Chapter 333: The Six Billion USD Acquisition
Li Tang woke up early.
Sleeping at home was truly relaxing, washing away all the fatigue from traveling abroad and instantly making him feel energized.
Initially, he had intended to go to the Yunding Tower, sit for a while, sign some documents if necessary, and check on the progress of various company activities.
But halfway there, he unexpectedly received a call from Secretary Wang, General Manager Niu Fu's assistant at Wukuang Group, asking him to come over immediately.
Didn't they just meet yesterday?
Although somewhat puzzled, after eating a large bowl of noodles in his company's cafeteria, Li Tang instructed his driver to take him directly to Wukuang Group's headquarters.
Secretary Wang was already waiting for him in the parking lot. She took Li Tang upstairs, but instead of entering Niu Fu's office, they went directly to the offices of Wukuang International Investment Company.
This time, not only was Niu Fu present, but Wukuang Group's Chairman Lang Hemin was there as well.
Looking around, it seemed nearly all senior executives of Wukuang Group were present, forming a powerful lineup.
When everyone saw Li Tang entering, they were initially surprised but quickly stood up to greet him politely.
Who didn't know Li Tang by now?
Even before Li Tang's name spread around the world, he had already become a legendary figure within Wukuang Group.
Zhao Hepu, with his bulky body almost overflowing his chair, struggled to stand up upon seeing Li Tang. The chair stuck momentarily, clanging loudly against the floor.
"Sit here!" Zhao offered his seat generously.
However, Niu Fu waved to Li Tang, "Come sit in the front!"
Li Tang, initially moving towards Zhao, changed direction and sat next to the seat reserved by Niu Fu.
In large state-owned enterprises like Wukuang, seating arrangements during meetings were always significant—the higher the position, the more prominent the seat.
No one had any objection to Li Tang sitting beside Niu Fu.
When Li Tang previously worked at Wukuang Group, everyone saw him as merely a young upstart. After he left under somewhat controversial circumstances, many within the company thought his exit lacked respect for leadership.
Yet, after leaving, Li Tang's success outside Wukuang became extraordinary. He discovered multiple large mineral deposits, and even acquired Winning Mining, an Australian iron ore company.
Over the past year, Winning Mining's market capitalization soared continuously, surpassing ten billion AUD, and was still climbing.
According to reputable international banks, Wukuang Group's total assets were valued at approximately 5.5 billion USD, of which around 1.5 billion USD came from their indirect 18% stake in Winning Mining.
In other words, excluding the stake in Winning Mining, Wukuang's own assets stood at roughly 4 billion USD.
This meant Winning Mining was already valued at nearly double Wukuang Group's own assets.
Under these circumstances, who would dare underestimate Li Tang?
Zhao Hepu, who was once Li Tang's superior, clearly understood Li Tang's significant influence. Upon seeing Li Tang, he proactively stood up, respectfully offering his seat.
Such behavior demonstrated workplace tact and awareness—respecting someone with greater success was appropriate, not humiliating.
Even if Li Tang sat at the main seat, no one would object.
Li Tang and Wukuang Group had become equal partners.
"Little Li," Chairman Lang Hemin greeted Li Tang warmly, shaking his hand. "Though it's been a long while since we last met, your accomplishments and name have been continuously ringing in my ears, to the point they're practically calloused."
"Chairman Lang, how's your health been lately?" Li Tang politely asked.
"Very good," Lang Hemin smiled warmly. "I heard Winning Mining faced some difficulties recently. Everything resolved?"
"Yes, everything's resolved now, thanks to Wukuang Group's tremendous support—not only did you sign a major contract with us, but also provided significant financing."
Li Tang knew Chairman Lang must have personally approved the financing for Winning Mining, so he was genuinely grateful.
"Last year, I accompanied national leaders on visits to various countries—Chile, Peru—places rich in mineral resources. We gained a lot," Lang casually mentioned, somewhat proudly.
Li Tang knew that a major state-owned enterprise like Wukuang naturally had greater responsibilities compared to private enterprises.
He was still somewhat puzzled about why he'd been invited today.
"This meeting looks important. Chairman Lang, do you have specific instructions for me today?" Li Tang asked directly.
"How could I instruct you now?" Lang smiled and explained, "Last year, we attempted a major overseas acquisition. Have you heard of it?"
