Chapter 350: Tipping the Balance of the Global Mining Industry
Li Tang returned home somewhat dizzy from the beer he drank the previous night. Initially, he had planned to set aside work the next day and accompany his parents sightseeing around town. However, Long Fuyuan, General Manager of Tangshan Steel, and Zhu Youxin, General Manager of Hualing Steel, visited him together. After finding that Li Tang was not at his office in Yunding Building, they went directly to his home.
"You should go with them. You'd be bored staying with just us old folks the entire day," Tang Chuqiu thoughtfully suggested.
"Brother Li," Zhu Youxin greeted politely upon seeing Li Zaijiang.
"Come in for a bit?" Li Zaijiang was brewing tea, recognizing both Long Fuyuan and Zhu Youxin at the door. He particularly remembered Zhu Youxin from the wedding in Sanxiang province, where Zhu had arranged the wedding convoy free of charge.
"I thought Li Tang would be alone at home. It seems we're disturbing you," Zhu Youxin hesitated but stepped in anyway, sitting on the sofa and sharing a cup of tea with Li Zaijiang.
"Is there an urgent matter?" Li Zaijiang noticed both Zhu Youxin and Long Fuyuan seemed distracted.
"There is something important we need to discuss with Li Tang. But if your family has plans to go out, we can come another day," Zhu replied apologetically.
"We don't have specific plans. Is it confidential? If so, we can step outside for a bit and return when you're done."
"No, no, please stay!" Zhu hurriedly insisted, waving his hands. "Li Tang just got back from overseas and should spend time enjoying family warmth. Honestly, we're quite embarrassed coming empty-handed."
"I went to the market this morning and bought fresh ingredients. Why don't you stay and have lunch with us while discussing?" Tang Chuqiu warmly suggested.
"No, thank you, really. We just need a quick word with Li Tang."
"How about dinner then? If you're free tonight, we can reserve a table and share a drink?"
Both Long and Zhu were keen to strengthen their relationship with Li Tang's family, hoping to build more rapport through dinner.
Observing the situation, Li Tang intervened, "Dad, Mom, please rest at home. I'll step out briefly with Long and Zhu to discuss some matters."
"Go ahead," Li Zaijiang and Tang Chuqiu sent them off at the door. As they watched Li Tang walk toward the Yunding Building accompanied by Long Fuyuan, Zhu Youxin, and several assistants, Tang Chuqiu sighed softly, "Why is Li Tang always so busy?"
"When business grows too big, it's not always a good thing. He's no longer just himself anymore. He belongs to the nation, to the mining industry," Li Zaijiang remarked thoughtfully. However, he couldn't conceal the pride in his voice. "Our son's status is truly remarkable. Even the General Manager of Hualing Steel personally came to our home."
Tang Chuqiu felt proud, recalling that relatives in Sanxiang province always talked about Hualing Steel as a prominent enterprise. Its general manager was undoubtedly an influential figure, someone ordinary people could only admire from afar. Yet, such a figure behaved respectfully before her son, unintentionally giving rise to a strong sense of pride. "Our son really is something!"
Li Zaijiang echoed her sentiment. Seeing Li Tang lead prominent industry figures made him deeply emotional. He was accustomed to greeting officials who came for inspections, always standing in the background, but now Li Tang was the one standing in the center, receiving others' admiration.
"The other man, Long Fuyuan, manages Tangshan Steel, an even larger company. Yet, look how respectfully he treats our son," Li Zaijiang continued with admiration.
"He's truly successful," Tang Chuqiu sighed again. "He wasn't outstanding as a child—just a bit more mischievous. Even in university, he wasn't notably exceptional."
"Sometimes people suddenly find their path, and then everything falls into place." Li Zaijiang also pondered how his son had become so accomplished. At times, he even felt inadequate as Li Tang's father, worrying that his humble background might embarrass his son.
"He's probably so good at exploration because you always took him up the mountains during school breaks. He learned it naturally from you," Tang Chuqiu generously credited her husband, who immediately felt comforted, standing with his hands behind his back, quite pleased.
Li Tang led Long Fuyuan and Zhu Youxin to his office. After sitting down, he asked directly, "What urgent matters brought you here?"
