Return to 1958 and build a century-old giant

Chapter 907 Christmas Creek Iron Mine

In industries that are politically sensitive internationally, Yang Wendong never thought of monopolizing the profits; that's impossible. If TSMC only develops into a regional company in the future due to his influence, then he can hold more shares and make it a high-quality supplier for him.

If it were to develop into an international giant like in its previous life, it would have to attract investment from Wall Street and even some government funds in order to ensure that the pie could be expanded.

“Mr. Yang, your suggestions all sound very good, but I need to consider them for a while,” Zhang Zhongmou said after thinking for a moment.

Yang Wendong nodded and said, "Of course, you can think about it for a while. This is my business card. Once you've thought it through, you can call the number on it directly."

For some strategically significant investees, he would still call his office.

After a while, when wireless communication equipment is installed in Hong Kong, I can arrange for a secretary to carry a mobile phone with him, which will make business communication much more convenient.
The most important thing I'm doing during this trip to the United States is to work with Zhang Zhongmou to build TSMC.
Afterwards, Yang Wendong made a trip to Hollywood and met with executives from Paramount, but so far, there is no strategic cooperation between the two sides.

Yang Wendong didn't think too much about Hollywood. He just wanted it to cooperate appropriately with Hong Kong films. This industry had long been controlled by various capital groups. It would be difficult for him, a new foreign capital, to get involved. He would rather use his energy to do some other emerging industries.
However, investing in some potentially blockbuster movies is a good option, or investing in future giants like Marvel and Disney is a more reasonable and less strenuous investment approach.

After his trip to Los Angeles, Yang Wendong returned to Hong Kong.

Then, I spent another half a month traveling by cruise ship to Southeast Asia.

December arrived quickly, and the weather in Hong Kong gradually turned cooler.

As usual, Yang Wendong went to his office and stood by the window. He noticed that the fire station next to the Kang Le Building was already being dismantled.
"They've moved quite quickly with this land acquisition," Yang Wendong said to his assistant after taking a sip of tea. "Have Lao Zheng come over here."

"Yes, Mr. Yang," the assistant replied.
A while later, Zheng Zhijie arrived. After greeting him, Yang Wendong asked, "Has Jardine Land made any public announcements regarding the construction plans for the Transaction Center?"

As a publicly listed company, Hongkong Land is required to publicly announce its major investment plans. In addition, it is necessary to notify nearby property owners in advance of large-scale construction projects to avoid potential legal conflicts later.

Zheng Zhijie replied, "It's already out. Hongkong Land plans to divide the Transaction Tower into two phases, totaling 178 million square feet, which is expected to be completed in 1985. We have also internally reviewed its height, so it will not affect us."

"178 million feet, that number is indeed astonishing," Yang Wendong nodded.

In Hong Kong today, the rent for Grade A office space is between HK$30 and HK$50 per square foot per month. With 178 million square feet, the annual rental income would be HK$700 to 800 million, which is not much less than that of Harbour City.

This doesn't even take into account the future appreciation of the property itself;
Zheng Zhijie said, "Yes, Hongkong Land's properties in Central are enough to increase by nearly 15% because of this one project."

Yang Wendong then asked, "What is the budget for construction costs?"

Zheng Zhijie said, "It's roughly between 35 billion and 45 billion. This is the approximate figure announced by Hongkong Land. The exact figure will depend on the changes in labor and building material prices in the next few years."

"The land purchase cost over 70 billion yuan, and with this, the debt is now over 100 billion yuan." Yang Wendong then asked, "Which banks did they contact for loans? Did they approach Hang Seng Bank?"

Zheng Zhijie replied, "They did approach them, but they mainly approached a banking consortium, including HSBC, Standard Chartered, Bank of East Asia, Hisense, and several Japanese and European banks. Hang Seng didn't get a large share. I estimate that Hongkong Land had previously borrowed a lot of money from Hang Seng to avoid having too much debt in one bank, so they diversified their operations."

“Yes, this is a basic business tactic, it’s normal.” Yang Wendong nodded: “As long as we, Hengsheng, are their creditors, that’s enough. When the time is right, it will be enough to take their lives.”

