Chapter 286: Next Year's Long-Term Contract Price—Forty USD per Ton
"After all this time, has there been any conclusion from Meng Nation regarding the bribery accusations?" Li Tang had constantly been concerned about this matter.
"If there were a conclusion, it'd be easier to handle. But there isn't any," Niu Fu sighed. "Jianshe called me a couple of days ago and said they've spoken with Meng Nation authorities. The investigation is still ongoing. They haven't detained anyone or even specified who exactly they're investigating. They're just using this as an excuse to stall our feasibility study approval."
"They clearly have ulterior motives," Li Tang said with a slight smile.
Such tactics were common.
They always found ways to stall project approvals. Internationally, environmental concerns were usually the most convenient excuses. No matter how many revisions you made, you'd never get approval unless you properly satisfied certain people's appetites.
Since someone had conveniently reported bribery involving Nanhuang Resources, Meng Nation took advantage of the situation to keep delaying.
"Our preliminary assessment is that Meng Nation is deliberately targeting us," Niu Fu put it mildly.
"After all, the Talego Copper-Gold Mine is Meng Nation's most critical mineral asset. On their list of nationally strategic mineral resources, this mining right is undoubtedly number one."
Considering it from another perspective, Li Tang thought that if such a rich deposit existed on his own land, and he could only watch foreigners mine it, merely collecting some land rent, he certainly wouldn't feel good about it either.
But outright seizing the mining rights wasn't feasible—they had to consider their international reputation. If they acted ruthlessly now, they'd destroy any hope of future foreign investment.
Their only option was to resort to underhanded tactics, hence the endless bribery investigations.
"Have they not made any conditions or offers yet?"
"The investigation itself yielded no conclusions, but they did mention a request," Niu Fu looked at Li Tang.
"At least they've finally made a request." Li Tang figured Meng Nation would eventually put forward demands; after all, every move was ultimately about interests. "Do they want money, or something else?"
"If they openly asked for money, they'd have no moral high ground to stand on," Niu Fu sighed heavily. "They only said one thing clearly: they want to talk directly with you."
"Talk about what?"
"The reason they gave was for you to personally come to Kuren City and cooperate with their investigation."
"That's ridiculous." Li Tang snorted. "How can they investigate something that doesn't exist?"
"They insist you're the only one who can clarify things, so they'll only talk with you."
Niu Fu was also somewhat helpless. Even among their own shareholders, there was an underlying belief that Li Tang was the only one whose words truly mattered in Zhongcheng Mining. Without him holding the fort, the other shareholders would likely descend into chaos during decision-making.
"It feels like a trap," Li Xingchao shook his head. "I don't think you should go."
His concern wasn't just for Li Tang but also for his daughter. If Li Tang landed in Kuren and got detained immediately, it would become a massive headache.
"I don't think they'll go that far." Li Tang wasn't overly worried. "I doubt they would be so openly hostile."
"A desperate dog can jump over walls," Niu Fu also didn't support Li Tang going personally.
"Could they come here to talk to me?" Li Tang suggested, though quickly dismissed the idea himself. "But since they're claiming it's an investigation, it indeed makes no sense for them to come here."
"These top-level officials in Meng Nation don't spend their time working for the people; they're always calculating over trivial issues!" Niu Fu fumed.
"According to our production plan, after building the copper mine with an annual capacity of 500,000 tons, its output would constitute more than 30% of Meng Nation's total GDP," Li Xingchao said understandingly. "They're definitely looking to get a share of the project."
"Their current mining law allows foreign companies to own 100% of mining rights..." Niu Fu paused, suddenly recalling something. "By the way, Jianshe mentioned something very urgent."
"What is it?" Li Xingchao asked.
"The Meng Nation parliament is considering amending their mining laws!"
"Amending the mining laws?" Li Xingchao was startled. "They're truly getting desperate now!"
Such a drastic move could indeed have severe consequences. Even the typically calm and refined Li Xingchao felt compelled to curse.
"This is what's really worrying me!" Niu Fu was irritated precisely because of this. "We still don't know exactly which clauses they plan to amend, but one thing is certain: any amendment will undoubtedly work against us. The catalyst for changing the law is precisely the Talego Copper-Gold Mine."
"This is indeed problematic," Li Tang suddenly recalled something that he'd previously overlooked.