"A bit, but I don't know much," Li Tang replied truthfully, having only caught fragments from media reports.
"At the end of last year, we dispatched our international investment team to Canada to acquire Noranda Inc.," Lang briefly summarized. "Noranda is a household name in Canada, a key resource company with a market capitalization exceeding five billion USD."
"Such a huge company—that acquisition must've been challenging!" Li Tang remarked thoughtfully.
Comparing the sizes of Wukuang and Noranda made it clear that this was a classic example of a smaller entity trying to swallow a larger one—a snake swallowing an elephant scenario.
"If we had succeeded, it would've been a record-breaking overseas acquisition for a Chinese enterprise. Unfortunately, it fell short," Lang sighed regretfully.
He continued, "Since its establishment, Wukuang has mainly been a trading enterprise, focused on importing and exporting minerals. Now we are actively transforming into a resource-based enterprise. You once worked here, so you must've heard about our ambitions."
"I'm aware," Li Tang nodded.
"This acquisition of Noranda was crucial to our transformation. Had we succeeded, Wukuang would have been fundamentally reshaped!" Lang expressed passionately, clearly motivated by the potential legacy.
Niu Fu added context: "Noranda is a globally renowned company, primarily involved in copper, nickel, and zinc mining. Its copper production ranks in the global top ten, with mines and smelters in Canada, the United States, Chile, and Peru. But their nickel business is what most attracted us—it ranks in the top three globally. Their nickel operations in Ontario's basin have been ongoing for eighty years, with another hundred years' worth of reserves."
"Our country needs massive amounts of nickel!" Lang emphasized.
Hu Zhenchi, another executive present, elaborated further, "Nickel is essential for stainless steel production. Currently, China's dependency on nickel imports has reached about 55%."
"Going overseas to control nickel resources is crucial!" Niu Fu stressed.
Listening carefully, Li Tang understood there must be deeper motivations behind this acquisition, beyond just corporate ambitions. Given Wukuang's asset scale—nearly 70% debt and only about 500 million USD in available cash—it was impossible to fund such an acquisition independently.
Moreover, for such large-scale acquisitions, premiums were inevitable. The price likely would have approached six billion USD.
Where would that money come from?
This was certainly a topic worth considering.
"Given recent soaring prices of copper, nickel, and zinc, why would Noranda choose to sell now?" Li Tang asked, curious about the internal logic.
Hu Zhenchi answered directly: "Noranda was profitable previously but encountered trouble around two years ago. In September 2003, after the building collapse in the U.S., the global economy, including copper prices, briefly dipped. Many experts predicted a downturn, prompting several mining companies—including Noranda—to reduce production as a precaution."
"Noranda cut production too?" Li Tang guessed correctly.
"Yes. They misjudged market conditions and reduced output significantly in Chile and Peru. However, copper prices rebounded quickly, driven by economic recovery in the U.S. and the rapid rise of China," Hu continued. "You witnessed yourself—2003 and 2004 were great years for copper. The supply-demand gap continued widening. This year's prices are expected to rise further."
"What's the current international copper price?" Li Tang asked.
"Between $3,300 and $3,400 per ton," Hu replied.
"Couldn't Noranda simply restart production?" Li Tang was puzzled.
"After production cuts, Noranda's Chilean operations faced worker strikes, causing chain reactions. Profits have plummeted, and now the company's major shareholders want to sell to prevent further losses," Hu explained. "Noranda's internal situation is complex, not easily summarized."
"This acquisition is highly attractive globally, despite these internal issues," Niu Fu noted.
"When we made our offer last year, major global players like Vale, Xstrata, Anglo American, and BHP Billiton competed fiercely," Lang added. "Initially, Vale offered $2 billion, clearly inadequate. Our late but substantial offer convinced Noranda's controlling shareholders and Canadian authorities."
"But it still failed?" Li Tang queried.
"Foreign investment environments are complicated," Niu Fu sighed. "We underestimated the complexity. Canada's Conservative politicians distrusted us due to a past small steel mill acquisition we mishandled in the '90s."
"This meeting is to summarize our experience and discuss overseas acquisitions with you," Lang concluded. "Your management of Winning Mining is highly impressive and valuable for other Chinese enterprises expanding overseas."
Li Tang listened quietly, finally understanding clearly why he had been invited today.
