"Haha, if you are willing to listen, I will introduce it to you. Just treat it as a casual chat."
Wang Yaocheng smiled gently and continued; "The world's bulk resources have always been oversupplied, from soybeans and natural rubber to iron, copper, aluminum, tin, oil, cotton, sugar, etc., and prices have been stable for decades.
However, since China joined the WTO, the booming economy has brought about massive demand for resources, causing the international bulk resources field to rise.
This watershed occurred in 2004. Before that, prices generally showed a steady and slight downward trend.
After that, the prices of all bulk resource categories soared, showing a steep upward trend. Especially since 2006, the prices of these bulk commodities in the international market have soared in unison, like a wild horse that can't be restrained.
Crude oil rose by 151%, sugar rose by 121%, natural rubber rose by 157%, copper prices rose by 383%, aluminum rose by 92%, and iron ore rose by 69%. As the largest importer of commodities, China has become the largest importer of commodities in this round.
A direct victim of the price increase trend.
There is now an international recognition;
Whatever China needs, the international market will rise?
Jim Rogers, a famous investor from Quantum Fund, wrote in the book "Hot Commodity Investing";
China is consuming more goods than any other country in the world. This consumption rate is still accelerating. China has become the world's largest copper consumer, the largest steel consumer, the largest iron ore consumer, and the largest cotton consumer.
Consumer countries, the largest soybean consumer and the world's second largest oil consumer, have almost endless appetites, and this prosperity can last for at least ten years.
The copper futures price on the London Metal Exchange continuously crossed the US$3,000 and US$4,000 mark, and then rose almost vertically, reaching US$8,000 in May 2006.
You know, at the beginning of 2002, the price of copper futures was only 1,336 US dollars per ton, and at the beginning of 2004, it still maintained the level of 2,620 US dollars per ton. After many speculative funds poured in, the price has been out of control since then.
The reason why I say this is to give you a clear understanding of the bulk resource field.
Perhaps you have noticed that copper resources are the category with the largest increase, with an increase of 383%, while iron ore has the least increase, with an increase of only 69%. Is there any difference?"
Having said this, Wang Yaocheng imitated his father and slowly picked up the teacup and took a sip, his legs crossed quite awkwardly.
Wang Guodong couldn't suppress the smile at the corner of his mouth, and said with some resignation: "Okay, my son, I know you are very capable, tell me what's the key here."
Wang Yaocheng took another sip of tea carefully, and Chen Xiulian, who was sitting next to him, couldn't help but laugh;
The two of them pretend to be working together, which is really bad.
After a while, Wang Yaocheng continued to explain to his parents;
"Most of the copper and iron ore resources urgently needed for China's economic development are in the hands of foreign mining giants. The contradiction in demand for copper is especially acute, with prices jumping up and down like monkeys.
The direct impact is that the interests of domestic enterprises have been damaged, and they have fallen into serious losses due to the surge in product demand. Some weak township enterprises have closed down one after another.
In response to this situation, the State Reserve Copper incident that occurred in November 2005 can be regarded as a head-on confrontation between international speculative funds and the State Reserve Bureau. The State Reserve's "copper dumping incident" further intensified the originally agitated futures market.
International media have frequently reported on this peak showdown between bulls and bears, which has been interpreted as a "money war" and "shirtless battle". International commentators also have different opinions on this;
Is the State Reserve throwing away copper to spend thousands of gold or Jingwei reclaiming the sea?
Can we strike later?
Can having guns but no ammunition stop the madness of copper futures?
Is it overestimating one's ability to knock on mountains and shake tigers?
The State Reserve's selling of copper attracted a pack of wolves?
There is news that the final outcome of the "copper dumping incident" is not ideal. I have no intention to comment on who wins and who loses here. It's just that the state's copper reserve has limited resources to cope with unlimited demand, which is destined to be unoptimistic.