Prompted by Niu Fu's revelation, he recalled that around 2006 in his previous life, Meng Nation had indeed modified a critical clause in their mining law:
Any strategic mineral resource constituting more than 5% of the national GDP would automatically grant Meng Nation up to a 34% equity stake in the project.
The clause was incredibly ruthless and retroactive—applying even to mining rights issued earlier. At that time, the Talego Mine had been controlled by Rio Tinto, and even Rio Tinto was forced to cede 34% equity to Meng Nation under the revised law.
Following the original historical path, even if they invested massive funds and successfully developed the mine, they'd inevitably face this revised mining law, being forced to surrender a portion of their equity.
This was essentially an unsolvable problem. Meng Nation had ultimate sovereignty over the minerals on their own territory and absolute legislative authority.
This was exactly why, despite Meng Nation opening their market entirely, their international rating for mining investment stability had always remained low. They frequently amended laws, creating continuous uncertainty for investors.
"What are you thinking about?" Li Xingchao waved a hand in front of Li Tang, seeing him deep in thought.
Li Tang lifted his eyes, furrowing his brows slightly. "If they revise the mining laws with a clause forcing us to surrender part of the Talego Mine's equity, their actions will be legally justified."
The historical trend was accelerating; Meng Nation was already preparing to revise their laws. The bribery investigation excuse was simply buying them time. It would be far more complicated to demand equity after the mine was already operational.
"Meng Nation must already be planning this," Niu Fu admitted the difficulty. Such a valuable mine naturally attracted attention, especially given its location.
"Many poor countries have similar regulations. If a large mineral deposit is discovered on their land, they automatically receive a portion of the equity," Li Xingchao mused. "Actually, Meng Nation's law allowing foreign companies complete ownership isn't entirely reasonable."
"The key issue is how much equity they want!" Niu Fu's primary concern was precisely this.
If Meng Nation demanded more than 50%, negotiations would become impossible.
"Most African countries seeking foreign investment typically claim around 15% free-carried equity, at most 34%," Li Xingchao explained.
"Still challenging," Niu Fu sighed. They couldn't influence Meng Nation's legislation. If the mining laws turned drastically unfavorable, as foreign investors, they'd have to accept it—a truly unsolvable problem.
"I'll find some time to visit Meng Nation," Li Tang decisively stated.
He already realized this situation was irreversible. Meng Nation would inevitably claim equity from the Talego Mine. Ethically, there was nothing particularly wrong with this. But it directly impacted their interests, making the loss unacceptable.
Instead of passively waiting for Meng Nation to amend the law and forcibly seize equity, it was better to proactively negotiate—perhaps turning a negative into a positive.
"Isn't it risky for you to go now?" Li Xingchao absolutely opposed Li Tang placing himself at risk.
"If Meng Nation only slightly amends the law without significant damage, that's tolerable," Niu Fu also felt Li Tang's decision was too reckless. "You shouldn't go!"
For Zhongcheng Mining's shareholders, and even for China's mining industry overall, Li Tang was invaluable. Losing the Talego mining rights was tolerable; losing Li Tang himself was like losing a pillar of their industry.
"It's not that serious," Li Tang calmly responded. "I have some ideas to discuss directly with them."
"If they detain you, it'll be too late," Li Xingchao warned.
"Would they dare?" Li Tang believed that if Meng Nation acted this rashly, they'd essentially give up on economic development.
"Investing there is beneficial for their economy," Li Tang reasoned. "Collaboration brings mutual benefit. Choosing confrontation only leads to destruction. They understand this clearly, so don't worry too much."
"Either way, think carefully!" Niu Fu knew he couldn't stop Li Tang.
"If you really go, we'll make thorough preparations," Li Xingchao added gravely. "If they dare detain you, they'll pay a heavy price!"
"It'll be fine." Li Tang remained calm. Discussing from afar wouldn't resolve the issue anyway.
Li Xingchao stood up. "Come on, let's go eat."
"Are you inviting your son-in-law or me?" Niu Fu joked.
"Both of you. Today, Lu Chenyi from Haigang Steel is in Yanjing too. Let's eat together."
"What's Lu Chenyi here for?" Niu Fu was surprised.
"No idea. Old friends, just having dinner," Li Xingchao glanced at Li Tang. "When Lianying Mining produces iron ore, it'll be sold domestically. Haigang Steel is the biggest iron ore importer here. You should get acquainted with Lu Chenyi—you'll eventually discuss business together."
"Are we drinking?" Li Tang dreaded drinking with these veterans. Half a liter, and he'd be drunk.