"It's not just about our two companies. The entire steel industry faces a big problem now," Long began anxiously. "Director Lu is still at the Steel Association discussing strategies with Chairman Bao."
"In past years, iron ore negotiations usually concluded by mid-year, setting prices for the coming year. Historically, China had little say in these negotiations," Zhu explained. "But two or three years ago, China became the world's largest importer of iron ore. This year, several major companies formed a joint negotiation team. Due to overcapacity and declining steel prices, iron ore talks were delayed until October."
"We've conducted negotiations separately with the three iron ore giants."
"And how did it go?" Li Tang asked, already anticipating the outcome but still seeking details.
"Our goal was to at least maintain the 2005 contract price of 61 USD per ton," Zhu explained. "However, the big three iron ore suppliers have refused any price reduction and insist on further increases."
"They're pushing for a 30% hike, nearly 80 USD per ton, making our steel profits negligible," Long added. "Unless steel prices rise, we'll earn nothing."
"So far, no Chinese steel companies have signed long-term contracts for 2006. This forces everyone to buy from the spot market, causing chaos."
Li Tang had anticipated this scenario but had no immediate solutions. "Given the current negotiation deadlock, is a resolution likely soon?"
"No," Zhu confirmed decisively. "China's market now significantly influences global ore pricing. Our stance is firm this year to assert our authority. We won't concede."
"At first, under Steel Association coordination, we were quite unified and nearly succeeded," Long sighed deeply. "But not everyone maintained discipline."
"What happened?" Li Tang asked curiously.
"Yanjing Steel secretly bribed Hushitan, the local representative of Lituo Mining, securing iron ore at above last year's 60 USD price. This action broke our united front," Zhu explained angrily. "The big three realized we were desperate."
"Now our position has severely weakened," Long concluded. "The responsible executive at Yanjing Steel is now under investigation and likely faces jail."
Both men looked expectantly at Li Tang.
"You're hoping I can fix this?" Li Tang shook his head. "Honestly, I wish I could help immediately, but there are no quick fixes."
"Our reliance on imported iron ore is excessive. Globally, China, Australia, and Brazil each produce around 300 million tons annually, dominating iron ore production. India ranks second-tier with just over 100 million tons. Other producers like South Africa and Canada produce only tens of millions, insufficient to impact global pricing."
"Without alternative suppliers, price control remains firmly with the big three. Additionally, other producing countries naturally support price hikes."
Long and Zhu wished Li Tang could instantly conjure abundant iron ore supplies. Li Tang couldn't directly help their immediate plight but mentioned, "Regarding Qiche Iron Mine, phase one construction is nearly complete. However, due to unexpected delays, initial production scheduled for the end of this year will begin only after the Chinese New Year in early 2006."
Expressing regret, he continued, "According to our original contracts, we were supposed to supply iron ore starting this year. But realistically, in 2006 we can probably supply only half the agreed initial amount."
Long and Zhu felt disappointed. Currently, their only hope was Li Tang's Lianying Mining, as the breakdown in negotiations with the big three had forced them to rely on volatile spot markets. Contracts with Lianying promised stability and competitive pricing, crucial in such chaotic times.
"It seems next year will be tough," Long sighed.
Zhu agreed, "Spot market ore is expensive, and its quality varies greatly."
Why did China depend so heavily on the big three? Apart from sheer volume, their ore quality matched the demands of most blast furnaces perfectly. Iron ore from South Africa, Canada, or India was inferior, expensive due to transport and insurance, and could not quickly replace the big three.
Currently, China's only options were increasing domestic iron ore mining or hoping Li Tang's Lianying Mining could disrupt global monopoly pricing—neither option was easy.
Seeing that neither of them expressed dissatisfaction about the delayed production of Qiche Iron Mine, Li Tang felt even more apologetic. To demonstrate his sincerity and compensate them, he proposed, "Our Lianying Mining will soon announce a decision."
"What decision?" Long Fuyuan asked.
"We've decided that, to show our appreciation for the initial support from Chinese steel enterprises, we'll announce shortly that the iron ore sold by Lianying Mining to China will always be priced 3% lower than in other global markets. This offer will remain effective indefinitely!"
