Return to 1958 and build a century-old giant

Chapter 909 Cooperation with Baosteel
The total value of the Christmas Creek iron ore mine, based on current international prices, is around US$300 billion; its estimated value is at least several billion US dollars.
In this era, it is also a super huge sum of money, and the negotiations involved are enough to alarm the five permanent members of the UN Security Council. Not to mention, iron ore is a strategic resource material that any country needs to obtain for development.

After Rio Tinto's representatives left, several other global mining giants also sent people to Hong Kong for negotiations. Given the scale of the cooperation, Yang Wendong naturally received them personally.
The terms of cooperation are basically the same in all aspects. The only difference is that Yang Wendong is already a shareholder of Rio Tinto.

As for other mining giants, he had little interest in investing because the mining industry developed earlier than the automobile industry. Global giants, from more than a hundred years ago to several decades later, have basically not made any moves except for mainland state-owned enterprises.
These companies are already giants, and even if they maintain their current position in the future, their return on investment will be very low.
The only exception is Rio Tinto. Over the next 20 years, Rio Tinto developed extremely rapidly, acquiring companies everywhere and becoming one of the world's three largest giants.

Even so, its return on investment is far lower than that of many industries. Yang Wendong's investment in Rio Tinto was purely based on his influence, rather than just on the improvement of the bank's figures.
Some investments, even if they don't make money, are still very valuable;
A top-tier conglomerate should allocate its resources to ensure that valuable investments generate their value, while allowing less valuable investments to fully leverage their influence, thereby protecting other valuable assets.

Time flew by and it was almost the end of June. On this day, Yang Wendong was playing on his computer in the office. The computer had a lot of games on it.
On the Honor Electronics side, they have begun to fully develop computer games. Over the past few years, in addition to the few games that Yang Wendong had previously launched, they have also developed dozens of simple and fun games internally. Although they cannot compare with the explosive popularity of games such as "Chinese Blocks", "Snake", "Tank Battle" and "Mario", they each have their own market.

The gaming industry is not inherently mutually exclusive, unlike physical home hardware where buying one means you can't buy another. As long as the games are fun enough, it's normal for a customer to buy dozens of different types.

The proportion of self-developed games within Honor's operations is also increasing, which pleases Yang Wendong. After all, as a transmigrator, even if he can help the company develop in the early stages, it shouldn't continue indefinitely. The ultimate goal is for the company to have its own self-sustaining capabilities.

Even those companies that succeed through normal entrepreneurship eventually have to gradually step out of the shadow of their founders' glory.
Businesses should always avoid becoming overly reliant on one person, even if that person is the boss.

In a few years, he will also need to start training a successor, and he will not allow the company to rely on him. At the same time, he can also retire semi-retire.

"Knock knock knock~" The assistant led two men in and said, "Mr. Yang, Mr. Zhang and Mr. Ding have arrived."

"Please have a seat, both of you," Yang Wendong immediately invited.
The visitors were Zhang Guangdou, the head of China Resources Group in Hong Kong, and a bureau-level cadre who had come from Beijing.
"Thank you, Mr. Yang." After the two sat down, the assistant served tea. After exchanging pleasantries for a while, Zhang Guangdou said, "Mr. Yang, this is Director Ding from the Ministry of Metallurgical Industry. He has come to Hong Kong to discuss some important matters with you."

"Director Ding, hello." Yang Wendong extended his right hand and said, "Director Ding, are you here because of my iron mine in Australia?"

Yang Wendong's businesses span multiple industries, but have little to do with metallurgy.
Although there is a heavy industrial factory that manufactures containers in both Hong Kong and Taiwan, it is essentially a downstream processing plant in the steel industry. They have never been involved in the upstream steel smelting.
On the one hand, this requires too much capital, often hundreds of millions of dollars, because in this kind of industry, it is impossible to spread costs if the scale is not large enough; on the other hand, this kind of industry has extremely high requirements for technology and environmental protection; and on the other hand, the global market is almost stable, and there are already too many giants in the traditional industry, so it is not very meaningful to squeeze in.
Director Ding said, "Yes, after learning that Mr. Yang had discovered such a large iron ore mine in Australia, the domestic authorities also hoped to reach a long-term supply cooperation agreement with you."

