"Let me focus on the steel industry. Currently, the international price of 60% iron ore is $20, equivalent to less than 70 RMB. Coke costs 250 RMB per ton. One ton of steel requires 1.5 tons of iron ore and 0.7 tons of coke. Including other raw materials, the price of one ton of steel raw materials does not exceed 350 RMB. Adding labor costs of 100 RMB per ton, taxes of 100 RMB, and another 150 RMB for rolling the steel, the total cost of steel is 700 RMB. Do you leaders know the current price of steel?"
"The current market price of steel is 1,200 yuan per ton, but it has risen to 1,400 yuan in the past few days."
Commissioner Shen Congde replied.
Li Chuanyou looked at Shen Congde with admiration, then turned to ask Sun Zongyuan:
"You mean to say that producing one ton of steel can bring in nearly 500 yuan in profit and 50 yuan in tax?"
"Yes, a steel mill with an annual output of 300,000 tons now has an annual profit of 150 million and at least 15 million in taxes. Do you think that's a good profit?"
Several leaders nodded.
"The key is how much money is needed to build a 300,000-ton steel plant. If we invest too much, it won't be worth it!" said Commissioner Sun Peiqing.
"Commissioner Sun's question is very accurate. If we import equipment from Japan, we'll need an investment of 5,000 yuan per ton. 300,000 tons would require 1.5 billion yuan."
"I don't have that much money!"
"Secretary Li, don't lose heart. If we go to Europe to look for used equipment and move it here, I think we can get it for 1,200 yuan per ton, which would cost 360 million yuan."
"Forget 360 million, the region can't even come up with 36 million in cash!"
Commissioner Sun Peiqing continued.
"So what should we do? It's a very profitable project, but the problem is that there's a nationwide shortage of steel, and the price keeps going up."
"Zongyuan, if you dare to invest, our region will invest with you, how about it?" Li Chuanyu asked him after thinking for a moment.
Sun Zongyuan was originally guiding regional investment, but his assets were too widely distributed and he did not want to get involved in the steel industry.
I didn't expect Secretary Li to drag me into investing as well. It's difficult because I don't have anyone to use my money.
"What? You don't dare anymore? That steel mill is just a scam to deceive us. If we don't make any money after investing, we'll be fooled!"
Sun Zongyuan gritted his teeth and said, "I'll invest 300,000 tons myself!"
"Hahaha!" Secretary Li Chuanyu laughed loudly, and the other two people also laughed. They are still young and don't act impulsively!
"We'll also invest 300,000 tons. We can tighten our belts and squeeze out 40 million yuan. You have to find a way to help us with the rest. How do you do that?"
"Aren't you giving me a hard time? I don't know the financial situation of the region."
"Just give us some ideas on how to raise the money, and we'll figure out the details."
"Okay, leaders, please forgive me if I say anything wrong."
Sun Zongyuan thought about how he raised funds for his previous project:
"We definitely need some self-owned capital. 40 million is a bit too little. We need at least one-third, or 100 million. This region could consider contracting out or selling off a few loss-making businesses to recoup some of the funds. Profitable ones, like the regional cement plant, could also be sold. We might get a good price!"
"The next option is a bank loan, but it's better to have a mortgage so you can borrow more!" Sun Zongyuan said firmly.
"Another method is to issue government bonds. Issuing 150 million yuan will solve the problem."
"Of course, there is another option, which is to form a joint venture with a foreign company. However, the new equipment is expensive and the repayment period is too long. Moreover, the profits have to be split 50% which is not cost-effective."
"Forget it. I think we should just invest in construction with you. Let's build a 300,000-ton capacity first. Once it's operational and profitable, the bank will come to us and lend us money without any hassles. Which factories have you set your sights on?"
"Secretary Li, this can't be done. Can't I vote for one myself? Wouldn't it be great if you guys vote for one too?"
"We have no money, so we rely on your investment." Li Chuanyu said shamelessly.
"Don't you want to take on the compressor project? I see the regional gear factory has good technology. With the decrease in military production demand over the past two years, their orders have dwindled. Just name a price and I'll sell it to you!"
Sun Zongyuan said to himself, it seems that they have been planning to sell the gear factory for a long time.
"The regional steel mill is in the city, producing 30,000 to 40,000 tons a year. I'll give it to you. Name your price."
"The seven kilometers of stone embankment along the coast are so deep that the water gets really deep not far from the shore. How about building a dock yourself?"
Sun Zongyuan certainly knew that a national-level deep-water port was built on that coast in the future, and its throughput ranked among the top ten in the country.
"Do you even have the right to sell that coast?"
"Sure. The government has already approved the construction of a deep-water wharf, but there's been no funding for three or four years. You can just take the blueprints and build it. Wouldn't importing iron ore solve the wharf problem?"
Sun Zongyu scribbled on his notebook with a pen: 10 million for the gear factory, 20 million for the steel plant, 120 million for the Shizhao Wharf, a total of 150 million. He handed the total to Li Chuanyu, Sun Peiqing and Shen Congde. They took a look and thought to themselves: The price offered is not low. Their own expected number was 120 million.
Li Chuanyou threw the notebook to Sun Zongyuan:
"180 million, no negotiation!"
"How much are you offering?" Sun Zongyuan asked.
"One hundred and eighty million plus forty million, that's two hundred and twenty million, right?"
"Then I'll invest 260 million yuan, a total of 480 million yuan, and strive to reach a scale of 400,000 tons. I will own 54% of the shares, and the region will only receive dividends and will not participate in management. How do you think?"
"Yes, but you have to build the docks according to the national plan. You can build them one by one, but they must be completed within ten years!"
"We can all write it down in the contract. I will design and construct it according to the national plan. I'll let the people from the group company discuss the specific matters with the administrative office. It's difficult for me to discuss it with your leaders."
Society is full of scams. That pier cost more than 2 billion yuan to build in the previous life.
"Hahaha!"
Several leaders might be Li Yunlong's soldiers, and they looked smirking as if they had gained an advantage.
"But I have a condition that I want to make clear in advance, so you don't accuse me of making a mistake later."
"I'll use foreign capital to invest in the steel plant, and domestic capital to invest in the dock. Ten years after the steel plant starts production, I'll buy back the regional shares."
"What? You still don't trust us?"
“Commissioner Shen, you are the youngest. Do you think you will still be working at the Ganhe Prefectural Committee in ten years?”
"That's right. By then I'll be retired and home to look after my grandchildren. Who knows, one of them might bully Zong Yuan in the future. Okay, then you can just spend the money to buy him back and make him your own. At least there's no fuss and no nonsense!"
Li Chuanyu turned around on the spot and said.
"The three of us agree. Let Sun Zongyuan arrange for someone to discuss the specific matters with the Planning Committee. This is the general principle. Draft the contract carefully to avoid any sequelae. We must not make any mistakes!"
Current politics sometimes turns left and sometimes leans right, so it’s better not to fall into it.
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