Li Tang's announcement undoubtedly represented a substantial commitment. Although 3% might not seem large, for a large-scale iron ore producer with an annual output of fifty million tons, representing an annual turnover of about three billion USD, a 3% discount equated to approximately 90 million USD per year.
When combined with previously signed contracts offering already advantageous prices, this cumulative benefit was indeed significant.
Not stopping there, Li Tang added another commitment: "We also previously assured the Steel Association that prices for our spot market sales and long-term contracts will remain consistent. However, those original cooperating partners who signed early long-term agreements will definitely enjoy even lower prices."
All these discounts and preferential terms were already within the strategic plans of Li Tang and Foleite. While these benefits were generous, they wouldn't undermine profitability; rather, they were intended to demonstrate gratitude to their supporters.
After all, Lianying Mining's rise, current success, and potential future growth were inseparable from the support of numerous Chinese steel enterprises. These companies had generously provided substantial supply contracts, advance payments, and even low-interest loans long before the Qiche Iron Mine had begun production. Their early backing had significantly propelled Lianying Mining forward.
Though Zhu Youxin and Long Fuyuan didn't gain immediate tangible benefits from Li Tang today, they left with renewed hope after learning the exact schedule for the Qiche Iron Mine's commissioning.
After seeing off both guests, Li Tang called Lu Chenyi to inform him of these developments. He then dialed Foleite's number.
"On January 1st, 2006, the first day of the new year, our mine will officially enter trial operation. The groundbreaking ceremony—the first symbolic shovelful of earth—Boss, you must come personally!" Foleite was excited, skipping any formal greetings, directly sharing the good news.
He had recently been very busy, spending considerable sums to silence those troublesome individuals who had repeatedly threatened to sue Lianying Mining, obstructing their progress. Now that these issues were resolved, no one could stop the giant ship that was Lianying Mining from setting sail.
"We'll soon be celebrating Spring Festival here, and after my recent unpleasant experience in Canada, my family strongly prefers I stay in China. For now, I won't be traveling abroad," Li Tang explained.
"Family always comes first; you've made the right choice," Foleite replied without hesitation.
"Also, I need to inform you of something else. I've promised Chinese steel companies we'll publicly announce that iron ore prices for China will always remain 3% lower than other markets."
"Understood. This decision will soon be incorporated into our company's articles of association," Foleite responded affirmatively.
"Then let's toast to Lianying Mining's upcoming success!" Li Tang encouraged.
"Boss, you'll miss one of the most important moments of your life if you're not here! Starting from the groundbreaking ceremony, Lianying Mining officially enters its profitable era!"
...
The groundbreaking ceremony took place directly at the Qiche Iron Mine. All factory installations, heavy machinery, and equipment had completed final adjustments, ready for action.
Not only did all senior executives of Lianying Mining attend, but major Australian media organizations invited by the company flew into the heart of the Pilbara region on chartered flights arranged by Lianying Mining.
Even media outlets that hadn't received invitations paid their own way to witness this historic moment. Major mining, economic, and financial news organizations from around the world flocked to this expansive red earth.
"Lianying Mining's stock price has already surged past 15 AUD, with a total market capitalization exceeding 20 billion AUD!"
The ceremony hadn't officially started, but the site was grandly decorated. A reporter stood beneath a giant backdrop, warming up viewers via live broadcast: "This high-value company has already become Australia's third-largest mining company and ranks fourth globally among iron ore enterprises! Yet, everyone, please note: to date, it has never turned a profit!"
"But starting today, the market valuation of this company will no longer be inflated purely through financial maneuvers."
"Because its first mine, the Paddy Mine at the Qiche Iron Mine complex, will officially commence operations today!"
"We've noticed that with Qiche Mine going online, Lianying Mining's stock surged significantly again at market open today."
"Following this upward trajectory, the company's valuation is expected to break through 30 billion AUD, potentially even approaching the 40 billion AUD threshold shortly!"
"We must acknowledge: this is perhaps the most astonishing miracle in mining history!"
"No other mining company in history has continuously posted losses year after year, yet still witnessed its share price consistently soar to seemingly endless heights."
"Clearly, the soaring iron ore prices played a major role here. Still, we must applaud the vision of the mysterious figure behind it—Li Tang, who acquired Lianying Mining back in 2002 for just over ten million AUD!"