"Does Baosteel need it?" Yang Wendong asked again. He naturally welcomed customers who came to him.
Although they are prepared to cooperate with Rio Tinto or other mining giants, it only involves the production side. The sales side will still be handled by each company according to the equity ratio or the terms of the contract.

On the one hand, he was involved in this iron mine for the sake of influence, and the large quantity of high-quality iron ore was a manifestation of that influence.

Secondly, the company owns its own shipping company. Coincidentally, the shipping crisis in recent years has led to poor business. Even if it had made preparations in advance, it would have been difficult to withstand the global crisis. Having an additional stable order is of great significance to Changxing Shipping Company.

Third, in any collaboration, both parties are often willing to give up some equity in order to gain control of the operations, because the room for maneuver after gaining control of the operations is simply too great;

In terms of production, Changxing Group has no experience in mining, so it can only seek cooperation and gradually learn experience and technology. However, it cannot abandon the sales side, otherwise the competitors can make the accounts completely legal but not make any profit.
Therefore, Yang Wendong also needs to find buyers for his future annual iron ore production of tens of millions or even tens of millions of tons, and domestic buyers are naturally one of the best options.

Director Ding said, "Yes, when Baosteel was first established, it planned to use high-quality iron ore from abroad to produce steel. Originally, we planned to purchase it from South America, but we think we can also consider Yang Sheng's new mine."

Yang Wendong thought for a moment and asked, "Director Ding, I have a question. Given the lack of foreign exchange in China, why did Baosteel intend to use imported iron ore for production when it was first established?"

Baosteel's investment is already staggering, and it will need to spend a large amount of foreign exchange to import iron ore every year, while the iron ore it produces will be used domestically. How can it possibly recoup its costs in terms of foreign exchange?

There were rumors circulating on the internet in my previous life that the Baosteel project was tricked by the Japanese. After it was completed, they found that they could not use their own iron ore and had to purchase it from overseas at high prices.

But Yang Wendong didn't believe it. For such a large project, let alone a country, even if you were just opening a factory yourself, you would have to consider whether the raw materials were suitable and where to buy them.

Director Ding said, "Yes, we never thought about recouping the costs of the Baosteel project in China through foreign exchange, but it's not unprofitable. We can't just look at this one factory."
On the one hand, China previously needed to import two to three billion US dollars worth of various steels from overseas every year. If Baosteel could produce them on its own, it would save a lot of foreign exchange.

Secondly, the domestic government hopes to first establish a state-of-the-art factory globally, then learn its technology and expand it nationwide. Therefore, even though this project is costly, it still needs to be implemented.

"So that's how it is." Yang Wendong nodded;
Decades later, Tokyo University became a unique industrial giant in the world, with its steel industry producing far more than its fair share of steel production year after year. It even became the subject of ridicule among netizens, with the top steel companies in the world being Hebei B and Tang S, etc.

But in this era, while the total domestic steel production may not be low, the per capita output is pitifully low.

The future reform and opening up will require large-scale infrastructure construction and industrial development, which will inevitably require massive amounts of steel. In some respects, the importance of steel is no less than that of oil.

Even decades from now, various new technologies may gradually replace some of the oil, but there is no way to replace steel.

Director Ding said, "Yang Sheng's iron ore is of extremely high quality. We have obtained some samples, and it is quite suitable for Baosteel's equipment." "Haha, that's good. I am also happy to cooperate with Baosteel." Yang Wendong added, "However, this project is still in its early stages. I haven't even started considering which company to cooperate with yet. Even if everything is negotiated, the preliminary preparations will still take several years."

After the Christmas Creek iron ore mine was exposed, Yang Wendong also adopted an attitude of welcoming anyone to come and explore. He said that anyone could take away any of the billions of tons of ore.

These ores were also sent to laboratories around the world for testing, which also made it easier to provide more accurate free data for themselves;
It's normal for people on the mainland to be able to obtain a portion of it.