In the past two years, Yang Wendong personally intervened to get Hang Seng Bank to adopt a more lenient policy on many of Hongkong Land's loans, just so that he could stab them in the back after the economic crisis.

There is no inherent risk in this. If Hongkong Land survives, its banks will recover the lent funds normally. If Hongkong Land fails, that would be even better, as it can take the opportunity to acquire, or at least acquire, a number of its prime properties in Central.

“Yes, we’ve been waiting for this day. In recent months, the momentum after the previous land auctions has faded, and the real estate market has fallen into a slump again. However, there are still a few conglomerates that are desperately trying to boost the market. Among them, the most active are Hongkong Land, Caring Land, and Hang Lung Properties,” Zheng Zhijie continued.

“Jia Ning? Chen Songqing? I remember he once wanted to cooperate with us, right?” Yang Wendong was quite familiar with this future top swindler;

It must be said that although this person went astray, his abilities were extraordinary. He managed to create an asset bubble worth tens of billions of dollars in just a few years through various means.

Zheng Zhijie said, "Yes, but we didn't cooperate with them either."

Yang Wendong said, "We need to reinvestigate. It's not just Jianing; we need to cut off cooperation with any company that has close ties with Jianing."

"Mr. Yang, why is that?" Zheng Zhijie asked. "Do you think this company is going to have serious problems?"

Yang Wendong said, "Yes, he rose to power too quickly, even faster than I did back then. The core of all this is the Southeast Asian consortium he claims to be backing, but no one has known who this consortium is for the past few years. There are big problems here. Let's be cautious and cut our cooperation."

He didn't interfere in this matter; it had nothing to do with him before, and now all he needs to do is make the necessary severance.

Seeing his boss's attitude, Zheng Zhijie didn't ask any further questions and said, "Okay, I'll go back and check it again." "Yes, including real estate, finance, and even industry," Yang Wendong reminded him again.
During the economic crisis of 83, companies like Hongkong Land and Hang Lung were only heavily indebted and insolvent, but not by much. However, Caring was a complete fraud, with bad debts amounting to billions.
Even HSBC was swindled out of 2 million dollars by it, and some Southeast Asian banks were swindled out of hundreds of millions of dollars, almost triggering a financial run in the region.
In the future, Chen Songqing will inevitably be recorded in the annals of Hong Kong's business history, and he certainly doesn't want his name to appear in them;

Time flew by and it was March 1982.

Assistant Aying came in and said, "Mr. Yang, news has come from Australia that Changxing Exploration Company has discovered what appears to be a sizable iron ore deposit near Christmas Creek."

"Oh, what are the specifics? Do you understand?" Yang Wendong put down the newspaper in his hand and asked.
Many years ago, he established a Changxing Mining Company, which also acquired an exploration company in Australia. Then, according to his requirements, he purchased regional exploration rights in Australia and searched for mines.

As a time traveler, Yang Wendong also knew that there was a giant iron mine in Australia called Christmas Creek Iron Mine, which was only discovered in the 21st century. Therefore, he also asked another team to find the place name in Australia and then arrange for a surveying company to purchase the exploration rights.

Of course, in order to avoid being too precise about the ore extraction rate, he also specifically purchased the surveying rights for several other locations, which didn't cost much.

However, Christmas Creek is a very large place, and finding iron ore is not something that can be done in a short time. After waiting for several years, Yang Wendong had almost forgotten about it. He didn't expect that news would come so soon.

The assistant said, "The team in Australia is still in the uninhabited area and is currently communicating via satellite phone. The information we have is not very clear yet, except that a large iron ore mine has been discovered."

“Okay, then I’ll have them send someone over via satellite phone, with all the relevant documents, to Hong Kong to discuss this with me in person,” Yang Wendong replied.

In the pre-internet era, many times, communicating complex information by phone was less efficient than having someone carry the documents by plane.

In the early days, many newspapers in Hong Kong copied news from abroad. They would only contact the newspapers by phone for particularly urgent matters. Otherwise, the news was transported to Hong Kong by air, which was more cost-effective and efficient.

The assistant replied, "Okay, I'll arrange it."

