Chapter 334: There's No Such Thing as Not Profitable
After dinner, Lang Hemin, Niu Fu, and Hu Zhenchi gathered for a short private discussion.
Niu Fu specifically asked Li Tang to wait briefly, and after their conversation ended, he approached Li Tang to explain their decision.
"It's getting late; sorry for keeping you waiting," he said, glancing at the completely darkened sky outside the window, where neon lights had already been flickering for quite some time. "We discussed your suggestions just now and unanimously agreed your idea is very reasonable!"
Li Tang had already received several phone calls from Li Xinqi and felt slightly anxious, though he concealed this well.
"Do you have any plans moving forward?" Li Tang asked politely.
"Since the overall acquisition has completely failed, we still maintained good relations with Noranda's major shareholders. They've witnessed our sincerity in the acquisition attempt, and the failure was due to external factors," Niu Fu quickly summarized. "Your comments gave us a new perspective. If we can separately acquire Noranda's nickel and copper assets, that would be ideal. Even acquiring just a small portion of them would be worth the effort."
"So you plan to continue negotiations with Noranda?"
"Yes. In the near future, we'll have Hu Zhenchi lead a team to Toronto to discuss with them again. We want to present our new viewpoint and gauge their willingness to sell individual assets. Selling their mines in Chile and Peru separately could attract less opposition from Canadian citizens and conservative politicians, potentially giving us a better chance."
Niu Fu placed a hand warmly on Li Tang's shoulder, his expression filled with gratitude. "You claim not to understand international acquisitions well, but I find your insights into the global mining industry surprisingly perceptive."
"Honestly, cross-border acquisitions are incredibly complex; I'm still pretty lost," Li Tang admitted openly, not overstating his capabilities. "When will you head to Canada?"
"We'll arrange the trip soon," Niu Fu replied, looking at Li Tang earnestly. "I know you're no longer employed at Wukuang, and I can't really ask much of you. You're a busy man with your own business. However, if you're free, could you accompany our acquisition team to Canada and offer some guidance?"
Clearly, Niu Fu already saw Li Tang as an all-knowing expert in global mining, someone whose expertise was undisputed—not just in exploration, but also in international acquisitions, given his success with Lianying Mining.
"I don't think I can offer much help," Li Tang began sincerely, but sensing Niu Fu's disappointment, he added quickly, "However, it so happens I have some free time coming up, and I was already planning a trip to Canada."
"That's fantastic!" Niu Fu was visibly relieved. "Do you have a new project there, or is it something else?"
"Just taking a look around. Canada has a strong legal framework and welcomes foreign investment, especially in mining. As an explorer, I can't pass up exploring a land so rich in untapped resources."
"Excellent. We can support each other there. If you need any assistance for your projects, don't hesitate to contact me!"
…
After work, Li Xinqi had immediately gone to Li Tang's office and then waited at his home. She had a key, so she waited two full hours. When Li Tang didn't show up, she left frustrated and went back to her parents' home.
Li Tang finally arrived late at night.
"You promised to have dinner at home tonight. I prepared a big meal, and you stood us up!" Li Xinqi scolded him with feigned anger. Yet, seeing Li Tang showing up late to apologize softened her irritation.
"I thought the Wukuang meeting would finish in the morning, but it dragged on until evening. Then, just when I was leaving, they made a major decision and asked me to stay," Li Tang explained gently. He softly touched her silky, waterfall-like black hair and asked quietly at the doorway, "Are your parents asleep?"
"My mom already went to bed early, always so health-conscious," Li Xinqi replied, pointing toward the living room, still illuminated by lamplight. "My dad is drinking tea and watching TV. You came this late just to see me?"
"Of course! I even drove here myself," Li Tang smiled, gesturing towards the black car parked outside. After dinner, he'd sent his company driver home and drove here himself.
"Are you staying here tonight, or coming back with me?" he asked quietly, a mischievous look in his eyes.
"Shameless!" Li Xinqi blushed fiercely, aware of the suggestive undertone in his question. Yet they were quite familiar and comfortable with each other by now.
Noticing movement at the door, Li Xingchao emerged in his pajamas, and upon seeing Li Tang, pretended to scold sternly, "You said you'd come home for dinner yesterday. Where were you tonight?"
"I ate at Wukuang Group's cafeteria. Director Niu wouldn't let me leave," Li Tang answered truthfully.
"Our Shenxia Group keeps inviting you, and you're always too busy—obviously biased!" Li Xingchao snorted half-seriously.
"The meeting lasted into the night; there was nothing I could do."
