"As far as we know, Mr. Forrester, your gambling-like investment has left FMG heavily in debt. If a large amount of capital cannot be injected, the result will be catastrophic."
Hao Wei didn't pay attention to Keynes Forrester's ugly face and talked eloquently;
“The first phase of the project includes a super-large-scale open-pit mine, amazing-scale mining equipment, and the construction of a 400km-long railway line, which must reach an annual transportation capacity of 100 million tons.
At the seaside terminal, it is necessary to build an iron ore storage yard covering an area of 10 square kilometers and a newly built Port Hedland.
If sufficient funds are invested, it is indeed possible to produce the first shipment of iron ore in the fourth quarter of 2016, thus alleviating FMG's imminent financial problems.
Once the construction period is delayed, even a fool can see that the funds invested will increase exponentially.
Calculated according to senior engineers;
Completing a construction of this scale will cost far more than 3.75 billion Australian dollars. The minimum construction cost is 5.5 billion Australian dollars, which may be increased by 8 to 10% on this basis.
All of this is based on sufficient funds. It is impossible for such a huge investment to be borne by the royal family fund. So I want to ask, how much more money are you prepared to invest?"
The atmosphere in the conference hall fell into silence, and Cairns Forrester's face was gloomy. He knew that although the other party's questions were sharp, they basically did not deviate from the core of the problem, and he did not intend to make things difficult.
But these words sounded very harsh to him, and even more distressing.
The reason is very simple - the company is insolvent and has no money.
"You have only seen the surface of things. The economy of the ancient country of China in the far east is taking off. They can eat as much iron ore as they produce without worrying about sales.
The Pilbara region is rich in resources and is the perfect seller for this deal. We will achieve historic success.
Believe me, this investment will bring you huge benefits. Every cent you invest now will reap dozens of dollars in benefits in the future.
What we have to do is to cooperate sincerely, start this big project together, and follow him to the glory of life..."
Cairns Forrester tried his best to encourage the Hong Kong guests, waving his arms vigorously to increase the momentum of his speech, trying to infect the other party with his passion, but unfortunately he had little effect.
"Well... I'm sorry, we still want to ask, how much more money can your FMG company invest in the future?"
"Can you please stop bringing up this damn topic? We are talking about a big project that is enough to shock the world. It is enough to change the pattern of the world's bulk resources. You are witnessing history."
"Okay Frist, let's talk about how much more money you can spare?"
Keynes Forrester almost went crazy and shouted: "Damn it! This is such a grand development plan that will change the whole world. Don't you feel a little excited?"
"A minimum construction cost of 5.5 billion Australian dollars is required. Once the project is delayed, the construction cost will rise rapidly. Please do not ignore this critical issue. We cannot carry 20 pounds of ore 400km away."
Hao Wei spread his hands and continued to undermine the other party's self-confidence; "All of this requires massive capital investment, and we cannot just rely on our investment. The biggest problem now is that FMG has no money."
"We can borrow money, we can raise funds, and we can also find more partners to invest together and share this rare historical opportunity."
"Forrest, FMG is now insolvent and no bank is willing to lend large amounts of funds. Let's face it, FMG does not have the strength to leverage such a large project and invest 5.5 billion Australian dollars in construction within one and a half years.
Cost, if the construction period is delayed, the construction cost will quickly skyrocket to 7 billion Australian dollars or more, and the huge debt will definitely crush this project."
"We can find more partners to share capital costs. As long as China produces iron ore and has enough appetite to eat it all, all problems will be solved."
Cairns Forrester has the adventurer gene flowing in his bones, and he has a strong sense of never looking back until he hits the wall.
Many company executives present were silent, and it could be seen from the solemn expressions on their faces that they were extremely unfavorable about the prospects of this project.
The reason is simple
FMG does not have enough strength to develop this huge project. According to decades of experience in the field of mineral resources, the profit rate of the iron ore industry has never exceeded 10%.
Huge cost investment, once it cannot be put into production as expected, the huge interest burden will make people despair.
In fact, everyone knows that this will happen with a high probability.
Mining companies have limited profit margins, so they must consider whether the input and output are cost-effective, instead of just betting like a gambler.
As it happens, the Pilbara iron ore project is in this weird situation.
In early 2004, Cairns Forrest went to China to contact numerous steel plants to seek investment. He also contacted major companies such as Mitsui Consortium, BHP Billiton and Rio Tinto, but no one was interested in this project.
Thomson, Rio Tinto’s chief operating officer, once said sarcastically;
"Forrest, you madman, do you want to drag everyone to hell?
The production capacity of the three major mines is enough to supply the needs of world economic growth. Who does FMG plan to sell the huge production capacity to? Let the iron ore under the Pilbara land stay quiet, maybe 100 years later
You can use it."
Even with the wildest imagination, no one dares to imagine that China's crazy demand for iron ore is simply a bottomless pit that can never be filled.
Of course, Chinese steel companies need iron ore, but they prefer to buy it in the spot market. The plan proposed by Forrest is really amazing. It often costs tens of billions of yuan in investment. Who can afford it?
