The Industrial Giant Reborn

"Chen Sheng, there is another important matter, the Christmas Creek Iron Mine. Recently we have negotiated with several international mining groups. At present, the conditions are similar. Among them, I think Rio Tinto is the best choice. "After Zhou Jiayang finished speaking, he took out a document from the side, handed it to the boss and said: "The Christmas Creek mine is 120 kilometers away from the nearest Rio Tinto railway line, and the nearest 300 kilometers away from the others. Kilometers, if you consider mining transportation, you must build a two-way track. In desert areas like Western Australia, the cost of such a railway is as high as 3 million US dollars per kilometer. If you cooperate with other companies, you will have to pay more for this alone. $500 million is not a good deal."

"With Rio Tinto's advantage, won't lions speak loudly?" Chen Zhiwen asked. Mining, an industry with huge investment, generally requires sky-high investment, not just in mines, but more importantly in railway transportation, ports, etc. Only sea freighters can be contracted by professional shipping companies.

Therefore, under normal circumstances, it is best to use existing infrastructure if it can be used. In some countries, the government will come forward to build infrastructure. However, in Western Australia, the Australian government is not willing to invest so much money. It is simply selling the survey rights of large areas of uninhabited land to attract international mining and oil giants. As long as there is enough mineral energy, the giant companies will naturally invest in infrastructure, and the entire industry chain can also pay taxes. The Australian government Make a profit without losing money.

However, this also has a disadvantage, that is, various mining giants have gradually monopolized the transportation infrastructure in Western Australia. Other players are free to buy exploration rights, but if they detect mineral deposits, they have to be controlled by these giant companies.

But in Chen Zhiwen's view, this is normal. People have invested a lot of money in infrastructure step by step over the past few decades, and now they deserve the "semi-monopoly" returns. If it were him, he might just feel that the returns are too little. point.

It's just a business negotiation. Now that we are the party with survey rights but no transportation infrastructure, we naturally have to stand on our own side.

"Of course they have put forward many more stringent requirements than other mining companies, but infrastructure is the Achilles' heel. Relatively speaking, it is still the most cost-effective." Zhou Jiayang said that during this period, Hutchison Whampoa's British management finally showed its full potential. After several months of negotiations with several mining giants, the entire project was handed over to Richard. After several months of hard work, we finally got a rough understanding of the parties’ needs with several mining giants. Some requirements, thereby pushing out each company's bottom line.

"What kind of cooperation model is that?" Chen Zhiwen asked.

"For joint venture development, both parties will set a valuation for the entire Christmas Creek iron ore, and then we will have 60% of the equity and Rio Tinto will have 40% of the equity. However, the mineral development needs to be handed over to Rio Tinto, and the various expenses required for the entire project, including development We will share the mineral deposits and railway construction in proportion." Zhou Jiayang replied: "It may take some time to decide on this valuation. Originally Rio Tinto asked for 50%, but we insisted strongly that it changed. It’s now 64 points.”

"It is said to be 64 points, but if it is really operated like this, I estimate that half of the profits will be taken away by them. We all know the tricks here." Chen Zhiwen took a sip of coffee and said.

In a joint venture between two parties, operating rights are often more important than equity, because with operating rights, even if the shares are lower, there will be a lot of room for maneuver. For example, in later joint venture car companies, operating rights , sales rights, quality release rights, and purchasing rights are all in the hands of foreign joint venture brands. For a joint-brand car worth about 150,000 yuan, the foreign party has to pay about 10,000 yuan in licensing fees alone. At the same time, in terms of procurement, many domestically produced cars are simple. Parts and components are also produced by overseas companies. In the end, the foreign party takes away 70% of the profits of a joint venture brand car, and high-end positions such as design will always be placed abroad. This is the case for Volkswagen, Toyota, local, BBA, General Motors, etc.

This is also why when domestically produced cars rise, the income of basic workers may not be as good as that of joint venture brands, but a large number of R\u0026D, quality, supplier and other positions have been retained in China, and all funds can be circulated internally, driving a large number of high salaries. Jobs can ultimately also boost the income of essential workers. And if it can be exported on a large scale, the income will be higher, and it can also seize the automobile market in other countries. You must know that in Japan in the 2020s, there will only be one core automobile industry left (those high-tech but small-market industries do not count) , although it makes money, it cannot drive large-scale employment). If this piece of fat is eaten up by domestically produced cars, then Japan will really have to rely on a certain special industry in the future.

"Everyone is actually well aware of this. We will also arrange for dedicated personnel to keep an eye on it in the future, plus third-party audits. Although it cannot be avoided, it can always be controlled to a certain extent." Zhou Jiayang said: "This may also be regarded as an industry. We have a tacit understanding. It will all depend on who has the higher moral standards."

"That's all we can do. It's almost the same looking for other places." Chen Zhiwen said with a shrug. Compared with the automobile industry, the troubles in the mining industry may be much smaller. After all, the products are single and the purchased items are also comparative. Unlike automobiles, there are too many technical requirements and only foreign parties have the final say. Without technology, only Can let it be.

"In terms of talent training, we have also hired some Chinese from other international mining giants, but it is difficult for us to find the most basic technical workers, not because the requirements are high, but because the quantity requirements are too many. Hong Kong, Bayan Many people here are unwilling to go, and we don’t have enough choices." Zhou Jiayang added.

