Chapter 320: The Fifth Largest Iron Ore Company
Noticing Alba's unstable mood and out of consideration for her guest, Yuna decided to steer away from the topic of Lianying Mining. After all, the accuracy of Lianying Mining's recent announcements required further verification.
"Let's move to our next topic, Mr. Alba," Yuna swiftly redirected the conversation. "Hancock Prospecting's Hope Downs mine reportedly has confirmed high-quality iron ore reserves of around 800 million tons. Recently, Gina Rinehart, Hancock's owner, publicly announced her intention to reclaim the 50% stake currently held by South Africa's Kumba Iron Ore through arbitration. There are also rumors that Rio Tinto is interested in investing in Hope Downs if Hancock regains full ownership. Mr. Alba, could you comment on these speculations?"
"Yes, there is indeed a dispute between Hancock Prospecting and Kumba Iron Ore regarding Hope Downs," Alba admitted. "Recent shareholding changes at Kumba Iron Ore, where the majority shareholder achieved complete control, led Gina to argue that this breached their prior joint development agreement. Both Gina and Kumba have expressed confidence in their cases, and arbitration results are expected soon. Let's see what happens."
"Is Rio Tinto interested in becoming an investor in Hope Downs? After all, once the mine begins operations, the iron ore transportation would likely pass through Rio Tinto's mining areas, and utilizing your existing railway would significantly simplify logistics," Yuna continued.
"We indeed have an interest in participating in Hope Downs' development, but the final decision is not ours to make," Alba cautiously responded. "We must wait for the arbitration outcome to see who gains control."
Fred returned to Perth carrying several newly signed critical contracts. Before leaving China, he'd instructed his team to release news about the contracts signed with Wukuang Group and Tangshan Steel. There was no better way to boost Lianying Mining's stock price than with such announcements.
After these new partnerships were revealed, numerous Chinese steel companies quickly dropped their reservations, reaching out to Fred again to explore potential cooperation. Clearly, with the leadership shown by these two major corporations, no other company would seriously doubt Lianying Mining's credibility anymore.
Before returning to Perth, Fred traveled to multiple cities in China, meeting with executives from dozens of steel companies. Roughly half of these companies clearly expressed interest in long-term iron ore contracts.
Even setting aside potential future deals, the contracts already secured amounted to annual iron ore sales of at least 40 million tons. According to Tangshan Steel's agreement, annual sales would steadily increase over time. Essentially, the majority of Lianying Mining's planned initial production capacity had been pre-sold.
Iron ore sales were no longer a problem for Lianying Mining.
More importantly, the recent developments brought in two significant new loans. With ample financing, developing the iron ore mine was now assured.
Following these announcements, Lianying Mining's stock quickly rebounded from a low of 4.3 AUD, swiftly climbing past the 5 AUD threshold. The upward trend showed no sign of slowing, and it was clear the stock would soon surpass its previous peak.
As Fred stepped into Lianying Mining's modest office building, applause broke out spontaneously. Employees, who had recently feared for the company's survival and their livelihoods, stood up from their desks or emerged from their offices, clapping enthusiastically and continuously.
"Well done, Mr. CEO!"
"You've saved Lianying Mining and all its shareholders!"
"It's our privilege to have a leader like you!"
"You're my idol, Mr. Fred!"
The sincere and emotional outpouring deeply moved Fred, bringing tears close to his eyes. Yet, he knew clearly in his heart that the real hero behind Lianying Mining's turnaround wasn't himself—it was the company's mysterious owner. Fred enjoyed everyone's admiration, while that person remained quietly in the background.
"Everyone, stay focused! No one can stop Lianying Mining's rise!" Fred encouraged, shaking hands and hugging his employees.
Upon entering his office, he was surprised to see a visitor waiting: Philip. Standing and tipping his hat, Philip applauded warmly, remarking, "Mr. Fred, your hard work and skill are genuinely admirable!"
"Please, sit," Fred warmly welcomed Philip, showing no ill will despite Philip's earlier doubts.
