According to the disclosed information, CITIC Pacific mainly invests in four types of leveraged foreign exchange contracts, namely, Australian dollar accumulative target redeemable forward contract (monthly settlement, hereinafter referred to as "Australian dollar contract"), daily accumulative target redeemable forward contract (daily settlement, hereinafter referred to as "Japanese Australian dollar contract"), dual currency accumulative target redeemable forward contract (monthly settlement, hereinafter referred to as "dual currency contract") and RMB accumulative target redeemable forward contract (monthly settlement).

"CITIC Pacific is currently building an iron ore project in Australia. In order to pay for the equipment and raw materials purchased from Australia and Europe, we need Australian dollars and euros. In order to lock in the cost of dollar expenditure, our group has signed some foreign exchange contracts. However, the signing of these foreign exchange contracts has not been reasonably authorized, and the potential maximum risks in these contracts have not been correctly estimated. " Rong Zhijian, chairman of CITIC Pacific, said in a personal statement.

Simply put, CITIC Pacific signed a foreign exchange contract to reduce the currency risks faced by its iron ore projects and other investment projects in Western Australia. However, the benefits and risks of these foreign exchange contracts are completely mismatched.