The "copper dumping incident" sent a wrong signal to domestic operating companies. After a short-term price correction, those that should be ordered were not ordered, and those that should be preserved were not preserved. Subsequently, copper prices continued to soar, causing major financial blows and losses to enterprises.
, as a result, thousands of companies closed down, and hundreds of thousands of industrial workers lost their jobs.
The crux of all this is that China, as a historically copper-poor country, needs to import most of its resource needs. It does not control the pricing power of copper mines, and domestic related industrial risks are directly exposed to international mining giants.
This situation is particularly serious in the iron ore field."
Having said this, Wang Yaocheng sighed deeply, with a look of concern for the country and the people on his face, and almost said to Wang Guodong and Chen Xiulian;
Come and praise me, I can bear it.
There was no casual expression on Wang Guodong's face. Instead, he looked at his son solemnly. The shock in his heart was beyond words. Is my child so good now?
"Xiaocheng, what you are doing now is very meaningful. You can see it and take the initiative to do it. Your parents will always be proud of you."
Even though Wang Yaocheng was so thick-skinned, he couldn't stand the energy anymore, so he laughed dryly and continued;
"Dad, I thought of this when I was negotiating with the Mitsui Consortium. Industrial resources are particularly concentrated in the iron ore field. More than 70% of the share is in the hands of the three major mines. Except for some self-operated mines of multinational steel companies, in the
The proportion of iron ore in international trade is higher.
The first phase of the Western Australia FMG project can reach 150 million tons. The current terminals and heavy-haul railway double tracks have all been completed, and mining has entered the full production stage.
In the past two years, 11,000 Chinese workers have obtained Australian household registration through the 'FMG Special Talent Introduction' project, and 7,400 Chinese workers have obtained stable and high-paying jobs in the Pilbara region of Western Australia with work visas.
We will also continue to introduce professional employees from China to supplement the staff gap in the Western Australia project.
Among the total world iron ore trading volume, the Western Australia FMG project can provide less than 7% this year, about 57 million tons of iron ore, but its influence is far more than 7%.
What the three major mines see is the influence brought by the long-term development of the FMG project in Western Australia. They may strongly deny this at the negotiation table, but needless to say, it has deeply affected the pricing of iron ore.
With a dog-beating stick in his waist, he is not afraid of walking at night.
The Simandou iron ore project in Guinea is another source of confidence for us. It is the largest undeveloped single iron ore deposit in the world. The iron ore grade is as high as 66% to 68%, and it is the best magnetite, higher than the famous magnetite.
Vale's iron ore has a grade of 62%, the highest in the world.
Such high-quality iron ore has a high premium. Compared with Australia's average 55% to 58% grade iron ore, the price is one-third higher and one-quarter higher than the price of Vale iron ore."
Wang Guodong was very happy to hear this, but he had been a senior cadre for so many years and was not easy to fool. He thought for a moment and said, "Xiaocheng, I know that the iron mine you are building in Africa is very useful. Isn't there any difficulty?"
"There are indeed difficulties, and they are not small."
In front of his father, Wang Yaocheng didn't have to hide anything. He tapped the coffee table gently with his slender fingers, and said after a moment of pondering;
“Compared with the improved facilities and business environment of the FMG project in Western Australia, the African iron ore project can be summarized in eight words;
Backcountry, with nothing.
It is naturally very difficult to develop. However, we have just solved the problems at the government level. The entire construction project is undertaken by the Huaxia Iron Army, so there is no need to worry about their strong construction capabilities.
The security aspect is borne by the consortium, so we cannot say that we can sit back and relax. At least safety is guaranteed.
The biggest problem faced is the harsh natural and cultural environment. It is necessary to build a complete set of systems from scratch, including mine construction, railways, docks, communications, water supply and power supply, public security and stability, and even the entire Honghe New Port City.
Construction, everything depends on imports.
This greatly increases construction costs and corresponding burdens.
