Chapter 307: Star of the Steel Industry
Li Tang didn't speak much in front of the crowd.
All he could say was that each steel company gathered here was a potential partner. However, choosing long-term and close collaborators was about quality rather than quantity.
He merely showed up briefly, greeted everyone politely, and quickly returned to his office.
Dai Yingchi and He Runqi followed him in.
"Our HR department is holding them downstairs," Dai Yingchi said, unsure of Li Tang's next step.
"These guys are way too crazy!" He Runqi exclaimed.
"It would be abnormal if they weren't," Li Tang replied calmly, understanding the steel companies' reactions after hearing that this year's iron ore negotiations resulted in a 70% price hike. "Such a sharp increase in iron ore prices effectively means an extra 300 yuan in cost per ton of steel produced."
Looking at his two university classmates—now key figures in his company—Li Tang poured tea and casually added, "For a moderately sized steel mill producing around a million tons of steel per year, this cost increase totals around 300 million yuan annually! Imagine, that money originally belonged in their pockets as profits. Now, due to rising iron ore prices, every cent flows directly into the pockets of those iron ore giants!"
"If you put it that way, huge enterprises like Seaport Steel or Sand Steel, which produce over ten million tons annually, will have their costs increased by over 3 billion yuan a year," Dai Yingchi remarked solemnly, recognizing the scale of the impact.
The entire steel industry was undergoing a massive earthquake, with no one escaping the shockwaves.
"And that's just the iron ore price increase," Li Tang continued with a slight smile. "Coke prices have also soared drastically. On top of that, labor costs have been steadily rising as well. Clearly, operating a steel company is becoming more difficult by the day."
"The steel industry is going to be choked to death!" He Runqi exclaimed worriedly, without any hint of schadenfreude.
Mining and steelmaking were closely linked. Their business depended directly on steel's prosperity. If the downstream steel industry suffered, their mining company would also struggle to survive.
"It won't be choked to death," Li Tang shook his head lightly. "As long as domestic infrastructure continues to develop strongly, steel will always be in demand. The steel industry will survive. Steel had overly high profit margins in recent years; now it's just iron ore producers taking a share. They will still make money. If raw materials become expensive, steel prices will rise accordingly."
"You're still optimistic about this industry?" asked He Runqi.
"Of course," Li Tang replied. "Steel is the backbone of all construction. It's irreplaceable." He knew this surge in iron ore prices was just the beginning; more turbulent times awaited. "Don't worry, this won't negatively affect Lianying Mining's mine construction."
"That's good to hear," He Runqi breathed a sigh of relief. After spending time in Australia, he understood how much international market conditions mattered for a company's growth. A fertile environment nurtures great companies. In past years, iron ore mining had mostly been unprofitable outside the big three giants—a poor business environment.
"Let's not discuss these abstract topics anymore," Li Tang turned to He Runqi with a teasing smile. "Before I left China, you said you liked Lin Xiaoshu. Have you had any progress while I was abroad?"
"You're pursuing Lin Xiaoshu?" Dai Yingchi raised an eyebrow, suddenly intrigued.
Embarrassed, He Runqi's dark-skinned face turned slightly red. "We're at work. Why bring this up now?"
"While abroad, nothing worried me more than your love life!" Li Tang grinned mischievously.
"Come on, tell us about it!" Dai Yingchi joined eagerly, clearly entertained.
"No progress," He Runqi said glumly.
"You got rejected?" Dai Yingchi laughed heartily. "You didn't write love letters again like when you chased Chen Lulu, did you?"
"No letters this time!" Embarrassed, He Runqi wished he could disappear.
"Our class president is quite experienced in dating," Li Tang joked. "Describe what happened. Maybe he can give you some advice."
"Not exactly rejected," He Runqi admitted gloomily. "But every time I call her at night, she says she's going to take a shower after barely two sentences."
"Taking a shower?" Dai Yingchi frowned. "Sounds suspicious."
"Forget it. Ugly people don't deserve love." He Runqi dramatically gave up.
