Hank Maersk, who is in charge of the company's iron ore industry in Western Australia, looked very ugly: "The headquarters wants us to shut down 50% of our production capacity?"
The secretary nodded helplessly: "Yes, Mr. Manager."
Hank Maersk had a huge headache when he received the notice of production reduction and layoffs from the headquarters.
Hank Maersk has no right to refute the decision of BHP Billiton headquarters. After all, the head office has no choice but to do so.
How could BHP Billiton shut down 50% of its production capacity if it could make money?
The reason why 50% of production capacity needs to be shut down is mainly because a disruptor has appeared in the international market at this time.
That's Homo sapiens, Inc.
After the formalization of Homo sapiens Corporation, it reorganized its internal mining and metallurgical industries.
It has established three mining subsidiaries, Jade Mining, Coral Mining, and Nanyang Mining, and three metallurgical subsidiaries, Sea Snail Metal, Mandalay Metallurgy, and Sumatra Metallurgy.
At the beginning, these two systems did not have much impact on BHP Billiton, Rio Tinto, and Vale.
Until September.
The fully integrated Mining Department and Metallurgical Department of Homo sapiens began to form a group to attack BHP Billiton, Rio Tinto and Vale.
The offensive of the Homo sapiens company is carried out in two aspects, namely the raw material market and the finished product market.
On the one hand, Jade Mining, Coral Mining, and Nanyang Mining are fully committed to exploiting the Sulu Sea seabed hematite, Sumatra pyrite, and deep magnetite in the southern part of Thaniat Ong Mountain. These three iron ore producing areas have a total reserve of 17.3 billion.
tons of iron ore, with an average grade of 43.6%.
If we were just mining iron ore, the problem would not be serious. After all, the Homo sapiens company's trade channels are blocked by Europe, the United States and the Far East.
But how could the Homo sapiens company only make one move?
Its subsidiaries, Sea Snail Metal, Mandalay Metallurgy and Sumatra Metallurgy, quickly lowered the ex-factory price of finished steel.
In September this year, the global ex-factory price of ordinary steel was about US$450 to US$500 per ton, while the CIF price of 62% grade Australian iron ore was about US$120 per ton.
The CIF price of Homo sapiens' selected 62% hematite is 35 gold yuan per ton (equivalent to US$70 per ton).
The ex-factory price of ordinary steel produced by Homo sapiens is 180 gold yuan per ton (equivalent to US$360 per ton).
The impact of this price is very bad.
Because the steel profit margin of Chinese steel companies is only 8 to 15 US dollars per ton, the profit margin of steel companies in other regions is also not high.
Europe, the United States and the Far East are stuck in the market channels of Homo sapiens, but that does not mean that the whole world listens to them, especially in the face of interests.
For example, the oil tyrants in West Asia found that the cost of purchasing Homo sapiens steel can be reduced by about 20%.
I have a lot of gold and foreign exchange, so why not choose Homo sapiens steel products? Isn’t it too much money?
Another example is cash-strapped African countries. They have obtained some gold dollars by selling minerals, oil and natural gas, and naturally they have to take advantage of the gold dollar's cost-effectiveness.
South Asia, Central Asia, and Latin America have also chosen Homo sapiens steel products.
Even some European countries secretly import steel products and iron ore from Homo sapiens companies through middlemen such as the Kingdom of Saudi Arabia and Egypt.
As a result, the pressure has come to the major steel companies in the Far East. Should they give up the high-priced iron ore from Australia and Brazil, or continue to insist?
The first one to make a choice was a group of steel companies in China. They reached an agreement with Homo sapiens company, that is, at a processing fee of 125 gold yuan per ton of steel, Homo sapiens company will provide iron ore to help
Homo sapiens produces steel.
Although the net profit is only about 5 gold yuan per ton, the benefit is cheap iron ore supply.
As the world's king of steel coils, Huaguo Steel Enterprises has exerted its power to directly lower the global ex-factory steel price to an ultra-low price of only 360 to 390 US dollars.
And a chain reaction followed.