The FMG project is located in the slate geological inland area of the Western Australia Plateau, with an altitude of more than 1,700 meters. From the Duanyun Mine to the Cape Anders Iron Ore Storage Yard 400 kilometers away on the seaside, as well as the newly built Port Hedland, it shows the altitude
Gradually decreasing characteristics.
The slate geology of the Western Australia Plateau is very conducive to heavy-duty trains. When building railways, it saves a lot of trouble in roadbed. Therefore, the cost of building a 400km double-track railway is only 2.68 billion Australian dollars.
However, in the African iron ore project, the roadbed has become the key point for the success or failure of the entire project. The sandy soil here has extremely poor aggregation, and several times the effort needs to be invested to consolidate the roadbed in order to withstand the high requirements brought about by running heavy-haul trains for many years.
Moreover, Guinea, which is close to the Atlantic Ocean, is flooded during the rainy season. There are no standardized river channels and they flow all over the mountains and plains. A large number of bridges, culverts and tunnels must be built in these areas to avoid affecting the transportation of iron ore.
What follows is soaring construction prices.
The iron ore heavy-duty train from Duanyun Mine only needs two high-horsepower electric locomotives to tow a 3.9km-long 30,000-ton heavy-duty train on a railway line with an ever-lowering altitude.
After unloading the iron ore at Port Hedland, two high-horsepower electric locomotives were regrouped to haul the empty carriages back, which greatly saved costs.
This is not possible in the African iron ore project. A 30,000-ton heavy-duty train must be pulled by four high-horsepower electric locomotives. Based on the domestic quotation of 4.2 million U.S. dollars per unit, each heavy-duty train must be equipped with a value of 17 million.
The traction power of US dollars is double that of the Western Australia project.
According to the 30 pairs of heavy-duty trains required for the African iron ore project, plus the necessary backup locomotives, the entire project requires more than 80 sets, which is another expenditure of more than one billion US dollars.
Power plants must be built, water, electricity, and communications must be built. Everything needed must be built from scratch. Tribal armed forces and neighboring forces with ulterior motives must also be prevented from coveting the country, and a strong military presence must be maintained.
Therefore, there are many difficulties that need to be overcome in the construction of iron ore projects in Africa."
Wang Guodong was horrified and moved after hearing this. There is indeed no love for no reason in this world. Every bit of hard work is rewarded. Behind Wang Yaocheng's glorious success, one needs to go through the stormy waves to reach the other shore.
After pondering for a long time, Wang Guodong said seriously: "Xiaocheng, when you met with the leaders, did you discuss this issue? Did you ask for domestic help?"
"No, but you can definitely see our efforts."
"You don't have to hold on. I'll help you if necessary. Just now you said that neighboring countries have ulterior motives for coveting you. What do you mean specifically?"
Wang Yaocheng said; "Dad, you may not know the geographical situation of Guinea. Although Guinea is a small country in West Africa and its economy is mainly based on agriculture, it is extremely rich in mineral resources. It not only has world-class iron mines like Simandou, but also world-class exploration projects.
It has the largest aluminum ore resource in the world. In addition, it also has a large number of diamonds, gold, copper, uranium, cobalt, lead, zinc and other mineral deposits. It can be said that it is a country sitting on the mines, and to some extent it is not inferior to Australia.
Unfortunately, due to Uncle Hei's casual nature, the economy has not developed yet.
Guinea's neighboring countries include Sierra Leone, Liberia, Senegal, Guinea-Bissau, Mali and Cote d'Ivoire. There are quite a few countries that are careless. To put it simply, they don't like others.
We are developing under the name of the British Red River Resources Company, but we cannot hide it from interested people, including the international bookmakers who have all the power in bulk resource futures. Those with vested interests will not want us to smoothly develop the Simandou iron ore, or even further extend our hands.
To aluminum mines, copper mines.
This is a conflict determined by interests, and there will definitely be people who will jump out to cause harm, such as supporting tribal armed forces to cause trouble, attacking construction teams, damaging railway facilities, etc. This is all possible, and will be the focus of prevention."