CITIC Limited Half-Year Report 2019

52 CITIC Limited Half-Year Report 2019 For the six months ended 30 June 2019 3 Critical accounting estimates and judgements (continued) (b) Mineralogy Pty Ltd (“Mineralogy”) disputes (continued) Site Remediation Fund Dispute (continued) On 22 October 2018, Mineralogy commenced a proceeding against the CITIC Parties in the Supreme Court of Western Australia (“Proceeding CIV 2840/2018”) concerning the Site Remediation Fund. Mineralogy claims that the CITIC Parties are required to contribute AUD529,378,207 into the Site Remediation Fund established under the MRSLAs, as security for the performance of their obligations relating to the protection of the environment and rehabilitation. While the CITIC Parties acknowledge their site remediation obligations and their obligations under clauses 20.5 and 20.6 of the MRSLAs, they dispute the amount claimed by Mineralogy. Among other arguments, the CITIC Parties consider that the amount demanded by Mineralogy is not an “annual charge” as required by clause 20.6(e) of the MRSLAs. Further, the CITIC Parties do not consider that the amount demanded is a “best prevailing estimate” of future site remediation costs, as required by clause 20.6(e) of the MRSLAs. The CITIC Parties have filed a defence and counterclaim in Proceeding CIV 2840/2018 seeking, among other things, orders appointing a new trustee in place of Mineralogy and a declaration that the annual charge to be made by Sino Iron and Korean Steel in the operating year commencing on 1 July 2018 is AUD6,000,000 or such other amount determined by the Court. The matter has been referred to mediation by the Court which has been listed for 30 October 2019. The Court has also made programming orders concerning the scope, timing and format of discovery. The matter is scheduled for a directions hearing on 25 October 2019. No trial date has been set for this proceeding. 4 Taxation The statutory income tax rate of the Company and its subsidiaries located in Hong Kong for the six months ended 30 June 2019 is 16.5% (six months ended 30 June 2018: 16.5%). Except for the preferential tax treatments, the income tax rate applicable to the Group’s other subsidiaries in Mainland China for the six months ended 30 June 2019 is 25% (six months ended 30 June 2018:25%). Taxation for other overseas subsidiaries is charged at the rates of taxation prevailing in the countries/ jurisdiction in which the overseas subsidiaries operate. Notes to the Consolidated Financial Statements