Five days later, Fu Tianhua, a vice president of Changxing Surveying and Mapping Company, rushed back to Hong Kong and met with Yang Wendong. "Mr. Yang, this is the data we have collected so far. Please take a look."

Yang Wendong took the documents, which had been translated into English and Traditional Chinese. After looking at them for a while, he said, "So, you found it two months ago?"

Fu Tianhua said, "Yes, but at the time we only discovered iron ore, and it was hard to confirm the scale, so it was not easy to report to you. It took another two months to drill more than 300 holes around the mine before we could roughly determine the size of the mine."
Even so, this is only an estimate at present. To know for sure, we need to continue drilling and testing.

The total reserves of the Christmas Creek iron ore mine are estimated at around 15 billion tons. While there may be some uncertainty regarding the future, the total reserves are expected to fluctuate slightly and not change drastically.

"Okay, how difficult is it to mine this iron ore? And what about the quality?" Yang Wendong asked again.
Reserves are just one number among many in mineral deposits, and their importance is even less than the difficulty and quality of mining.
For example, Venezuela has the world's largest oil reserves, even more than Saudi Arabia, but in the future, one country will be so poor that its people will go hungry, while the other will be one of the world's top Middle Eastern tycoons.

The most important factor is that Venezuela's oil is all heavy oil, which is difficult to extract and has high processing costs. So even with high reserves, it is difficult to sell its oil in the face of competition from other countries. Even Dongda, which diversifies its oil imports, does not import much of Venezuela's oil.

The same principle applies to iron ore or other mineral deposits. If the iron content is too low or the mining cost is extremely high, then it has little value, no matter how large the reserves are.

Fu Tianhua said: "Currently, the iron content is around 55%, which is already very high. Mining is also easy, as it is an open-pit coal mine, and the mining cost is relatively low."

However, there's another problem: transportation. There's no railway around Christmas Creek, and we need a railway to transport what we've extracted.

"How far is the Christmas Creek iron ore mine from the nearest port?" Yang Wendong pressed, as transportation costs are also an important factor, especially for ore with low unit value.

Fu Tianhua said, "It's about 500km."

“500km? Building such a long railway in such a desolate place must be very costly,” Yang Wendong said, frowning.

Even now, when it comes to final infrastructure projects, he would still have a headache over the funding.
It's not that I don't have the funds to invest, but investing so much money in this day and age is clearly not worthwhile.

Fu Tianhua said: "There is another way, to build a railway of about 100km and then introduce a railway that BHP Billiton has already built in Australia."
In this case, our investment will be significantly reduced, but we will need to pay tolls to BHP Billiton in the future. Furthermore, BHP Billiton will control our core transportation channels.

“BHP Billiton, that’s a giant company in Australia.” Yang Wendong thought for a moment and said, “Paying the tolls peacefully is a minor issue, but if they control our lifeline, that would be a real problem.”

Fu Tianhua continued, "There is another way, which is to develop the Christmas Creek iron ore mine in a joint venture with BHP Billiton. If they have shares, they will have no reason to make things difficult for the joint venture."
Furthermore, we lack experience in developing such large-scale iron ore mines, and banks are unlikely to believe that we can develop such mines independently, making it difficult for them to provide financial support.
However, if we partner with mining giants to develop the project, the financial aspects become much simpler. Take the railway example we discussed earlier; if the financial arrangements are handled well, we might not even need to invest our own money, but could directly utilize bank funds.

“That’s one approach, but there must be more than just BHP Billiton in Australia, right? Are there any other transportation routes? It would be best to have other options so that the negotiations can proceed more smoothly,” Yang Wendong asked again.

Fu Tianhua said, “Rio Tinto of the UK also has a railway in western Austria, but their railway is about 200 km away from our mining area. Cooperating with them would naturally require an additional investment of hundreds of millions of US dollars.”

“It’s alright. The entire iron ore mine is worth billions of dollars. Don’t worry about immediate gains or losses. Even if we don’t cooperate with Rio Tinto, we still need it as leverage in negotiations,” Yang Wendong said. “Let’s release the news first and see how the global mining giants react.”

PS: Please give me a monthly ticket
(End of this chapter)