"In just three years, he's become a top-tier billionaire with wealth exceeding tens of billions of AUD!"
"This investment has already returned over a thousandfold!"
"Could this be the most successful investment in global mining history?"
"And today, at this critical moment marking the transition from losses to profitability, that mysterious billionaire behind the scenes might finally make his appearance!"
Media reporters eagerly and skillfully elaborated, providing detailed, vibrant coverage of the day's events.
At that moment, Alice and Foleite led Lianying Mining's executives, slowly approaching the venue. Bauer, Carroll, and other prominent figures linked with Lianying Mining were also present, invited to witness this historic milestone. Representatives from several Chinese steel companies attended, bringing flowers and blessings.
"Friends!" Foleite glowed radiantly today, his flushed face brimming with pride.
"As Lianying Mining reaches this historic moment, we express deep gratitude to all shareholders, everyone who's supported us, everyone present today, those who care about us, and even those who've opposed us!"
Applause erupted enthusiastically—not just from the Lianying Mining team, but also from the journalists on-site, stirred by Foleite's passionate speech.
"This mine officially starts operations today!"
"I'm confident that from this year onward, Lianying Mining will enter a profitable era! We promise to reward every shareholder handsomely for their steadfast support!"
"Moreover, today marks only the commencement of our first mine at Paddy Mine."
"Simultaneously, our railway and port infrastructure is under intense construction, scheduled for completion before 2008!"
"At that point, our iron ore will be transported globally through our own infrastructure, operating with unprecedented efficiency and speed!"
"Additionally, we will implement phase two of the construction at the Qiche Iron Mine, developing our second mine. By then, annual output at our Qiche complex will reach 100 million tons!"
"In the future, we will also continue to develop the Xiuluo Iron Ore Region, bringing Lianying Mining's iron ore output capacity to 150 million or even 200 million tons annually!"
"Lianying Mining aims to become the world's largest iron ore producer!"
The world's largest iron ore producer! To surpass giants like Xianshui Valley, Lituo, and Bihebituo was extremely ambitious. Yet, considering the assets Lianying Mining now controlled, success seemed at least plausible, unlike other smaller iron ore producers, who weren't even qualified to challenge these industry titans.
Additionally, recalling the mysterious Chinese figure behind Lianying Mining—Li Tang—he clearly possessed exceptional strategic insight. If he decided to integrate the Simendu Iron Mine from Africa into Lianying Mining, successfully developing this massive project, surpassing the Big Three iron ore giants might not be just a dream.
Furthermore, recent news from Canada reported another significant discovery by Li Tang: the Maluhe Coal Mine project had revealed a massive coal deposit totaling three billion tons, marking Canada's largest coal discovery ever. Crucially, about half of this reserve—1.5 billion tons—was premium-grade coking coal. With further exploration, this site could surpass even the Talege Coal Mine (6.5 billion tons), becoming the world's largest undeveloped coking coal mine.
Having recently visited Maluhe Coal Mine personally, Foleite openly declared in front of media that he had officially discussed developing this mine under Lianying Mining with Li Tang.
If this materialized, coal would become another significant revenue engine for Lianying Mining, further propelling its unstoppable growth. Becoming the world's number-one mining giant was not only possible—it seemed increasingly likely.
Foleite greatly enjoyed the enthusiastic atmosphere, confidently declaring before the assembled guests and media, "We solemnly promise today that the price of iron ore sold to China will always remain 3% lower than elsewhere globally!"
The announcement raised excitement among reporters. One immediately shouted, "Is Lianying Mining aiming to support China's position against the Big Three in ongoing negotiations?"
Foleite smiled broadly and replied ambiguously, "You guess!"
His playful response instantly became a headline favorite.
Ultimately, despite worldwide anticipation, Li Tang—the mysterious figure behind Lianying Mining—did not appear, leaving global fans still guessing at his true visage.
In fact, this outcome was already widely anticipated, but many still held onto a glimmer of hope, thinking perhaps if he appeared, they'd finally catch a glimpse of him!
Alice represented Li Tang at the ribbon-cutting ceremony.
CEO Foleite delivered a splendid speech, during which he revealed several strategic decisions concerning Lianying Mining's future.