"Now I don't like hearing that," Li Tang turned to Dai Yingchi. "Do you think Runqi is ugly?"
Dai Yingchi studied Runqi's face carefully and nodded regretfully. "On closer inspection, a little bit."
"Shut up, both of you! You guys already have girlfriends—no sympathy for single guys!" Runqi snapped in mock anger.
"You're back home now; use this opportunity to invite her out for dinner more," Dai Yingchi advised helpfully.
"Or maybe I'll assign Lin Xiaoshu to Australia to supervise Lianying Mining's finances?" Li Tang mischievously offered to assist.
"Forget it! Let's get back to work!" He Runqi shifted the topic firmly.
Knowing the issue couldn't be rushed, Li Tang became serious again. "How's mine construction progressing in Australia?"
Mentioning work, He Runqi regained composure. "It's slow due to funding shortages."
"During your stay there, did you notice anything unusual about the company's management?" Li Tang probed cautiously. Although Forette was highly capable, he wasn't the ultimate boss. If Forette abused his power for personal gain, it would spell trouble.
"I think Forette is very dedicated," Runqi stated honestly. "He makes important decisions every few days and often works weekends voluntarily. He's very different from typical foreign employees. He's very hardworking."
He Runqi had closely observed Forette. "Alice has been worried about your delegation of authority, allowing Forette too much control. But in my opinion, it actually brought great flexibility to the company's operations."
"Really?" Li Tang was pleasantly surprised by Runqi's positive assessment.
"There were small accidents, disputes with locals, and some government pressure—all minor yet potentially disruptive. Forette always quickly resolved these issues. If he didn't have such flexibility, each minor incident needing your approval would delay things considerably."
"So, you think entrusting management to Forette was the right choice?"
"Currently, yes, the benefits outweigh the risks," Runqi confirmed confidently. "But for financial compliance, you'd better ask Alice directly."
Li Tang nodded, relieved by this reassurance.
"Oh, one more important thing," Runqi suddenly added with a serious expression. "Alice was planning to return, but Lianying Mining is currently finalizing a crucial proposal."
"What proposal?" Li Tang inquired curiously.
"Our original mining construction budget was 2 billion AUD. Due to delays and rising costs over the past year, Forette and Alice propose raising the total budget from 2 billion to 3 billion AUD."
Runqi watched Li Tang nervously, unsure how he'd react to this substantial change.
"I understand," Li Tang responded calmly. He realized this wasn't a scheme by Forette or Alice's mismanagement. Currency depreciation, rising labor costs, and surging prices for steel, cement, and other materials naturally increased the overall budget. A delayed project naturally incurs extra expenses over time.
"You're not angry?" Runqi asked cautiously.
"It's perfectly reasonable to adapt to changing circumstances," Li Tang explained patiently. "Why would I be angry?"
"In addition to revising the total budget, Forette is drafting a large financing plan," Runqi continued carefully. "Alice will provide you with detailed information after her return."
Li Tang nodded again, unbothered.
"That's all from my side," Runqi finished.
Knowing it was his turn, Dai Yingchi didn't bother with minor internal issues. Instead, he pointed downward. "The steel company representatives are still downstairs in the conference room. What should we do?"
He had been dealing cautiously with the steel company reps in Li Tang's absence, hesitant about promising anything specific.
"Which companies have clearly expressed intentions to collaborate?" Li Tang asked seriously.
"I had individual conversations with many of them." Dai Yingchi pulled out a notebook densely filled with notes. "Most companies primarily want to buy cheaper iron ore. Some expressed a desire for long-term cooperation like Hua Ling Steel. And a few powerful companies even proposed acquiring our company."
He handed Li Tang a neatly organized list, categorized by the various proposals he'd received.
"I'm not too familiar with the specifics of these companies' operations, nor with Lianying Mining's iron ore production, so you'll have to make this decision yourself," Dai Yingchi explained briefly.
Just as Li Tang received the notebook and glanced through the list, Dai Yingchi's phone suddenly rang. He glanced down, looked up, and said, "It's President Wu from Fengli Group."
