In human history, there are no precedents or markers left by predecessors; no one knows exactly how to navigate this new path.

It's like being in the vast ocean, without a clear direction, both open and boundless. What guides us is the human heart leading to a world of good intentions, just like the eternal North Star in the night sky, surpassing the compass needle and the sunset in the valleys.

What is certain is that Taiwan Cement is on the right path. At this moment, 200 years after the invention of Portland cement, there are only two types of cement industries left:

One is still stuck in yesterday's cement industry, still focusing on production volume;

The other looks towards tomorrow, firmly and confidently continuing on their path.

TCC is no longer just an abbreviation for Taiwan Cement Corporation; TCC now stands for Total Climate Commitment and Total Care Commitment to environmental and human concerns.

Today's TCC is rightfully TCC Group Holdings! TCC is turning a new page, beginning to write a new story for a new TCC.

We are on the right path, and we are certainly not alone.