After concluding his detailed conversation with Li Tang about the events surrounding their recent activities, Hu Zhenchi stood at the front of the room, pointed at the projection screen, and began summarizing their failures and gains:
"For Wukuang Group—and indeed for the entire domestic mining industry—this acquisition attempt represented an important exploration. Of course, we're disappointed because we failed and couldn't make history. However, reflecting on this situation, we now recognize that we may have rushed into the competition to acquire Noranda Inc. Considering that Noranda, despite having such excellent resources and market conditions, has continuously declined, we must carefully ask ourselves: why has this happened? Clearly, the company faces numerous internal problems. If we had succeeded in acquiring it for six billion USD, could we have managed the immense financial pressure? How would we have integrated such a massive enterprise post-acquisition? These are matters worth deep reflection…"
Wukuang Group's executives spent the entire day discussing the complexities involved in this massive acquisition attempt. The discussion was exhaustive, and by evening, everyone was hungry, their stomachs rumbling audibly, prompting the end of the debate—though many seemed eager to continue.
Chairman Lang Hemin glanced at Li Tang, noticing his sleepy expression. Lang waved his hand, interrupting everyone:
"Has dinner been arranged?"
"We'll eat in our cafeteria tonight. We've instructed the kitchen to prepare some good food and drinks," Hu Zhenchi replied.
"Then let's just make do with the cafeteria today. Li Tang, I apologize for not arranging something better," Lang said politely.
"I used to be an employee here—eating at the cafeteria feels very normal," Li Tang replied, genuinely unbothered.
"Alright, let's eat. We can continue discussing the acquisition later. Failure is the mother of success—let's learn and move forward!"
The elevator couldn't accommodate everyone at once, so Lang Hemin, Niu Fu, and Ou Pingguo went down first with Li Tang.
Throughout the meeting, Li Tang hadn't spoken much. Now, out of the formal setting, he casually expressed his curiosity:
"I heard earlier that Noranda is very large, with some valuable assets but others that seem to be burdens?"
"Yes," Chairman Lang confirmed. "Do you have any ideas?"
All eyes instantly turned towards Li Tang. Clearly, everyone in Wukuang Group placed enormous trust in him.
"In fact," Niu Fu explained, "the main reason we invited you here today, apart from discussing and learning together, was to ask your advice. Should we continue pursuing this acquisition?"
Internally, Wukuang Group's consensus was that the acquisition attempt had essentially failed. Accepting this, they had decided to withdraw completely, as opposition from Canadian conservatives and public sentiment had made further progress impossible. Reflecting on this, they realized the huge risk they'd avoided. Had they spent six billion USD and failed, it would've mirrored the small steel plant fiasco from the previous century—one million dollars wasted and leaving behind endless criticism. Indeed, China lacked extensive experience in conducting such massive international acquisitions.
Li Tang, however, was very certain:
"Noranda is absolutely a valuable company! It has abundant nickel, copper, and zinc resources already generating continuous production and metal refining. In my opinion, not only is it worth six billion USD, it's even worth spending ten billion USD!"
Li Tang understood clearly that, whether copper, nickel, or other resources, the current market had barely begun its ascent. Over the next decade, metal prices would soar steeply.
Taking copper as an example: current international prices hovered around $3,300 per ton, but by year-end, prices would surge sharply, soon surpassing $4,000 per ton—and that wasn't even close to the peak.
Noranda's current difficulties were complex, prompting even its major shareholders to want out, yet none of this diminished its immense underlying value.
In the original historical trajectory, Noranda indeed ended up being acquired—but not entirely. Instead, only its key subsidiaries, including nickel production in Canada and copper mines and refineries in Peru and Chile, were acquired by Xstrata, a company from northern Europe. Xstrata paid a staggering 16 billion USD for these core assets—much higher than Wukuang's current offer, just one year later. This bold move catapulted Xstrata to the forefront of global mining giants, transforming it into a resource powerhouse.
"Ding!"
While everyone stood quietly, stunned by Li Tang's confident assertion, the elevator doors opened, breaking the silence. Exiting the elevator, they could hear lively chatter from employees dining in the cafeteria, who were surprised and curious to see so many senior executives suddenly appear together.
"Chairman Lang, General Manager Niu!"
