Chapter 1602: Base of Steel

In terms of reserves, among the world’s proven reserves of approximately 170 billion tons of iron ore, Huaxia occupies 21 billion tons, ranking fourth in the world. It’s really hard to say, but Tan Zhenhua knows that in the future, China will be short of iron ore. The stone is very, very, very bad.
As a result, in addition to having to spend a lot of foreign exchange to buy iron ore every year, Huaxia was also criticized many times and paid high tuition fees.
The lack of iron ore is because steel is one of the most basic materials for the construction of the national economy, and China is also known as the "infrastructure madman". The entire country has spent only a few decades at a high speed that is unique in human history. The land has evolved from an agricultural society to an industrial society, and it is also the largest in the world. Therefore, the demand for all natural resources has increased in a geometrical manner. There is a paragraph that describes the world’s largest steel output. Huaxia, the second place is Huaxia Hebei, and the third place is Huaxia Hebei Tangshan... Take 2015 as an example, the annual output of China’s steel reached 803.83 million tons of crude steel, accounting for 50.3% of the world’s total output In other words, China has defeated all other countries in the world combined.
What brother do you ask after 2015?
Well, afterwards, Huaxia wanted to reduce production capacity all the time. After all, the crude steelmaking industry is neither environmentally friendly nor economical. Moderate is good, too much is not enough. As a result, the capacity reduction went to 2019. At first glance, the steel output reached 996.3 million tons that year, accounting for 53.3% of the global total output that year...
Obviously, with such a large steel output, only the iron ore mined in China can not meet the demand.
Moreover, it is very unfortunate that although China's domestic iron ore reserves are quite large, it suffers from the same problem as most other natural mineral deposits-the quality is very low.
In terms of averages, the global average iron ore grade is about 45% iron content, while China’s iron ore is only 33%, which is a full 12% difference. This means that most of the iron ore produced by China , Its production cost is naturally higher than using imported iron ore-this is easy to understand, right? You use the same energy, etc., to refine the same tons of ore, but get less finished products than others. Doesn't this cost naturally rise?
As costs rise, competitiveness will naturally decline. At that time, most of China’s steel plants mainly sold crude steel. The added value of their products was very low and they depended more on price competition. After this calculation, they still bought imported iron. The ore is cost-effective.
And it can also protect domestic resources and the environment, right?
Originally, importing resources, processing products, supplying domestic demand or the international market is the standard behavior of industrialized countries, but it can be maddening. At that time, as the world’s largest iron ore importer, China had almost no treatment of iron ore. The right to stone pricing!
The pricing power of international iron ore has long been held by the three monopoly giants: TioTinto, BHP&FMG and Vale, and has also passed cross-shareholding and acquisition of mines. Prospecting rights and mining rights in potential areas, unified price alliances and other methods have monopolized the international iron ore market prices, earning excess profits. For example, in the 2007~2008 years of Tan Zhenhua’s previous life, China at that time was just about infrastructure and When real estate development was at its peak, there was a huge demand for steel, so the three companies joined forces to push up the price of iron ore by 79.8%!
And this is based on the annual increase of 18.8%, 71.5%, 19%, and 9.5% in the previous 4 years!
(The above data are historical facts, the author's note.)
So you see, what capital likes most is monopoly operation, because monopoly operation can bring excess profits to capitalists without paying additional costs and labor.
However, in this time and space, it is obviously quite difficult for these three companies to continue to replicate this successful model, because there is a young master who is not happy.
As early as 1991, when the "Xiangjiang Hongqi Mining Group" was established, Tan Zhenhua officially started his large-scale entry into the global natural resources field, and from the first day of its birth, this group enterprise has established a goal to become The ambitious goals of the giant enterprise group in this field.
At the beginning, the group only set its sights on the territory of Burmese Jade, the motherland of the group CEO Wu Juewen. In addition to merging the operating rights of the Mogok uranium mine and Taigongdang nickel mine, it has successively developed the "Shirui" oil and gas fields. , "Meng Yu" copper mine, etc., but as his teeth grew older and his life became more mature, his pursuit of career became more and more bold, and his heart became more and more focused. Obviously a small Burmese jade can no longer satisfy him. My appetite.
So soon, "Hongqi Mining" extended its tentacles to Southeast Asia, and competed with the Japanese countries for the mining rights of many nickel mines in the Philippines, Indonesia and other countries, and relied on the strong financial strength of "Hongqi Capital" to gain a lot; and The Shinawatra family of the Dai nation jointly won several tin mines and fluorite mines in Chumphon, Ranong, etc.; they also used the oil wells obtained by Tan Zhenhua in Iqra after the first Gulf War to enter the Middle East oil and gas exploration; then they used Tan Zhenhua in The network foundation laid by Ukelan also put a foot in the Crimea region, using the chaotic situation to "whoever embezzled the state-owned assets of Ukelan," and bought some local small and medium-sized coal mines and coal mines at very cheap prices. Iron Ore, formed the "Hongqi Coal and Steel Consortium" in Wukelan and grew into the third steel group in Wukelan in a very short time...
Along the way, in just a few years, "Hongqi Mining" has grown into a rising star in the international mineral and petroleum industry, and Wu Juewen's name has long become a frequent visitor to international financial magazines.
Rising stars or something, why is the goal pursued by the ambitious Wu Juewen? With Tan Zhenhua, a friend and partner of nearly the same age, Zhuyu, who is young and energetic, he believes that turning "Hongqi Mining" into the king of international minerals will live up to his ambitions!
But to achieve this goal, the road to go is not smooth.
Mineral development is a very complex industry. There are many things that need to be paid attention to. Technical means are on the one hand, and the political structure of the countries that own mines is on the other. Moreover, the old industry structure is also a big obstacle. After many studies, Wu Juewen followed Tan Zhenhua's advice and focused his attention on Africa, a region with relatively little resistance to the old pattern.
Wu Juewen quickly made some tentative investments in Africa. Some of these investments succeeded, some failed. A very important reason for the failure is that the political situation in Africa is too turbulent. Sometimes you just and The government had negotiated everything, but in a blink of an eye, a coup took place in this country. The original government ceased to exist and disappeared, so everything was annulled.
Moreover, the level of infrastructure construction here is extremely backward, the sanitation status is also very poor, and the education level of the locals is also very low, resulting in extremely low labor efficiency and high initial investment costs for developing mines. If there is no stable political environment and reliable , A policy that can last for a long time, investing here, it is easy to lose the capital.
This caused Wu Juewen to retreat.
But at this moment, one of the prospecting teams scattered in several friendly countries in Africa came out with a major news-an iron ore enrichment area was discovered in Guinea, with good quality and large area. The reserves are expected to be abundant.
But when the name of this area reached Tan Zhenhua's ears, even he couldn't sit still. He decided to go out in person this time, and he must take down the mine by all means.
Because the iron ore enrichment area discovered is called Simandu.