"I see you've recently achieved another major breakthrough!" Philip looked at Fred expectantly.
"Yes, we've made significant progress," Fred openly shared his excitement. "We've secured two large new contracts and a substantial loan."
"It seems the company's recent announcements were accurate after all!" Philip had come to personally verify this news.
"Lianying Mining will always be trustworthy," Fred recalled Li Tang's words.
"I didn't expect you to handle the crisis like this," Philip confessed. Given Fred's temperament, Philip had anticipated direct confrontations or lawsuits against critics. Yet, Fred had unexpectedly used a highly effective indirect strategy, quickly restoring trust in Lianying Mining throughout the financial world.
"Negative opinions were never going to hinder Lianying Mining's growth!" Fred confidently told Philip, eyes shining with determination. "About our previously agreed financing—when can we expect the initial transfer of that $1 billion USD loan?"
"The funds are ready and can be transferred immediately," Philip assured him. He'd arrived today precisely to confirm the company's soundness. Now, all doubts were dispelled.
"I'd like the funds transferred promptly," Fred requested, handing Philip several construction-site photographs. They depicted numerous facilities rising quickly at the mining site, and critical equipment such as reclaimers, stackers, and railcar dumpers were already on their way.
In 2005, they had less than one year left for final preparations. The faster they received funding, the sooner they could complete construction and begin operations.
"Certainly, no problem," Philip confirmed. He always generously invested in promising ventures, and Lianying Mining's iron ore project was exceptionally attractive in today's market. Worldwide, everyone was envious of iron ore producers, especially major firms like Rio Tinto and BHP Billiton, which effortlessly turned excavated stones into vast profits.
After finalizing contracts with Wukuang Group and Tangshan Steel, Li Tang traveled to Haigang City. Accompanying him was Tangshan Steel's General Manager, Long Fuyuan.
Surprised, Lu Chenyi, chairman of Haigang Steel, greeted them at the entrance of the headquarters building, noticing the unexpected guest. "Why are you here, Long?"
"Why can't I be here?" Long Fuyuan, stocky and outwardly simple-looking, grinned deceptively. "Chairman Lu, am I not welcome?"
"Of course you're welcome. Please come in!" Lu Chenyi smiled broadly, walking alongside Li Tang. "I heard you partnered with Tangshan Steel as well. Mr. Long's willingness to stand up and support you at such a critical time clearly demonstrates his leadership and vision."
"Thanks to Mr. Long's generosity, much of the negative speculation surrounding Lianying Mining has faded," Li Tang sincerely expressed relief. He frequently communicated with Fred lately to understand Lianying Mining's public reputation and construction progress. Without external disturbances, the mine's construction had significantly accelerated.
Fred recently informed him that funds from the Lucati International Group had also arrived promptly, alongside new contract prepayments and Wukuang Group's loan, ensuring abundant liquidity. Funding was now more than sufficient for initial construction, equipment procurement, and necessary infrastructure such as water desalination and power generation facilities.
Fred confidently asserted that with such excellent conditions, if they still failed to produce iron ore soon, he'd rather publicly apologize.
Further construction phases, such as the railway and port—significant financial investments—were progressing steadily, though small funding gaps remained manageable.
Currently, their primary goal was producing iron ore within the year. Completing essential infrastructure like their own railway and port within three years was their secondary goal. Expansion into subsequent phases could wait.
Li Tang genuinely appreciated Tangshan Steel, Wukuang Group, and Haigang Steel's critical support. This filled his heart with gratitude. He remembered his promise to Lu Chenyi, setting aside other tasks to personally visit Haigang City, bringing Long Fuyuan along to show appreciation and reciprocation.
"Congratulations!"
Lu Chenyi was genuinely happy for Li Tang: "I have champagne here. Should we open a few bottles to celebrate?"
"Chairman Lu's champagne is certainly first-class. We should try it!" Long Fuyuan seized the opportunity enthusiastically. Sitting down together to drink champagne provided the perfect chance to discuss further cooperation—such opportunities often arose naturally.
