"I am naturally happy to be able to cooperate with Baosteel, but at present, the iron ore mine in Christmas Creek has only just completed the preliminary planning, according to the plan, it will take 5 years for the production capacity to be raised, if it is only the willingness to cooperate, then it can be determined now, but the specific cooperation matters can only be discussed after the start of production in Australia." Chen Zhiwen said.

The mine, which also belongs to heavy industry, is no less complex than a steel mill, but Hutchison is not directly involved at present, but handed over to Rio Tinto, its own side, just participate in monitoring and learning, after all, there is no experience, there is no point in participating, and when there is a little foundation, then we will talk about it later.

But even for the experienced Rio Tinto, it will take several years to get a mine from nothing to being able to open a mine, but fortunately, the Christmas Creek iron ore ore layer is shallow, easy to develop, and the transportation area, basically can mostly use Rio Tinto's existing facilities, otherwise it will take longer.

Two months ago, Hutchison and Rio Tinto had completed a preliminary agreement to value the entire Christmas Creek iron ore mine at US$2.5 billion, and Rio Tinto would buy a 40% stake at US$1 billion, and then Hutchison used the funds to inject another US$666 million into the Christmas Creek iron ore mine to complete the joint venture.

As a result, the Christmas Creek Iron Mine alone has $1.666 billion in cash, and the shares of the two parties are still 6:4, and the joint venture will be operated separately, so that Hutchison does not need to contribute any funds separately, reducing the financial pressure.

1.6 billion US dollars, for Hutchison, is also a very large amount, so that it is a bit difficult to take it out alone, but for mining, it is a normal number, an iron mine covering dozens of square kilometers, need to buy a lot of equipment and invest in infrastructure, but also need to prepare a living area for thousands of workers, which is equivalent to building a town, the cost of any of these is in the unit of 100 million US dollars.

Only when the ore is mined and sold can you start to raise the ore with mine, and before that, it is desperately burning money.

Even if it is a company like Rio Tinto, the funds used are actually borrowed from the bank, and the mortgage is naturally the value of the future iron ore, otherwise, any mining giant is unlikely to come up with so much money, and the oil field is actually the same, the mineral mining industry, the demand for bank funds, is much higher than the real estate or even the shipping industry. However, the stability is also relatively strong, as long as there are no new super deposits in the world, basically there will be no loss, which is also where the bank is more assured.

"This is actually nothing, our country imports all kinds of bulk commodities, if it is not an urgent purchase of spot, it is basically with many large foreign companies or governments, in advance to discuss the content of cooperation for a long time in the future, as for the price, there is no need to settle down now, the future of the two sides will also follow the international price to conduct annual negotiations, otherwise the market price fluctuations are too great, none of us can stand it." Li Ming smiled and said: "However, theoretically, you can also lock in the price in advance, that is, we generally do not participate in this kind of futures investment." ”

"I won't participate in futures, so if we cooperate, we can renegotiate the price according to the year." Chen Zhiwen nodded and said, "I don't know Baosteel, what will be the annual amount of ore imported in the future?" ”

Chen Zhiwen knows that Baosteel is the largest mainland steel mill in the future, and even the number one in the world, but I don't know what the current production capacity is.

"The production capacity of the first phase is estimated to be around 6 million tons, and according to the plan, there will be a second phase later, but that will be at least five years later." Li Ming said.

"Then import iron ore, at least 15 million tons?" Chen Zhiwen nodded and said. Although he doesn't know much about the steel industry, he has a large iron mine in his hands, and he naturally has some of the most basic understanding, under normal circumstances, refining a ton of steel requires 2-2.5 tons of iron ore, 0.5 tons of coke and a lot of water, etc., but this is only crude steel, and more resources are needed to refine it, and the iron content of iron ore must also be considered, so it is only an approximation.

"Almost, at least 1,500, and with the subsequent increase in production capacity, this number will only get higher and higher." Li Ming said.

"In the future, the domestic economy will inevitably get better and better, and the demand for steel will inevitably become higher and higher." Chen Zhiwen smiled and said.

"I heard that the iron ore in Christmas Creek has an iron content of more than 60%, I wonder if it's true?" Li Ming asked again, this is something they are more concerned about.

The reason why Baosteel's project is placed in Shanghai instead of Northeast China is mainly to consider that the equipment imported from overseas must use high-quality iron ore, which is currently not available in China, and can only import iron ore from overseas, so it is necessary to establish such steel plants in coastal cities.

Of course, the location of the market is also one of the considerations, Shanghai and the surrounding area, the economy is very developed, in previous years it is necessary to buy steel from the Northeast, or import from overseas, the transportation cost of steel is very high, in the Yangtze River Delta, there must be a large steel plant.