"Have you considered looking for people from the mainland?" Chen Zhiwen asked. It is indeed unrealistic to find people willing to do this kind of work in Hong Kong Wanwan. There are no such companies in these two places, and the economies of the two places are not Worse, who is willing to go mining outside unless they have to? Although Hong Kong's economy is not doing well this year, it is estimated that there will not be many people in the desperate situation, which is far less than the demand for people from large-scale mineral deposits.

"For the mainland, language is a problem, and we definitely need to discuss it with the domestic side. Furthermore, Rio Tinto may not agree with it. They probably know our idea, and they are probably more willing to use their own people." Zhou Jiayang said.

"It's not their turn to have the final say. We are the owners of this mineral deposit. Besides, the labor costs of mainlanders are much lower. Let's calculate this account with them. If they don't agree, then use their people The extra cost is theirs." Chen Zhiwen said: "As for the language issue, it is not very important. Just match it with some translators. If you can earn a lot of foreign exchange, you can still mobilize some translators in the country, and there are also a large number of professional miners in the country. Although The mining methods are different from those abroad, but after all, as people in the industry, if they learn more, it will be easy to get started. In the future, I can teach them basic English overseas."

Hong Kong's small population, coupled with the attraction of real estate and finance to high-quality talents, is destined to have no good industries here. Similarly, when Chen Zhiwen's overseas industries need a large number of people, Hong Kong is not a place that can be transferred In some places, unless it is a factory like that in China, it is still possible to recruit a small number of people.

The mining industry is even more special. Among the global Chinese community, only the mainland can provide so many people. If Hutchison Whampoa wants to develop in this industry, it does not necessarily have to employ all Chinese, but at least some, at the very least, some technical personnel. It needs to be Chinese talent, so that we can stand firm in this industry and have our own basic base.

"Then this issue also needs to be included in the next round of negotiations." Zhou Jiayang nodded and said: "When it comes to Chinese people, I'd better arrange for the person in charge from the mainland to communicate with the relevant departments to see if the mainland can Send people out to sea and how many people you can send.”

"Did the previous draft agreement stipulate the output of iron ore and how to distribute the sales rights?" Chen Zhiwen asked again. In the mining industry, if there is a joint venture, the sales rights will generally be allocated. For example, the ore produced will be sold according to a certain proportion. This is a very influential right, whether it is coal mines, iron ore, copper ore. Mines, oil, etc. are necessities most of the time. When there is no oversupply, they are still very popular. For example, they can affect large shipping companies, large smelting companies, and even to exaggerate, they can affect some countries.

"This has not been settled yet, but looking at Rio Tinto's intentions, they want to monopolize this piece. What does Chen Sheng mean?" Zhou Jiayang said.

"Are they dreaming?" Chen Zhiwen shook his head and said: "Based on the shareholding ratio, I want 60%. Based on this, if Rio Tinto is willing to regress in other aspects, then we can reduce it to 50%. This is the bottom line. , we need to control half of the sales.”

If you want to develop in an industry, you must develop this market yourself. Otherwise, why bother and just sell the Christmas Creek Iron Mine for a single price? Although the profit in the ore market is very high, it is still not as good as the most basic real estate. Let's not talk about it. Let's talk about some cities in Southeast Asia. Now they buy some buildings, rent them out to collect rent, and sell them before the Asian financial crisis in 1997. Then The total profit will not be lower than that of minerals, but this is purely cash and has no influence. The difference with mining is that as long as the scale is large enough, it can have direct dialogue with many countries. This is what Chen Zhiwen needs, otherwise it would be so easy to invest in American IT companies.

"Okay, I will talk to Richard about this. He is still in the UK." Zhou Yang said with a smile. Although Hutchison is still Richard's boss on the surface, and Chen Zhiwen has kept his original promise and not replaced him, but the power of Hong Kong and domestic business has been in his hands. There is no way, how can the Chinese boss let the ghost Lao controls the core business, while some overseas businesses, such as ports and now mining, are in charge of Richard. In fact, for him, when Hutchison becomes bigger, the resources Richard controls will be greater than before. The Hutchison CEO is much larger.

"In addition, the valuation price of iron ore cannot go back. Although it is a joint venture, I don't want to spend any more money on this project. Therefore, the funds after the joint venture need to be able to meet various development and infrastructure investments. In this way, we are equal to Hold the shares, buy these facilities, wait until the minerals come out, and then we will invest in the next phase when the profits are made. This model is my ideal plan." Chen Zhiwen added.

"Indeed, the investment in mining is too big. With this money, it will be more cost-effective for us to invest in Hong Kong real estate or Japanese real estate." Zhou Jiayang nodded and said. This year, Hutchison Whampoa invested a large amount of funds in Japanese and Hong Kong real estate. For the latter, Zhou Jiayang is also very optimistic about the future. For the former, it has risen by almost 15% in more than a year. The income is very considerable, and the Japanese yen exchange rate is still rising slowly, making it more cost-effective.

"In addition, after the land acquisition is completed, we will prepare some more funds and go to the UK to acquire some Rio Tinto shares." Chen Zhiwen added.