"Fengli Group?" Li Tang didn't have a deep impression of the name.
"A private enterprise involved in port operations, logistics, and stainless steel products, among other areas. They have several billion yuan in assets and have recently begun expanding into steel manufacturing and mineral resource development," Dai Yingchi explained. He had specifically looked into this company earlier. "Of all the people who invited me out these past few days, President Wu Yueming from Fengli Group was the most enthusiastic."
He was still holding the phone as it kept ringing, but he had yet to answer the call.
"Wu Yueming is still here?" Li Tang asked.
"Yes, he's been around all these days."
"Tell him to come upstairs. Let's meet him first and understand their position."
"Alright."
Dai Yingchi answered the call and personally went downstairs to bring Wu Yueming up.
When Li Tang first saw Wu Yueming, he looked like a rather ordinary middle-aged man. It wasn't immediately obvious he was a wealthy boss.
"President Wu?" Li Tang greeted him at the door.
"President Li!" Wu Yueming was slightly out of breath and pointed downstairs. The large conference room downstairs was practically an auditorium filled with eager visitors. "Everyone refuses to leave. They all want to speak privately with you about cooperation," Wu Yueming said excitedly upon meeting Li Tang. "I honestly didn't expect you'd see me first. There are many other companies downstairs, including several large state-owned enterprises. I heard you generally prefer working with state-owned enterprises."
"We select partners based on alignment of values, not by status or ownership," Li Tang replied, inviting everyone to sit. After pouring tea, he asked, "Earlier, Minister Dai mentioned Fengli Group to me, praising it as a diligent and ambitious company."
"I must thank Minister Dai for his kind words!" Wu Yueming nodded respectfully toward Dai Yingchi, their earlier drinking sessions clearly paying off.
"I'd like to ask: what does Fengli Group wish to gain from us?" Li Tang asked directly.
Wu Yueming thought carefully for a moment, then smiled warmly and replied, "Rather, you should ask what we can offer you."
Meeting Li Tang's gaze calmly, he explained, "Our group operates its own port—though small, handling a few million tons of iron ore annually is no problem. We also have our own shipping fleet, a steel plant, and a stainless-steel products factory."
"Your group controls the entire industry chain!" Li Tang was genuinely surprised.
"Our scale isn't large, but we indeed cover every link of the steel industry. The only part missing now is the uppermost segment—raw materials."
"And how exactly would you like to cooperate?" Li Tang asked.
"Given our company's scale, there's ample room for growth. Our steel plant has never had a stable iron ore supplier. Therefore, we hope to establish cooperation similar to Hua Ling Steel's arrangement, securing a supply of a few million tons of iron ore annually."
"Our iron ore isn't yet being mined; the mine and infrastructure are still under construction," Li Tang reminded him.
"But it'll start soon enough, won't it?" Wu Yueming smiled confidently.
"At the earliest, production will begin in 2005."
"That's just next year."
"Yes," Li Tang nodded, "though that's an optimistic estimate. If construction encounters issues, commissioning could be delayed."
"That happens often enough," Wu Yueming responded nonchalantly. "When we built our port, we initially planned for two years, but construction stretched to four. However, the payoff afterward was substantial."
"Indeed." Li Tang was candid with potential partners. "I'll be upfront: the agreement with Hua Ling Steel is priced at 85% of the prevailing international iron ore benchmark price index each year."
"Eighty-five percent?" Wu Yueming's eyes brightened at the offer.
"The reason we can provide this discount is that the ore we intend to produce generally averages 58% grade, and other specifications might slightly differ from typical suppliers," Li Tang explained, handing over a document. "Here are laboratory test results and the outcomes from blast furnace trials conducted at Hua Ling Steel. Results in sintering characteristics and loss on ignition are very promising and fully compatible with mainstream domestic blast furnaces."
Wu Yueming studied the test results. While he grasped the basics, more detailed analysis from experts would be needed. "We'll review this quickly and make a decision," he replied optimistically.