"Why are you two standing at the door? Come inside!" Li Xingchao waved them in.
Li Xinqi rolled her eyes playfully at Li Tang, slightly annoyed that her dad had caught them, making it impossible to openly follow Li Tang back to his place tonight. She walked into the house first.
Li Tang followed, carefully avoiding eye contact with Li Xingchao as he passed.
Once inside, drinking hot tea, Li Tang casually started a conversation. "Wukuang Group was trying to acquire a big mining company in Canada. What's your opinion?"
"I saw it on the news," Li Xingchao replied, sipping his tea leisurely and watching TV. "That's what you discussed all day today? The acquisition failed, right? What did they call you in for?"
"They invited me to learn and summarize the lessons from the failure."
"Niu Fu thinks your skills still aren't good enough?"
"Not exactly."
"He worries unnecessarily. Who in our country knows foreign mining investments better than you?" Li Xingchao chuckled.
"I learned a lot today," Li Tang said modestly.
Li Xingchao set down his cup, looking at Li Tang seriously. "You have time to advise Wukuang on foreign acquisitions. When will you advise Shenxia Group on coal exploration?"
Speaking of coal, Li Tang remembered something. "I'll be heading to Canada soon—"
"Wukuang still hasn't given up, and they're dragging you along again?"
"They've changed strategies and plan to speak with Noranda again," Li Tang waved away the topic. "My trip to Canada is unrelated to that."
"What are you going for?"
"Canada is rich in resources. I'm a technical guy, after all. I want to see if there are new opportunities."
Noticing Xingchao's specific interest in coal, Li Tang shifted the conversation accordingly. "Canada's coal industry has huge potential."
"Mining coal in Canada?" Xingchao had never seriously considered this. Shenxia Group was deeply rooted in domestic coal production. Venturing overseas was unfamiliar territory and carried risks. Xingchao himself preferred steady, step-by-step expansion. Yet, if an obviously profitable opportunity arose, who could resist?
"Coal and iron ore are key resources domestically, and surely profitable in the future," Li Tang continued.
"Do you know how much coal our country produced last year?"
"How much?"
"Almost a billion tons!" Xingchao emphasized. "Do you know how much Canada produced?"
"How much?"
"A few tens of millions," Xingchao replied, highlighting the vast difference.
Li Tang understood the implication. Compared to China's massive coal industry, Canada's seemed insignificant. Chasing small projects abroad seemed irrational.
"You've mentioned this before, and I still don't quite get your fixation," Xingchao admitted.
"I'm a technician and a businessman, and our company is private, not state-owned. Within China, state-owned giants like Shenxia Group always have the advantage. Coal prices keep climbing, and everyone's making money easily here. We've lost the early advantage domestically. Moreover, high-quality coking coal reserves are depleting rapidly. Apart from Taleguo Mine, no domestic mine has reserves exceeding 100 million tons, and Taleguo faces significant development hurdles."
"Coking coal will soon become scarce," Li Tang insisted. "President Li, this time I'll need someone's assistance in Canada. You might know him."
"Who?"
"Liu Naishun, originally from Sanjin Province, now residing in Canada. He used to work in coal mining, then became a businessman."
"Liu Naishun?" Xingchao frowned thoughtfully. "The name sounds familiar, but I can't recall clearly. I'll have someone get his contact information for you."
"Thank you, President Li."
"No worries." Xingchao paused thoughtfully. "You're really going to Canada to explore coal mining?"
"I'll take a look. Coal, iron ore, nickel—whatever opportunity presents itself."
"Shenxia Group will send a team with you—coal technicians, translators, international relations experts. And," he added, glancing at Xinqi as she passed by, her hair wet from bathing, "take Qiqi with you as well, let her handle finances."
"Going abroad? Why?" Xinqi asked, confused.
"Vacation," Xingchao replied, smiling.
"Sounds great!" Xinqi replied excitedly.
Once she left, Xingchao turned to Li Tang seriously, "I look forward to your success. Bring us good news!"
…
Initially, Li Tang wanted to contact the steel industry leaders individually about exploring Canadian iron ore projects. But before he could do so, Bao Yanyao from the Steel Association called him, inviting him urgently to a small industry meeting already underway in Yanjing.
He quickly rushed over, finding all the major steel company executives present. The main discussions had already concluded, but his arrival immediately drew everyone's attention.
Lu Chenyi waved warmly at him. "You're late—what took you so long?"
"Steel Association meetings aren't my business," Li Tang joked lightly.