What's more, according to China's current system, foreign investment must go through layers of approval.
Even if there is an investment intention, it will not be done without a year or two of effort. Additional investment will be even more troublesome. If the decision-making is wrong, it will be even worse. Both the company and the leaders of the higher-level authorities must be held accountable.
In this case, who wants to cause trouble for themselves?
There is no turning back for Cairns Forrest. After acquiring 47% of FMG's shares, he invested hundreds of millions of dollars in large-scale resource exploration and mine construction. This was a complete gamble.
to know
The Pilbara region is 400km away from the seaside port. A dedicated iron ore transportation line and a dedicated iron ore terminal must be built to carry the planned 55 million tons of iron ore transportation.
Otherwise, the ore cannot be transported out and everything will be a dream.
Other iron ore companies in the Pilbara region, the largest of which only has an annual output of 3 million tons, are transported by heavy-duty trucks to Rio Tinto's dedicated railway line 120km away, where they are loaded and transported to the seaside terminal.
However, the planned production capacity of FMG is too large. The annual transportation volume of Rio Tinto's dedicated railway line is only 28 million tons, which is not enough for FMG.
Therefore, dedicated heavy-haul railway lines must be built.
The inspection team did not stay long at FMG and left quickly. They visited several other medium-sized mining companies in the Pilbara region and had direct conversations with the management.
After entering August
The professional negotiation team that came from Hong Kong merged with the previous Australian inspection team, and was led by Hao Wei to form the Western Australia Mining Investment Command, which was responsible for formal acquisition negotiations with relevant mining companies.
Due to detailed investigation work and close contact with mining companies regarding acquisition intentions, the ensuing acquisition negotiations quickly opened up.
August 3
Royal Fund announced that it has reached acquisition agreements with Diamond Mining, Western Australia Metals, and Luke Resources in the Pilbara region of Western Australia, spending a total of A$117 million to acquire the above three mining companies.
August 7
Royal Family Fund announced that it has reached acquisition agreements with Agniines Group Limited, Creek Iron Ore Company and Luesso Resources Company in the Pilbara region of Western Australia, spending a total of A$373 million to acquire the above three mining companies.
August 11
In the remaining days of July, Royal Fund acquired 32.3% of FMG's shares through the stock exchange at a cost of A$432 million, becoming the second largest shareholder after company chairman Cairns Forrester, who holds 47% of the shares.
.
In view of the heavy pressure from the board of directors and funds, Cairns Forrest finally had to compromise, reach a full acquisition agreement with Royal Fund, and hand over the chips in hand to make a profit.
The Royal Family Fund negotiation team paid a premium of 55% and spent A$974 million to obtain 47% of the shares held by chairman Cairns Frist.
And under the same conditions, it acquired the remaining 20.7% equity held by other shareholders.
At this point, Royal Fund has steadily taken over FMG, holding 100% of the shares, and announced that FMG will delist from the Australian Stock Exchange. It will merge and reorganize its seven mining companies in the Pilbara region, and choose an opportunity to reorganize
Listed.
August 16
Wang Yaocheng, chairman of the board of directors of the Royal Family Fund, personally went to the Pilbara region of Western Australia and had frequent contacts with local parliamentarians and high-level government officials. He expressed that he was extremely optimistic about the investment prospects in the region and was willing to invest heavily in the mining industry to promote employment and economic development in the region.
Senior officials of the Western Australia regional government have expressed their strong support and unanimous optimism for this, saying that they will provide strong support in introducing foreign workers to come to Australia for visas, employment, settlement, application for preferential government loans, and improvement of supporting water, electricity and transportation infrastructure construction.
The iron ore companies acquired and integrated by the Royal Family Fund are all concentrated in the North Pilbara region. After the integration, it has 130,000 square kilometers of exploration rights and proven iron ore resources of 7.7 billion tons, forming an astonishing superpower.
Large iron ore mining enterprises.
The vast Pilbara region of Western Australia is a truly barren land. This red land contains endless iron ore resources.
The area is vast and sparsely populated. The permanent population of the North Pilbara region is less than 10,000. If large-scale development is to be carried out, a large number of professional labor must be introduced from abroad, ranging from mine diggers, mine truck drivers, and mining equipment use and maintenance.
From welders, plumbers, carpenters to domestic service workers, almost all industries are short of workers.
Here, entertainment life is scarce, and there is endless red wasteland as far as the eye can see.
Don't expect residents of the economically developed Eastern Australia region to come to work here. No matter how much money you give, it's impossible. If you want to develop the economy of Western Australia, you can only attract foreign workers to come and work and settle here.
For the top officials of the Western Australia regional government, being able to attract the world's top Wang family consortium to develop resources is simply a piece of cake in the sky.
This is crucial for accumulating political achievements, attracting voters, and even expanding Western Australia's voice in the Australian federal government and accumulating political capital.
Therefore, we should do everything possible to provide policy support.