They sat down in Lu Chenyi's office, each with a tall champagne glass filled with bubbling golden liquid in front of them.
"Come on, let's toast to Li Tang and his Lianying Mining, for overcoming the recent crisis and soaring to new heights!" Lu Chenyi raised his glass, smiling warmly.
Li Tang took a sip of the champagne. It was sweet, pleasant on the palate. "Thank you, Chairman Lu, for your hospitality."
"Now that Lianying Mining's crisis is resolved, Shazhai Molybdenum's equity transfer is nearly complete, and the iron ore project in Guinea is, as you said, not urgent. The Tallego project is mostly being driven by Wukuang Group now," Lu Chenyi said, clearly understanding Li Tang's current situation. He twirled his glass leisurely, giving Li Tang a cheerful glance. "You don't have any urgent projects on hand right now, so can we finally focus fully on our iron ore exploration project?"
Long Fuyuan immediately perked up at the mention of iron ore exploration.
Buying iron ore, no matter how discounted the price, could never compare to owning and developing one's own mines. Those who held iron ore mines today were effectively sitting atop mountains of gold, effortlessly making money. Who would have thought of such prosperity just two or three years ago, when the entire iron ore industry was suffering losses?
"Tell us about your plan!" Long Fuyuan nudged Li Tang's shoulder eagerly.
Lu Chenyi instantly became cautious. He already thought it was odd that Long had mixed himself into Li Tang's group. Now, seeing Long's heightened interest, he sensed his intentions weren't entirely friendly.
"Mr. Long, I have something private to discuss with Li Tang. Perhaps you'd like to wait in the lounge next door?"
"No need," Long smiled warmly. "Don't worry about me—carry on."
"What are you trying to do?" Lu Chenyi was too familiar with Long Fuyuan. The two largest steel enterprises met frequently at industry conferences and often exchanged technical insights.
"Go ahead, please. Just pretend I'm not here," Long said comfortably, sipping his champagne with a broad smile.
Unable to dismiss Long, Lu Chenyi sighed quietly in resignation.
"Li Tang, you discussed the exploration project with Qu Yongan for a long time without settling on a location. Have you thought things through now?"
Li Tang set down his glass thoughtfully. "Iron ore deposits, especially large ones, are relatively easy to detect due to distinct magnetic anomalies. Even hematite or limonite, despite losing magnetism, differ significantly from surrounding rock in density, making gravity and electrical surveys highly effective in pinpointing large deposits."
"Indeed," Qu Yongan nodded, agreeing wholeheartedly. "Domestically, we've discovered several iron ore deposits exceeding hundreds of millions of tons, like Mianhua Steel's deposit."
"Big and high-quality deposits are usually already identified since they're easy to detect. Exceptionally deep deposits—two or three kilometers below the surface—pose immense challenges in both exploration and extraction technology. Given current market conditions, exploring at such depths isn't practical."
"What exactly are you suggesting?" Lu Chenyi was confused.
"Since both Chairman Lu and Chairman Long are here, I'll be direct," Li Tang said sincerely. "Your goal to find billion-ton or tens-of-billion-ton iron ore deposits domestically is understandable, but frankly, it's nearly impossible."
"Even with you personally involved?" Lu Chenyi hadn't expected Li Tang to make such a blunt assessment.
"The large deposits that could be easily found have already been discovered due to the simplicity and efficiency of exploration methods."
Hearing this, Lu Chenyi felt a wave of disappointment. He had hoped Li Tang's expertise could deliver a huge domestic mine. Owning a domestic mine producing tens of millions of tons annually could lower steel production costs by at least 30%, a truly transformative prospect.
"Is there really no chance domestically?" Long Fuyuan persisted stubbornly despite disappointment.
"Not exactly," Li Tang pointed at Qu Yongan. "They recently discovered a sizable iron ore deposit at Neimeng."
"The grade is somewhat low," Qu Yongan laughed awkwardly. "Adding up all resources, it barely qualifies as a large deposit." He was clearly downplaying expectations.