Several management-level employees greeted them, including a woman who, after greeting Lang and Niu, seemed momentarily stunned upon seeing Li Tang.
She stared at him intently for several seconds before quickly looking away, embarrassed.
"President Yang," Li Tang greeted her warmly, "Long time no see."
Yang Xueping smiled awkwardly, nodding slightly: "Long time indeed."
She wasn't sure how to address Li Tang now. When she was Vice President at Wukuang Exploration Company, Li Tang had been just a new hire whom she'd appreciated greatly, especially after his help on the Guanling Gold Mine project. She'd even hoped he would join her team. However, due to certain internal power struggles—particularly with her rival Qin Jianshe—Li Tang had ended up indirectly opposing her.
Ultimately, her situation stagnated, still waiting patiently for advancement, while Qin Jianshe, bolstered by Li Tang's meteoric rise, soared upward. Qin Jianshe now not only managed the group's technical department but also oversaw Zhongcheng Mining, a rapidly expanding, influential enterprise soon poised to surpass Wukuang itself. Yang felt bitter, believing her stagnation was due purely to luck—had Li Tang accepted her earlier invitation, perhaps their positions today would've been reversed.
"Working overtime, President Yang?" Li Tang asked politely, clearly indifferent to their past trivial conflicts.
"I've been quite busy lately," Yang replied awkwardly. "You're having dinner with the executives, right? I won't disturb you."
"Would you like to join us?" Li Tang invited courteously.
"No, thank you. I've already eaten," Yang declined, still embarrassed.
After exchanging pleasantries, Li Tang proceeded to a private dining room with Chairman Lang, Niu Fu, and others. The cafeteria food was surprisingly good and abundant. Everyone was famished and began eating quickly.
Niu Fu finished his meal first and, still intrigued by Li Tang's earlier words, spoke again:
"Li Tang, earlier you said the acquisition of Noranda is worthwhile, even at ten billion USD?"
"Absolutely!" Li Tang replied firmly. "Despite the difficulties, we must persist. Such opportunities are extremely rare!"
"But our opportunity is gone," Lang Hemin said matter-of-factly. "Canadian officials were supportive, but public opinion turned fiercely against us. National pride led them to see our acquisition as humiliating, creating insurmountable political obstacles."
"The situation is quite unfavorable," Niu Fu agreed. "If it were possible, we'd be willing to pay more than six billion. Initially, when Vale offered two or three billion, we jumped directly to five billion, demonstrating our sincerity and impressing Noranda's shareholders and Canadian officials. Unfortunately, the matter wasn't so simple."
Li Tang sensed their deep frustration.
"Perhaps," Li Tang suggested thoughtfully, "instead of buying the entire company, you could purchase only Noranda's subsidiaries individually."
"Hmm?" Niu Fu raised his eyebrows, clearly never having considered this approach.
"An entire acquisition involves too much money and publicity," Li Tang explained. "Buying subsidiaries—like their nickel assets in Canada or copper operations in Peru and Chile—might be simpler, more discreet, and less controversial."
"This strategy has merit!" Lang Hemin pondered carefully.
"We truly never considered this," Niu Fu admitted, suddenly hopeful. "Previously, all international mining giants competing with us also proposed total acquisitions. No one thought of breaking it down into smaller, strategic purchases."
"If Noranda's major shareholders urgently want to sell, they might accept separate offers. Acquiring only the core, valuable assets could simplify integration post-acquisition."
Li Tang admitted he wasn't an expert in international M&A but provided advice based on historical insights: "It's worth attempting, even at higher costs."
Such opportunities rarely came twice. Although success or failure didn't impact him personally, Li Tang was sentimental about Wukuang, eager to offer meaningful advice. If he personally had the capital, he'd readily join such an investment. After all, proven copper and nickel mines producing metals were worth paying high premiums, as the rising market would soon justify the cost.
Indeed, history later proved this point: eventually, Wukuang would pay even more—seven billion USD—just to acquire a single copper mine in Chile. Now, with six billion USD, they had a chance to secure multiple copper mines plus vast nickel reserves. Missing this chance now would leave them only nostalgia and regret, sighing at lost opportunities as they watched resource prices soar in the coming years.
Thank you for the support, friends. If you want to read more chapters in advance, go to my Patreon.
Read 40 Chapters In Advance: patreon.com/Johanssen