"Definitely drinking!" Niu Fu stood up readily.
"Can I drink less?" Li Tang asked reluctantly.
"Just drink enough; no pressure," Li Xingchao reassured him. "Even if you pass out, I'll make sure you get home safely."
At the restaurant, Li Tang immediately called Dai Yingchi for backup.
When Dai Yingchi arrived, he was accompanied by a petite and charming young woman.
"Uh..." Li Tang immediately felt somewhat embarrassed. "Class monitor, if your girlfriend was coming, you should've told me earlier."
Li Tang had initially called Dai Yingchi over specifically to help handle the drinking. After all, his own drinking capacity was far too weak for occasions like these. Most employees at the company were young, and Dai Yingchi had by far the strongest alcohol tolerance among them.
But now, seeing Dai Yingchi accompanied by a beautiful woman, Li Tang felt awkward about asking him to drink.
"This is Xiao Lu—you've met before," Dai Yingchi introduced the girl standing next to him.
"Nice to see you again, sister-in-law," Li Tang greeted her politely.
It had been a long time, but he vaguely recognized the girl as Dai Yingchi's girlfriend. The two had been together since high school and later both came to Yanjing for college. Although they weren't at the same university, she frequently visited their dorm, and he'd seen her many times before.
"Li Tang?" Xiao Lu recognized him as well.
"That's me," Li Tang nodded.
"Yingchi already told me he's working with you now. Please take good care of him," Xiao Lu responded gracefully.
She stood about 1.6 meters tall, and beside the nearly 1.9-meter-tall Dai Yingchi, she truly embodied a gentle, petite beauty.
Li Tang remembered Dai Yingchi previously mentioning they'd broken up, but he hadn't asked further. It was a pleasant surprise to see them back together. Considering they had been together since high school, their love was pure and sincere, and he genuinely hoped they'd eventually marry.
"By the way, Haigang Steel's chairman Lu Chenyi is here today, and we'll probably have to drink," Li Tang glanced at Dai Yingchi and then at Xiao Lu. "You shouldn't drink alcohol tonight; it's not good for you."
"When you invited me, I thought you knew Xiao Lu was coming and wanted to treat us specifically. Turns out it's for business," Dai Yingchi said without any annoyance. He turned gently toward Xiao Lu, "Why don't you head home first and wait for me?"
"Alright," Xiao Lu agreed reluctantly, though clearly not very happy about it.
"Absolutely not!" Li Tang quickly interjected with a sincere apology. "I'm just here for a casual meal as well. Eating alone isn't fun. With the three of us, it's totally justified."
Knowing exactly where the room was, Li Tang took the lead and walked straight in. "Come on, it's just an ordinary meal, not a big deal at all."
When he opened the door, he was greeted by the lively chatter from inside.
"Li Tang! I heard from Mr. Niu that you managed to steal away President Li's precious daughter!" Lu Chenyi laughed heartily, beckoning him over.
"Chairman Lu, it's been a long time," Li Tang greeted warmly. He had previously met Lu Chenyi, though at the time their status had differed greatly, and it had just been a brief encounter under Zhao Hepu's introduction.
Li Tang stepped inside and introduced his companions, pointing at Dai Yingchi and Xiao Lu: "These two are my friends, and also my business partners."
"Minister Dai, please sit," Niu Fu greeted Dai Yingchi warmly; they'd previously shared drinks together.
Everyone soon took their seats.
As the dishes arrived, accompanied by several rounds of drinks, the warmth spread through their bodies, making everyone more relaxed and sociable.
The mood around the table was lively.
Previously, Lu Chenyi hadn't paid much attention to Li Tang. But over the past two years, news related to Li Tang had become unavoidable, constantly drawing his attention.
"You sold the Pebble Project to Rio Tinto, didn't you?" Lu Chenyi asked as he toasted Li Tang.
"We signed the agreement recently," Li Tang nodded.
"You've made quite a profit," Lu Chenyi sighed appreciatively. "But personally, I think you lost out on the deal."
"Three hundred and thirty million USD sounds substantial, but given the Pebble Project's true value, it's actually not that high."
"There's recent news from Ghana as well, stating the project's exploration has progressed even further, with continuous positive drilling results."
"Our domestic experts analyzed that the mining rights' true value might exceed two or three billion USD, far beyond your selling price."