Undoubtedly, the most eye-catching of these announcements was Lianying Mining's significant commitment to the entire Chinese market.
In the future, all iron ore produced by Lianying Mining would be priced 3% lower in China than in international markets.
This announcement was loaded with implications!
Some said this was Lianying Mining's way of giving back to those initial supporters.
Yet, considering the months-long, stalled negotiations between China's steel industry and the three major iron ore giants—which had reportedly collapsed entirely—people couldn't help but see a deeper significance behind this timing.
Did this major commitment signal to the Big Three iron ore suppliers that if they insisted on price hikes, they might lose the Chinese market altogether?
Could China's market become entirely reliant on iron ore supplied by Lianying Mining in the future?
Speculation erupted, debates roared, and opinions flew in every direction.
It was like a fire that quickly engulfed Australia's entire mining industry—and then rapidly spread worldwide.
Meanwhile, in Canada, discussions about Li Tang had not yet quieted.
People continued to discuss Li Tang's arrest and swift release.
Now, however, the focus was less about the beginning and ending, and more about the process.
Reliable sources revealed that several major Canadian coal companies had approached both the Resources and Justice Departments to plead on Li Tang's behalf.
Prominent figures, including Mark, CEO of Barrick Gold, and Fernando, CEO of Ivanhoe, had publicly spoken up in Li Tang's defense.
Even Richard, CEO of Alcan Group, had acted at high political levels in Canada specifically to advocate for Li Tang!
When pieced together, these events demonstrated a truly astonishing level of influence!
Some speculated that Li Tang's arrest might even have been a test to gauge international reactions.
And the result, as everyone saw, was explosive.
While that drama continued, more sensational news erupted from Australia.
Not only had the much-anticipated Lianying Mining mine finally commenced operations, but during its inauguration, Foleite's speech propelled Lianying Mining into the global spotlight again.
And once more, it placed Li Tang squarely at the center of worldwide attention.
Even though this mysterious Chinese man had never appeared publicly, nor spoken a single word himself, everyone knew these were his decisions.
Foleite was merely his spokesperson.
Clearly, that Chinese man was supporting Chinese enterprises and bolstering Chinese industry!
This seemed no longer purely a business matter!
Politicians in Australia, Canada, and even those in the U.S. and the U.K. loudly proclaimed Li Tang as a dangerous "X factor."
Joseph, the editor-in-chief of Canada's Financial Post, again invited his old friend Bill, the founder of the Ontario Geological Association, to discuss this.
Bill was highly respected, with considerable prestige in Canada's exploration and mining industries. His commentary on mining projects was always incisive.
"That Chinese man, such a mysterious billionaire!" Bill sighed upon seeing Joseph and Erwin. "The last time you invited me, we discussed the major discovery at Talego copper-gold mine. I was astonished and said that porphyry copper deposits would inevitably become the hottest exploration topic in the coming decades. Evidently, that Chinese man had already captured the industry's direction!"
Bill's eyes, somewhat cloudy, raised thoughtfully, "But I never imagined this Chinese man would not only capture the porphyry copper trend, but also subsequently seize iron ore, coal, molybdenum, and more!"
"In all my exploration history, I've never encountered someone like him!"
"I've met him—he seemed like an ordinary, low-key young man," Erwin interjected.
When you tried connecting these two images, it felt contradictory.
How could someone so understated and humble consistently make moves that stunned the world?
It didn't seem logical.
Influential figures typically gave the impression of supreme confidence, radiating charisma like the sun.
Joseph then joined the conversation, clarifying why he'd invited Bill again: "Li Tang is now more than an exceptional geologist and exploration expert. He's widely recognized due to his ownership of Lianying Mining and his immense wealth. Given Lianying Mining's current market value, his personal assets approach 10 billion U.S. dollars!"
"Since our last conversation about Talego, I've kept a close eye on this Chinese man," Bill replied. Though older, he hadn't entirely retired and was closely following developments in exploration and mining. "I heard about his arrest and subsequent release here. He immediately returned to China. Yet lately, his name constantly resurfaces in connection with Australia."
"Through Lianying Mining, he has tipped the scales of the global iron ore industry," Joseph asserted confidently. "Otherwise, Foleite's comments wouldn't have triggered such global turmoil. Clearly, this Chinese man, from the shadows, is influencing the global economy! Especially in international iron ore supply—he's now targeted by the Big Three!"