"How much iron ore would you require annually?" Li Tang inquired.
"Our steel plant isn't large—around two million tons a year."
"Two million tons is significant," Li Tang acknowledged.
After briefly discussing cooperation with Wu Yueming, Li Tang met with several other steel company representatives throughout the afternoon. Some had extensive demands, while others simply sought a reliable source of quality ore.
By day's end, Li Tang understood clearly that very few companies could realistically become long-term partners. But he wasn't worried. For at least the next twenty years, iron ore would remain a seller's market. As long as their mines came online smoothly, demand wouldn't be a problem.
That evening, Li Tang hosted all visiting representatives at the downstairs cafeteria. During dinner, as he toasted each table individually, he tactfully explained that hopes of long-term fixed-price iron ore contracts—like the previous year's rate of forty dollars per ton—were unrealistic. Once operational, Lianying Mining would adhere strictly to market-based pricing.
In short, he gently made it clear there would be no easy profits or bargains. How many steel firms had Hua Ling Steel's courage to sign ten-year supply contracts and pay substantial advance deposits for ore that hadn't even appeared yet? Not many.
Smaller steelmakers were often opportunistic, making money quickly when the market was favorable and shutting down at the first sign of trouble. Signing long-term deals with upfront payments for future ore carried risks beyond what many could bear.
The following morning, Li Tang arrived early at Yunding Tower. He found fewer companies waiting to discuss cooperation. After seeing several more visitors, he suddenly received a call from Niu Fu's office. He quickly headed to Wu Mining Group's headquarters.
Inside the familiar general manager's office, he saw both Niu Fu and Li Xingchao already there, making today's meeting particularly convenient.
"I had planned to meet separately with both major shareholders of Lianying Mining. Fortunately, you're both here today, saving me time," Li Tang greeted them.
Seeing Li Tang, Niu Fu and Li Xingchao both appeared pleased.
"The iron ore market has been absolutely insane lately. Good thing you're finally back," Niu Fu stood to greet Li Tang warmly.
"I noticed—steel companies practically blocked our office entrance," Li Tang smiled ruefully. "We managed to send some of them off after negotiations."
Turning to Li Xingchao, Li Tang asked hesitantly, "President Li, how is Qiqi doing these days?"
"You're asking me?" Li Xingchao felt conflicted upon seeing Li Tang—he admired the young man's impressive professional achievements yet remained frustrated by his lukewarm handling of his daughter's feelings.
"In Africa, cellphone signals were nearly nonexistent. Often, I had to travel miles just to make calls. Communication with Qiqi has been limited," Li Tang explained apologetically. "I've been swamped since returning, dealing with countless steel firms."
"We'll discuss this privately later," Li Xingchao said curtly, clearly separating personal from professional matters. "Today someone else wants to see you about an in-depth cooperation."
Niu Fu glanced at his watch. Almost on cue, several people entered the office, led by Lu Chenyi.
"Am I late?" Lu Chenyi beamed upon seeing Li Tang.
"Just in time—I was about to greet you downstairs," Niu Fu rose respectfully.
"No need, I know my way around." Lu Chenyi had flown from Haigang specifically for this meeting.
"Chairman Lu," Li Tang greeted him.
"It feels like just yesterday we met, yet you've changed considerably," Lu Chenyi assessed Li Tang.
"Have I?" Li Tang wasn't aware of any significant change in himself.
"You've grown powerful!" Lu Chenyi said admiringly. "Now you're the star and savior of our domestic steel industry!"
"I don't deserve such praise," Li Tang humbly dismissed the compliment.
Haigang Steel, a gigantic enterprise worth billions, hardly needed saving from him.
Lu Chenyi turned toward Niu Fu and Li Xingchao. "I've spoken briefly with President Niu and President Li about Lianying Mining and Nanyang Investment Company. They said any collaboration requires your approval."
"What collaboration?" Li Tang didn't beat around the bush.
"Why don't you sell your shares of Lianying Mining to us?" Lu Chenyi asked lightly, smiling as if casually joking.
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