Everyone present seemed to agree Li Tang hadn't made the best financial decision. But Li Tang neither took offense nor felt any regrets. From his perspective, the Pebble Project was actually worthless, a fact he believed would eventually become common knowledge. Exiting early with considerable profit made him the real winner, leaving others to shoulder future risks.
"Contentment is key," Li Tang laughed, raising his glass.
"A couple days ago, we went to Singapore for negotiations with BHP Billiton, Rio Tinto, and Vale," Lu Chenyi added. "Rio Tinto's Alba couldn't stop bragging about acquiring the Pebble Project, treating it as a grand achievement."
Turning to Li Tang, Lu Chenyi continued: "I heard you only negotiated with Rio Tinto alone before selling. You acted too hastily. With more bidders, you could have raised the price further."
"I'll accept your criticism, Chairman Lu. I'll definitely be more cautious in the future," Li Tang humbly replied.
Lu Chenyi quickly waved his hand. "You're already so successful at your age—I wouldn't dare criticize. Instead, let's share management experiences in the future and possibly collaborate in iron ore trade."
At this mention of iron ore, Niu Fu asked, "How did the negotiations in Singapore go?"
They all knew Haigang Steel had participated in international iron ore negotiations on behalf of China's steel industry for the first time—a milestone event. China, now the world's largest iron ore consumer, held significant global influence.
Lu Chenyi sighed again as he set down his glass, "Not great."
"Why so?" Niu Fu asked seriously.
"Actually, we only went as observers. By the time we arrived, Rio Tinto and BHP had already settled next year's long-term contract price with Nippon Steel from Japan," Lu Chenyi replied with obvious frustration. "We even suspect Nippon Steel had already privately agreed upon the price with BHP, Rio Tinto, and Vale beforehand."
"Nippon Steel is controlled by Mitsui, which essentially directs Vale's decisions and also holds shares in mines operated by Rio Tinto and BHP. Their interests are aligned," Li Xingchao explained.
Lu Chenyi nodded in agreement. "Their negotiations clearly didn't purely represent the interests of the steel industry."
"Still, participating taught us a lot," Lu Chenyi added. For him, the main purpose had been learning rather than actual negotiation.
"What price did they settle on?" Niu Fu asked, concerned. His own Wukuang Group imported heavily from these iron ore giants.
"Next year's long-term iron ore contract price will rise significantly," Lu Chenyi revealed, holding up four fingers. "It'll be forty USD per ton FOB."
"So much higher?" Niu Fu was shocked, his expression turning serious. "That's nearly a 20% increase!"
"Nippon Steel accepted first, then Korea and Europe followed suit. We had no choice but to accept," Lu Chenyi said helplessly.
The price hike would significantly squeeze steelmakers' profits. Thankfully, global steel prices were also rising, softening the impact. But it still affected their margins, even if they were manageable for now.
However, iron ore price increases weren't entirely negative, especially benefiting upstream iron ore producers.
At this thought, everyone turned their gazes to Li Tang. This young man was boldly venturing into iron ore production, investing deeply in Pilbara, the world's most renowned iron ore region.
He'd entered the market at its lowest point, at a time when everyone else hesitated. While many couldn't understand his move, they admired his courage.
Niu Fu once again recalled Li Tang's prediction: this young man had confidently insisted that iron ore would be the next big opportunity—and he'd acted accordingly. Now, market shifts were proving him right.
"Li Tang, I heard you signed a transportation agreement with Rio Tinto?" Lu Chenyi asked again.
"Yes, but only for sixty million tons," Li Tang responded openly, knowing this information was already public.
"When will your production start?" Lu Chenyi asked seriously.
"We plan to begin before 2005."
"Can the ore quality remain stable?" Lu Chenyi asked cautiously, knowing blast furnaces demanded stable, quality raw materials.
"We've done extensive tests. The ore quality will definitely meet high standards," Li Tang assured confidently.
"I hope you can expand production soon," Lu Chenyi encouraged him. "When that happens, we'll negotiate directly with you."
Trading with their own people would naturally offer better conditions. Still, Lu Chenyi didn't commit immediately; after all, Li Tang's company couldn't yet meet Haigang Steel's massive demand.
For now, Haigang Steel remained reliant on the major producers. He didn't seriously believe Li Tang's company would drastically influence the global iron ore market anytime soon.
"We'll soon start building the mine and aim to deliver our first shipment quickly," Li Tang assured confidently, fully aware many still doubted the project's prospects. However, his own confidence remained unshaken.
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