Director Ding laughed and said, "That's not a problem. Our Baosteel is also under construction. According to the plan, it will start construction around 85. The first two years after construction starts will be the trial production stage. It is estimated that mass production will not begin until the late 80s."

"The timing is quite compatible," Yang Wendong said with a smile. "So, how will we cooperate? Have you decided on a stable demand?"

Director Ding said, "According to our estimates, we may need about 80 million tons of steel a year in the late 800s. By the 90s, this number may double. I can't say the exact amount, as you know we have internal discipline."

The output of major domestic industries is naturally a secret, but the approximate quantity is not.

Because it's difficult to hide the details of a large factory, especially equipment imported from abroad. The seller of the equipment may know more about it than the domestic company itself, so there's no need to strictly conceal everything. They are a partner they need to cooperate with, and the other party is a Chinese capital tycoon who is on their side.

"This number isn't very high, it shouldn't be a problem for me," Yang Wendong readily agreed. "Are you planning to buy everything from me?"

Iron ore investment costs are high, but the core factor in its output is the characteristics of the mine itself. Christmas Creek is one of the easiest iron ore mines to develop in the world. As long as you are willing to invest money, it is difficult to achieve a production capacity of 100 million tons per year.
Of course, for the sake of long-term benefits, they usually don't go to such extremes; they generally consider a 50-year lifespan for slow mining.
Even if some people want to pocket the profits as soon as possible, they can use financial means, which is much more convenient than frantically mining in advance, and can also gain a bunch of financial allies.

Only in special circumstances, such as war, will there be frantic development without regard for commercial interests;
Director Ding shook his head and said, "That won't work. We will also consider diversified procurement. However, as long as you offer a price discount, we will naturally purchase more."

“That’s fine. Since you have a large order volume, you’ll get discounts, which is common practice internationally,” Yang Wendong nodded in agreement.
This is basic business logic;
Director Ding added, "That's good. As for the price, Baosteel will send a team over to negotiate with you."

"Isn't it a bit too early to discuss this now? After all, the true situation at Christmas Creek can only be determined after the birth," Yang Wendong suddenly said.

He would naturally be happy to secure future clients as soon as possible, but this seemed a bit too early.

The current composition of iron ore is based on the material extracted from drilling. The true results will only be determined after mass production, although the theoretical difference is not significant.
If it's an iron ore mine that's already being mined, then we can finalize the deal first.

"That's true, maybe I was too impatient and wanted to select Baosteel's supplier as soon as possible," Director Ding said with a smile.

Yang Wendong suddenly asked, "Director Ding, is the domestic steel industry currently open to foreign investment?"

Director Ding was taken aback for a moment, then asked, "Does Mr. Yang intend to invest in the steel industry in China?"

"You have this idea?" Yang Wendong nodded.

Previously, he would not have ventured into this industry;
But now that it has its own iron ore and transportation capabilities, and its future development of industries such as automobiles, home appliances, and containers will require sufficient steel, it can be said that this is definitely a business that will not lose money.

More importantly, China will face a steel shortage for the next few decades, and will also face a shortage of special steels in the later stages.
We also have our own funds to conduct research and development on special steels in the future.

Director Ding thought for a moment and said, "According to domestic laws, foreign investment is not allowed in the domestic steel industry. However, for large-scale projects, it is not absolutely impossible to negotiate. I cannot guarantee this. I will mention this to my superiors when I get back."

The large-scale investment was determined by the central government itself. In the early years, China did not think about joint ventures with foreign countries to develop automobiles; it only thought about purchasing technology. However, in the end, a joint venture operation was still reached.

As long as it doesn't involve national defense, it's generally negotiable. If an agreement isn't reached, it's just a waste of time and manpower, which is nothing compared to the huge investment.

"Okay, thank you," Yang Wendong replied.

In the early stages of China's reform and opening up, the steel industry was given far more importance than energy sources such as oil and coal.
At this time, foreign capital can purchase domestic coal mines. Although foreign capital cannot purchase oil fields, it can participate in subsequent oil processing and so on.

However, the steel industry is subject to very strict regulations;
This may also be because in the 80s, China was still an oil exporter and its internal energy was not scarce, but steel was extremely scarce.

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(End of this chapter)