Therefore, when Baosteel was just built, the state department began to go to sea to find suitable suppliers, and also found a few, but when Hutchison discovered a super iron mine in Australia, it still attracted great attention in China, especially when I heard that the iron content was very high.

Baosteel's equipment is currently the most advanced equipment in the world, purchased from developed countries such as Japan and Germany, and these equipment, the higher the quality of the iron ore used, the lower the loss of equipment, the greater the production capacity, and the less energy can be consumed.

"Yes, the average iron content of the Christmas Creek iron ore mine is 56%, and the highest can reach 65%." Chen Zhiwen nodded and said.

In these iron-deficient countries in China, 30% of iron ore has development value, but overseas, especially in Australia, this kind of iron ore is completely meaningless, and it is not worth developing at all, because the cost of infrastructure makes iron ore must be high iron content to make a profit, unless the iron ore is on the seaside, and there is a suitable port, but this is basically impossible.

The Christmas Creek Iron Mine is also because of its high iron content, Rio Tinto is willing to cooperate, and it is reluctant to give up.

"Then perhaps, we can first reach the most basic cooperation agreement, delineate a transaction value, as my Baosteel reservation, how about it?" Li Ming asked.

"How much tonnage?" Chen Zhiwen asked.

"What will be the annual production capacity of the Christmas Creek Iron Mine in the future?" Li Ming asked again.

"At the moment, Rio Tinto's plan is 20 million tons a year, but if Baosteel can win more, I can ask them to increase production capacity." Chen Zhiwen said with a light smile.

The total reserves of Christmas Creek are 1.5 billion tons, but this is theoretical, in fact, after the development of 1 billion tons, even if the rest can be developed, the cost may be high, unless the future iron ore price is very high, otherwise such iron ore can be mined 1 billion tons.

According to 20 million tons a year, this mine can be opened for 50 years, the time span is very long, for many industries that make quick money, it is almost unacceptable, but the mining industry is like this, these companies are century-old enterprises, will not over-develop their mines, and the development of fast, it shows that transportation, reserves, development equipment and other investment needs more, which is not cost-effective in the long run.

However, it is not immutable, as long as there are really customers to place long-term orders, increasing production is not a problem at all, even if the development is completed prematurely, it will take twenty or thirty years, there is such a long time, with his capital, it will inevitably be invested in other mines, forming a virtuous circle, besides, maybe the world's major mining giants, he will be a major shareholder.

"If that's the case, we can lock in 5 million tons, and if we need it in the future, we can discuss it, how about it?" Li Ming said.

In the future, the demand for Baosteel will definitely exceed 5 million, but whether it is from the perspective of the country or Baosteel, it is impossible for them to let themselves rely too much on a supplier.

"Okay, that's fine." Chen Zhiwen nodded and said, since the moment the Christmas Creek Iron Mine came out, plus his own identity, then it is the best choice to supply Baosteel that has just been built.

"However, Mr. Chen, according to international practice, we will also have some discounts for such a procurement scale." Li Ming said with a smile again.

"Of course, as long as it is in accordance with international rules, large customers also have the right to discount." Chen Zhiwen said.

The current international iron ore market, and even the next 10 years, is basically still in a relatively balanced state, that is to say, buyers and sellers, in a relatively equal position, iron ore supply and demand in the quantity of similar, occasionally a little fluctuating, although the Asian economy in the next ten years of rapid development, but the new iron ore mining is just as fast, only wait until the mainland economy takes off, after the birth of infrastructure madness, the balance of iron ore will be lost, from then on the demand is much greater than the supply, resulting in iron ore prices skyrocketing.

At present, it is in the reciprocal stage, and iron ore has not yet formed the pattern of the three giants, more than a dozen or even dozens of iron ore companies, it is impossible to form a monopoly, therefore, the buyer must still be in a higher position, sign a long-term contract, then the seller will generally be a little concessionary, otherwise to find multiple customers or multiple directions of transportation, will also increase the cost.

This is the case in any industry in the world, only oil, natural gas, and food during the food shortage have the absolute right to speak, that is, the game console of the United States, if there are supermarkets and other channels to purchase a large number of goods, there will also be certain discounts.

"Well, I hope to have more cooperation with Mr. Chen in the future." Li Ming smiled and said that Baosteel, as a steel plant, needs to buy ore from Chen Zhiwen's iron ore in the future, and also needs to sell a lot of steel to Chen Zhiwen's automobile company. Even Chen Zhiwen's electronics company is the same, and a lot of iron is needed inside home appliances such as televisions.

(End of chapter)