"I'm a technical person—I don't really grasp the intricacies of political struggles," Bill admitted straightforwardly, retaining his purely technical perspective. "I can discuss technical details and mining rights. Regarding Lianying Mining, iron ore trade is an obvious money-maker. Once production starts smoothly, their profitability is unquestionable."
As for Lianying Mining, given it was already operational overseas, Bill saw no need for further analysis. The market had clearly demonstrated its prospects. Any further comment seemed redundant, offering no professional insight.
Thus, Bill shifted his focus to Li Tang's Canadian ventures: "I know this Chinese man has launched two projects here in Canada: Malu River Coal Mine, with outstanding results evident to everyone; and the Mali River Iron Mine project. Previously, I hadn't paid much attention to Mali River Iron Mine. However, I vaguely recall that exploration occurred there in the early 1970s, but the project was abandoned due to harsh conditions and funding issues, leaving mining rights unclaimed."
"Perhaps you can first discuss the Malu River Coal Mine?" Erwin, prepared with his interview outline, gently guided Bill's comments, preventing the elderly expert from wandering off-topic.
"Malu River Coal Mine…" Bill's eyes drifted towards the ceiling, his thoughts momentarily distant. After a lengthy pause, he refocused: "This project again demonstrates my admiration for Li Tang! His insight into the market is incredibly visionary!"
"Why do you say that?" Erwin listened intently.
As a non-expert, he recognized the importance of these two projects but didn't fully grasp their significance or future trends.
Bill carefully formulated his explanation: "The production and demand for coking coal are tied directly to steel production. The world's richest coal resources are in China, which is also the largest steel-producing nation. For years, they've imported hundreds of millions of tons of iron ore annually, yet their coking coal imports have only been a few tens of millions. Clearly, they've been largely self-sufficient in coking coal."
"So, you mean the Chinese steel market doesn't need Malu River Coal Mine's massive resources?" Erwin asked, confused.
"No." Bill shook his head. "That's not my point—I'm merely explaining the current situation."
"What do you mean, then?"
"China increasingly prioritizes environmental protection and resource conservation," Bill explained firmly. "I know they're crafting policies to control coal exploitation and related carbon dioxide emissions."
"If China's domestic coking coal production can't meet their steel-making needs, the world could face a coking coal shortfall of over 100 million tons annually! At that point, coking coal, especially premium varieties, will become incredibly scarce."
"Your perspective is really innovative!" Erwin quickly noted this down, astonished. "Many experts have reviewed Malu River Coal Mine, but no one mentioned this critical market trend!"
"China lies across the ocean. Few truly understand their market," Bill stated profoundly. "Yet, understanding it means understanding the future direction of global mining."
"I totally agree!" Erwin felt he'd met a soulmate.
"Besides China, Australia produces 400 million tons of coal yearly but exports almost all of it. The U.S. produces nearly a billion tons yearly, but less than 100 million are coking coal. Their developed steel industry depends heavily on imports—including from Canada."
"Other steel-producing giants—India, Japan, Korea, Europe—have virtually no coking coal production. Their steel industries entirely depend on imported coal!"
Bill grew visibly excited: "In the future, coking coal's market pressure could surpass iron ore's!"
Erwin rapidly recorded, mentally connecting dots. He suddenly grasped the coal industry's—particularly coking coal's—future trajectory.
But he had no coal rights himself.
The world's two largest undeveloped coal deposits—Talego and Malu River Coal Mines—were already controlled by Li Tang.
A chill ran down his spine.
Unconsciously, that remarkable man had already laid out the future!
Combined with Lianying Mining, Simandou Iron Mine, and Mali River Iron Mine, he seemed poised to dominate future global industry!
Realizing this now, Erwin sat frozen, stunned by the complexity and foresight of this global strategy.
What an extraordinary strategy!
Long before anyone else had even thought clearly, that brilliant figure had methodically executed his flawless plans.
Until today, hardly anyone had grasped the grand scope of his ambitions!
Without Bill's professional analysis, Erwin would still remain clueless, glimpsing only the edge of this intricately woven web.
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