"Our country is vast; surely some large deposits remain undiscovered," Long insisted optimistically.
"Iron ore exploration, especially using aerial magnetic surveys, is extremely effective," Li Tang spoke honestly. "Any significant shallow deposit would have already been identified. Given your companies' enormous iron ore demand, focusing solely domestically isn't realistic. Your best option lies overseas."
"Then why did you previously sign contracts promising domestic exploration, sounding so confident?" Lu Chenyi voiced mild dissatisfaction.
"I promised to find a large domestic deposit, and I will fulfill that," Li Tang reassured him. "However, for companies of your scale, genuine control of iron ore sources requires looking abroad. You're whales—you can't thrive in shallow waters; your playground must be the open ocean."
"Why didn't you clarify this earlier?" Lu Chenyi complained.
"I hinted at it earlier, though perhaps not explicitly enough," Li Tang replied sheepishly. He genuinely wanted to help, grateful for their recent assistance. Otherwise, he'd never have devoted so much effort.
Long Fuyuan sighed. "Just one large mine would help us significantly. Right now, all our iron ore and coking coal must be purchased externally. Costs are high and getting higher."
"Alright, we trust your judgment!" Lu Chenyi made a decisive call. "We'll tackle this issue from both angles—domestic exploration and overseas investment. Regarding overseas, should we focus on acquiring identified deposits or fund new exploration?"
They all knew Li Tang had multiple successful overseas projects, including Pebble Project, Pilbara iron deposits, and Guinea iron ore. There was no doubting his extensive overseas geological expertise.
Yet they also knew overseas investments, whether acquiring established deposits or funding exploration from scratch, involved substantial sums and significant political risks—like Guinea, rich in reserves but politically unstable, unsuitable for long-term returns.
"Either works, depending on your preference." Li Tang opened his notebook briefly before looking up. "Have you heard recent news about iron ore in Australia?"
"What news?" Lu Chenyi rarely followed foreign developments.
"Hancock Prospecting and Kumba Iron Ore are currently in litigation over equity in the Hope Downs deposit," Li Tang said calmly.
"Why is this information valuable?" Lu Chenyi couldn't immediately see the relevance.
"Hope Downs is just south of our Chichester Range mine, sandwiched between Rio Tinto and BHP's mines. Hancock and Kumba each own 50%, but recent ownership changes at Kumba triggered contractual clauses. Hancock will likely regain full ownership."
"And then?"
"Hope Downs has 800 million tons of high-quality iron ore reserves, suitable for a major mine producing tens of millions of tons annually," Li Tang explained.
"You mean there's an opportunity for us to join development?" Lu Chenyi exchanged a glance with Long.
"Possibly—but investment will be massive, probably around 2 billion AUD," Li Tang warned. Such large capital transfers abroad faced stringent approvals from foreign investment regulators.
"We hadn't followed this closely," Long Fuyuan admitted. Without enough information, it was difficult to make immediate decisions.
"In my opinion, Hancock Prospecting is currently the best investment in iron ore after Lianying Mining itself," Li Tang advised sincerely from his unique vantage point. Hancock controlled several undeveloped but immensely promising deposits and would quickly become one of the world's leading iron ore firms—potentially ranking fifth globally.
Presently, Hancock was merely a small exploration firm, profiting mainly from royalties paid by Rio Tinto. But its growth potential was enormous. If Li Tang hadn't already been committed to Lianying Mining, lacking spare capital, he would've proactively approached Gina Rinehart to seek cooperation.
Undoubtedly, Hancock needed significant capital and supply contracts from major Chinese steelmakers. In the past, Hancock repeatedly approached companies like Haigang Steel and Tangshan Steel seeking partnerships but had been consistently rejected.
No one had recognized the potential, missing the opportunity to invest early. Li Tang's words now served as a crucial reminder to Lu Chenyi and Long Fuyuan: if Hancock Prospecting ever approached them again, they must seize the chance without hesitation.
Opportunities like these rarely knocked twice.
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