Dragon Fuyuan rose and eagerly approached him. "The industry's changed dramatically. Let me fill you in; it'll affect you and Lianying Mining significantly..."
"Mhm," Li Tang nodded slightly, listening attentively.
"After Chinese New Year, around February, the authorities introduced new qualification standards for importing iron ore. You're aware of this, right?"
"I've heard a bit about it; it has somewhat affected us at Lianying Mining," Li Tang replied, showing that he was not entirely disconnected from industry developments.
Indeed, shortly after the holiday, both Fred and Alice had called him separately to inform him that a smaller steel company, which had previously signed a long-term iron ore supply agreement with Lianying Mining, had been forced to cancel the contract because it lacked the new iron ore import qualification. Under normal circumstances, the cancellation would have allowed Lianying Mining to retain the prepaid amount, since the fault lay with the steel company. Nevertheless, considering the situation arose from uncontrollable external factors, and to demonstrate the company's goodwill and integrity, Lianying Mining had chosen to refund the entire prepaid sum. This incident had made Li Tang fully aware of the implications of the newly implemented qualification standards.
"The chaos in the iron ore spot market over the past few years—hundreds of domestic enterprises scrambling for iron ore, deliberately inflating prices—was a direct cause of the soaring global iron ore prices," Long Fuyuan continued, explaining further to Li Tang. "Just last year, many steel companies joined in speculating on iron ore, earning far more from trading ore than from actual steel production. To address this, the authorities imposed regulations. Since February, companies qualified to import iron ore dropped sharply from over 500 to fewer than 120—more than halved."
Reducing the number of qualified importers indeed helped curb some speculative activities. With fewer players, the market seemed less chaotic. The logic was simple, the implementation direct and harsh.
"It's unavoidable," Lu Chenyi joined the conversation. "In the first half of this year, China produced about 170 million tons of steel. Given the substantial increase in iron ore prices, our steel industry has collectively spent over ten billion yuan more on costs. Frankly, the losses have been significant."
"Have these new policies shown any real results?" Li Tang asked skeptically, aware that iron ore prices hadn't significantly decreased afterward.
Lowering his voice, Long Fuyuan whispered, "Honestly, I haven't seen much effect. Those without import qualifications are complaining bitterly everywhere. Those who got the licenses are secretly celebrating behind closed doors."
Clearly, the profits previously shared among over 500 companies now flowed into the pockets of the 120 qualified ones. Those qualified enterprises, naturally, were making even greater profits and were secretly delighted.
As an outsider, Li Tang avoided commenting and merely remarked, "We indeed need to keep exploring solutions."
"A month after the new standards were announced, around March, iron ore prices in the spot market surged even more dramatically due to panic buying. Prices peaked as high as 930 yuan per ton!" Long Fuyuan exclaimed, visibly shaken by the memory. "That's over a hundred US dollars per ton—scary, isn't it?"
"What about now?" Li Tang asked.
"Prices have dropped somewhat but remain higher than long-term contract prices."
"Well, the new qualification standards still had some positive effects. Those who got the licenses are mainly large steel companies and traders, making management easier and allowing better coordination," Lu Chenyi said optimistically.
"Was this the main discussion at your meeting today?" Li Tang inquired curiously.
"We summarized the first half-year's work, arranged plans for the second half, and discussed future industry developments," Long Fuyuan explained before asking Li Tang, "Did Chairman Bao call you over to discuss something important?"
"I'm not sure," Li Tang shook his head.
Just then, Bao Yanyao turned to Li Tang, speaking up, "Li Tang is here. How is the construction progress at Lianying Mining's site lately? Several domestic steel companies have contracts with Lianying Mining. You have to keep an eye on things, making sure production begins as soon as possible to deliver iron ore!"
Clearly, the Steel Association was very keen on Lianying Mining's production. They eagerly awaited its annual supply of fifty million tons of iron ore to alleviate domestic shortages and restrain soaring ore prices.
"I just inspected the construction at the Qiche iron ore site. The development is proceeding smoothly," Li Tang announced, bringing evident relief to the room.
"When can you officially start production?" Bao Yanyao asked, emphasizing this critical point.
"By the end of this year, we'll begin trial operations, but achieving fully stable, large-scale production will certainly take until next year," Li Tang answered cautiously, knowing mining projects faced many variables—excavation, processing, transportation—each requiring extensive equipment and personnel. Any single issue could stall the entire operation.
"Produce iron ore as soon as possible!" Bao Yanyao emphasized. "The entire steel industry eagerly awaits your mine's output. You earn profits from selling iron ore, and we benefit as well."
