CITIC Limited Half-Year Report 2020

50 CITIC Limited Half-Year Report 2020 For the six months ended 30 June 2020 Notes to the Consolidated Financial Statements 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 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. Mediation took place in late 2019, but was unsuccessful. The CITIC Parties, Mineralogy and Mr. Palmer have completed discovery. The parties are required to file and serve lay, expert and documentary evidence over the course of July to September 2020. A directions hearing is listed for 3 September 2020. The proceeding has been listed for a five day trial commencing on 16 November 2020, with the following week reserved if needed for the trial. 4 Taxation The statutory income tax rate of the Company and its subsidiaries located in Hong Kong for the six months ended 30 June 2020 is 16.5% (six months ended 30 June 2019: 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 2020 is 25% (six months ended 30 June 2019: 25%). Taxation for other overseas subsidiaries is charged at the rates of taxation prevailing in the countries/jurisdiction in which the overseas subsidiaries operate.