You know, in 2021, 60% of the iron ore on the international market was taken by Chinese steel companies, while the metallurgical subsidiary of Homo sapiens took 21% of the iron ore share.
Together, the two companies account for 81% of the iron ore in the international market.
Now the Homo sapiens company fully uses its own iron ore, and Chinese steel companies are also forced to use the iron ore of the homo sapiens company.
Suddenly, 81% of the market share was lost.
BHP Billiton, Rio Tinto, and Vale suddenly experienced a large amount of excess production capacity.
Even though America has restarted part of its steel production capacity in response to the threat from Homo sapiens, North America has long passed the stage of using iron ore for smelting, and their steel plants mostly use scrap steel as raw materials.
There is over 1.3 billion tons of iron ore production capacity. How can we break it?
This is simply incomprehensible.
The remaining steel companies in the world cannot digest 1.3 billion tons of iron ore, so drastically reducing production and laying off employees are BHP Billiton's only options.
Of course, they can also choose price reduction promotions.
Even with price reductions and promotions, they can't beat the Homo sapiens company.
According to research reports from international institutions, the production cost of iron ore in Australia is about US$40 per ton, and that of Vale in Brazil is about US$60 per ton.
After adding transportation costs, the CIF price of Australian iron ore transported to the Far East will reach about US$60 per ton, while the CIF price of Vale reaches US$90 to US$100 per ton.
How does this price compete with Homo sapiens?
The production cost of Homo sapiens company's ore is extremely low, and the transportation distance is also very close. The CIF price of 35 gold yuan per ton actually still leaves a 40% profit.
In other words, once BHP Billiton and others cut prices, Homo sapiens will definitely lower prices further.
As a last resort, BHP Billiton and others began to reduce production and lay off employees.
Mines in Western Australia are the first to be affected.
Hank Maersk has already felt the pressure and malice of Homo sapiens. According to the current trend, the remaining 19% market share is actually in danger.
After all, the steel plants in South Korea, Japan and the EU will definitely not be able to survive for long.
Nowadays, Chinese steel companies occupy the mid- to low-end international market, while Homo sapiens companies occupy the mid-to-high-end market, making other steel companies cry for their fathers.
Not purchasing ore from Homo sapiens?
Then go to hell!
This is also the reason why some European steel plants secretly purchase Homo sapiens minerals. They have no choice but to use them. In order to survive, they can only make a choice.
If it were a traditional international market, then BHP Billiton and their behind-the-scenes financiers would definitely use financial means to directly eat up all the low-priced iron ore, and then continue to maintain their market monopoly.
However, when they encountered the Homo Sapiens Company and the existence of Jin Yuan, the possibility of European and American financial capital control was blocked.
After all, to purchase iron ore from Homo sapiens, they need to prepare at least hundreds of billions of gold dollars.
The trade gold dollars currently circulating in the world are only over 300 billion.
European and American capital forces simply cannot gather so much gold and dollars, so there is no way to attack the iron ore layout of Homo sapiens.
Even if they can gather so much gold, Homo sapiens Company can still play rogue and directly restrict their purchases. They must be steel companies to obtain purchasing qualifications, which will break the other party's conspiracy.
Faced with this head-on confrontation, BHP Billiton and others felt extremely uncomfortable.
Now we can only manage to stabilize the internal situation by reducing production capacity and laying off employees.
But production cuts and layoffs are just poison to quench thirst.
There is no problem if iron ore is not mined, but large-scale mining equipment, ore dressing and washing, sintering equipment, load-carrying railways, iron ore transport ships, etc. are depreciating all the time, and these expenses cannot be cut off.
As long as production is stopped for a year and a half, these equipment will become scraps.
What is more serious is that once industrial workers are lost, it will be very difficult to train them again.
As long as an industry ceases production for more than 10 years, the supporting industrial workers and the supporting majors of the school may disappear directly.
This is also a problem encountered by North America at this time. Their industrial hollowing out over the past few decades has caused North America to lose a large number of industrial workers and supporting training systems.
Thank you for your support (ω｀), and thank you for your rewards. We have just finished the game in the past few days, and it will take a few more days for more updates.