"Understood," Li Tang nodded in agreement.
Bao Yanyao then turned toward other representatives of major steel companies who remained in the room.
"Some steel companies are starting to experience inventory backlogs. Rapid production increases in recent years have brought steel supply and demand into relative balance," Bao said steadily. "Steel prices are showing signs of declining; I believe each company here has noticed."
"With iron ore and coking coal prices so high, steel production costs remain elevated. Falling steel prices will significantly impact profitability," Lu Chenyi expressed on behalf of the steel companies.
"A decline in steel prices will be the dominant trend for the second half," Bao Yanyao admitted cautiously, waiting until the broader meeting was over to prevent unnecessary alarm. "What strategies do we have?"
"For this year's iron ore price negotiations, we shouldn't rush," Bao continued. Usually, global iron ore price negotiations began around mid-year. Over the past two years, China's market influence had grown dramatically, increasingly setting global ore prices. Haigang Steel represented China in negotiations, though largely in a passive role. "This year, we must lead the negotiations ourselves!"
Bao spoke with conviction, "Earlier today, we all expressed strong willingness to participate actively in determining iron ore prices. But we must wait. With steel oversupply becoming evident and declining prices inevitable, we must unite. We can't allow iron ore prices to continue rising!"
Everyone nodded vigorously. With steel prices falling, if iron ore costs continued increasing, profitability would evaporate, essentially making their enterprises servants of the international iron ore giants—a scenario no one wanted.
Negotiations aside, everyone was actively seeking ways to weaken the monopoly held by the three global iron ore giants.
Bao Yanyao had invited Li Tang today not only to inquire about Lianying Mining's project progress but also to ensure Li Tang understood the steel industry's current predicament, hoping he'd show solidarity and help address domestic challenges.
Finally, Bao turned to Li Tang directly, "You mentioned earlier you had something to discuss with everyone?"
Initially, Li Tang had intended to speak privately with a few steel companies he'd previously worked with. But given Bao's invitation, he spoke publicly. Clearing his throat, he addressed everyone clearly:
"Steel is the backbone of economic development and will remain so for decades. Even if our domestic mines ramp up production significantly, they'll never fully meet our demand; we'll always rely on substantial imports."
"So you're investing abroad in iron ore to solve our domestic predicament!" Lu Chenyi spoke up immediately, giving the action a patriotic spin.
Caught off guard, Li Tang hesitated to endorse such lofty praise. He invested in Lianying Mining simply because he'd seen a profitable opportunity, nothing more.
Avoiding excessive praise, Li Tang simply outlined his next steps. "I plan to conduct further exploration abroad soon. To be honest, exploration is my expertise. It requires relatively smaller investments and lower risk. If we discover viable deposits requiring development, the investments become massive—tens of billions—and development cycles very long, easily five or ten years. As an individual, I can't afford that kind of risk."
This elicited laughter and playful protest from the crowd:
"Lianying Mining's market value has long surpassed ten billion euros and is quickly approaching twenty billion. How many domestic companies match Lianying's size?"
"You're being overly modest—sounds fake!"
"If you're calling yourself a 'small player,' what about us? Should we just call ourselves insignificant?"
Everyone joked good-naturedly, creating a relaxed atmosphere.
Smiling, Li Tang finally continued, "I will soon visit Canada to specifically evaluate iron ore and coking coal projects. If good opportunities arise, I plan to invest there."
This announcement instantly excited the steel industry leaders. Iron ore and coking coal were precisely the resources they desperately needed. Producing steel required significant costs in these two areas, and owning sources directly meant massive profits—more profitable even than steel production itself.
Everyone eagerly spoke up, expressing keen interest and support, vying for the opportunity to join any project Li Tang initiated. After all, investments Li Tang recommended had always turned profitable. Referring to Li Tang's previous successful projects—like Taleguo copper-gold mine—only intensified everyone's enthusiasm.
Amidst the excited clamor, Long Fuyuan humorously whispered, slightly exasperated, "Hey, you promised you'd help our Tangshan Steel after Nihe!"
Lu Chenyi chuckled from the other side, teasingly commenting, "Li Tang always thinks broadly, with deep patriotism and humility, naturally considering everyone's benefit."
Li Tang, surprised by everyone's enthusiastic reaction, tried modestly to downplay expectations. But that only made the crowd more excited and insistent, eager not to miss out again.
The steel magnates jostled playfully, eager to secure a place in Li Tang's next profitable venture. After all, following Li Tang's investments had always proven extremely lucrative.
Indeed, there were simply no losing deals where Li Tang was involved.
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