(Yicai) Nov. 6 -- Shares in Hainan Mining edged down today after the Chinese mining firm said the Swedish Tax Agency has ordered its Swedish subsidiary to pay more than SEK180 million (USD18.2 million) in back taxes and interest on late payments by Nov. 26 over accounting issues dating back to before Hainan Mining acquired Tethy’s Oil. The company said it plans to challenge the ruling through legal channels.

Hainan Mining’s share price [SHA: 601969] closed down 2.9 percent at CNY8.19 (USD1.20).

The Swedish Tax Agency conducted an audit of Tethys Oil’s corporate income tax filings for 2021 to 2023, Hainan Mining, which bought a controlling stake in the Stockholm-based firm in December 2024, said yesterday. The tax authority concluded that the allocation of operating profits between Tethys Oil and its Oman subsidiary did not comply with the arm’s-length principle, which refers to when the parties of a transaction are independent and on an equal footing.

Hainan Mining said Tethys Oil will review the relevant evidence and seek advice from professional institutions before pursuing legal remedies. The firm has not ruled out initiating legal proceedings with Sweden’s administrative courts, it added.

The ultimate impact of the additional taxes and late-payment interest on Hainan Mining’s annual financial results will be determined based on the findings of its external auditor, it said.

Hainan Mining was founded in 2007 by Fosun Group and Hainan Haigang Group, and went public on the Shanghai Stock Exchange in 2014. It is currently the only mainland-listed company with business operations spanning both mineral resources and energy, it said.

In the first nine months, Hainan Mining’s net profit attributable to shareholders more than doubled from the year before to CNY650 million (USD97.4 million), while revenue soared 31.6 percent to CNY4.4 billion (USD660 million).

Hainan Mining acquired a 51 percent stake in Australia’s Roc Oil from Chinese conglomerate Fosun International in 2019 and the remaining 49 percent in 2023, for a combined consideration of approximately USD393 million.

Roc Oil launched a takeover bid for Tethys Oil in September 2024 and completed its acquisition of a controlling stake in December that year, after which Tethys Oil was delisted. Tethys Oil holds significant onshore oil assets in Oman, with mining rights covering about 60,000 square kilometers, equivalent to around 18 percent of the country’s land area.

Editor: Kim Taylor