Homo Sapiens

Kangaroo Country.

Pars, the capital of its Western Australia Region.

Inside the BHP Billiton office building.

Hank Maersk, the man in charge of the company’s iron ore operations in the Western Australia Region, looked grim. ”Headquarters wants us to shut down fifty percent of our production capacity?”

His secretary nodded helplessly. ”Yes, sir.”

Holding the notice from headquarters about production cuts and layoffs, Hank Maersk felt a major headache coming on.

Hank Maersk had no power to refute the decision from BHP Billiton’s headquarters. After all, the parent company was being forced into this position.

If they could still make a profit, why would BHP Billiton ever shut down fifty percent of their production capacity?

The reason for shutting down fifty percent of their capacity was mainly because a disrupter had appeared on the international market.

That disrupter was the Homo Sapiens Company.

After its formal establishment, the Homo Sapiens Company restructured its internal mining and metallurgy industries.

They formed three mining subsidiaries—Jade Mining, Coral Mining, and Nanyang Mining—and three metallurgy subsidiaries: Sea Snail Metal, Mandalay Metallurgy, and Sumatra Metallurgy.

Initially, these two systems didn’t have much of an impact on BHP Billiton, Rio Tinto, or Vale.

Until September.

Having completed their integration, the Homo Sapiens Company’s mining and metallurgy divisions teamed up to launch an attack on BHP Billiton, Rio Tinto, and Vale.

The Homo Sapiens Company’s offensive was a two-pronged attack, targeting both the raw materials market and the finished products market.

On one hand, Jade Mining, Coral Mining, and Nanyang Mining went into full-scale extraction of hematite from the Sulu Sea floor, pyrite from Sumatra, and deep-layer magnetite from the southern Tannantawong Mountain. These three iron ore regions held a total of 17.3 billion tons of iron ore reserves with an average grade of 43.6%.

If it were just a matter of mining iron ore, the problem wouldn’t be so severe. After all, the Homo Sapiens Company’s trade channels were being choked by Europe and America and the Far East.

But how could the Homo Sapiens Company possibly limit itself to a single move?

Its subsidiaries—Sea Snail Metal, Mandalay Metallurgy, and Sumatra Metallurgy—swiftly slashed the factory prices of their finished steel products.

In September of this year, the global factory price for ordinary steel was about 450 to 500 US Dollars per ton, while the CIF price for 62%-grade iron ore from Kangaroo Country was around 120 US Dollars per ton.

The Homo Sapiens Company’s select 62% hematite had a CIF price of 35 Jin Yuan per ton (equivalent to 70 US Dollars per ton).

Meanwhile, the factory price for ordinary steel produced by the Homo Sapiens Company was 180 Jin Yuan per ton (equivalent to 360 US Dollars per ton).

The impact of this pricing was devastating.

This was because the profit margin for Huaguo’s steel enterprises was only 8 to 15 US Dollars per ton, and the profit margins for steel companies in other regions were not high either.

Europe and America and the Far East Region had blocked the Homo Sapiens Company’s market channels, but that didn’t mean the whole world listened to them—especially not when profits were on the line.

Take the West Asian Oil Tyrants, for example. They did the math and found that by purchasing steel from the Homo Sapiens Company, they could reduce costs by about twenty percent.

They already had a considerable amount of foreign exchange in Jin Yuan, so why not choose the Homo Sapiens Company’s steel products? Did they have too much money to know what to do with?

Or consider the cash-strapped nations of Africa. They had earned some Jin Yuan by selling minerals, oil, and natural gas, so naturally, they wanted to get the most value for their Jin Yuan.

South Asia, Central Asia, and Latin America also chose the Homo Sapiens Company’s steel products.

Even some countries in Europe secretly and discreetly imported steel products and iron ore from the Homo Sapiens Company through intermediaries like Saudia Arabia and the Suez Republic.

With this, the pressure fell upon the major steel enterprises of the Far East Region. Would they abandon the high-priced iron ore from Kangaroo Country and the South American Redwood Federation, or would they continue to hold out?

The first to make a choice were the steel enterprises of Huaguo. They reached an agreement with the Homo Sapiens Company: for a processing fee of 125 Jin Yuan per ton of steel, they would produce steel for the Homo Sapiens Company using iron ore supplied by them.

Although the net profit was only about 5 Jin Yuan per ton, the benefit was gaining access to a cheap supply of iron ore.

As the world’s kings of involution, Huaguo’s steel enterprises lived up to their name, directly crushing global steel factory prices down to the ultra-low level of just 360 to 390 US Dollars.

And the chain reaction followed.

You have to understand, in ’21, Huaguo’s steel enterprises consumed 60% of the iron ore on the international market, while the metallurgy subsidiaries under the Homo Sapiens Company consumed 21%.

Together, the two consumed 81% of the iron ore on the international market.

Now, the Homo Sapiens Company was using its own iron ore exclusively, and Huaguo’s steel enterprises were forced to use the Homo Sapiens Company’s iron ore as well.

Just like that, 81% of the market share vanished.

BHP Billiton, Rio Tinto, and Vale were suddenly faced with massive overcapacity.

Even though America had restarted some of its steel production capacity to counter the threat from the Homo Sapiens Company, North America was long past the stage of smelting with iron ore. The steel mills there mostly used scrap steel as raw material.

An overcapacity of more than 1.3 billion tons of iron ore—how could they possibly solve that?

It was simply an unsolvable problem.

The remaining steel enterprises in the world could not possibly digest 1.3 billion tons of iron ore. Drastic production cuts and layoffs were BHP Billiton’s and the others’ only choice.

Of course, they could also choose to cut prices for a promotion.

But even with promotional price cuts, they couldn’t beat the Homo Sapiens Company.

According to research reports from international institutions, the production cost of iron ore from Kangaroo Country is about 40 US Dollars per ton, while Vale in the Redwood Federation has costs of around 60 US Dollars per ton.

After adding transportation costs, the CIF price for iron ore from Kangaroo Country delivered to the Far East Region comes to about 60 US Dollars per ton, while the CIF price for Vale’s ore reaches as high as 90 to 100 US Dollars per ton.

How could they compete with the Homo Sapiens Company at these prices?

The Homo Sapiens Company’s ore production costs were super low, and the transport distance was negligible. Their CIF price of 35 Jin Yuan per ton still included a 40% profit margin.

In other words, if BHP Billiton and the others were to cut prices, the Homo Sapiens Company would definitely slash their prices even further.

Left with no choice, BHP Billiton and the others began to cut production and lay off workers.

The mines in the Western Australia Region bore the brunt of it.

Hank Maersk could already feel the pressure and malice from the Homo Sapiens Company. At this rate, the remaining 19% of the market share was also in jeopardy.

After all, the steel mills in South Korea, East Japan, and the European Union definitely wouldn’t be able to hold out for long.

Currently, Huaguo’s steel enterprises occupied the low-to-mid-end international market, while the Homo Sapiens Company dominated the mid-to-high-end market, beating other steel companies so badly they were crying for their mamas.

Refuse to purchase the Homo Sapiens Company’s ore?

Then you can just go and die!

This was also why some steel mills in Europe were secretly purchasing ore from the Homo Sapiens Company. They had to use it. To survive, they had no other choice.

If this were a traditional international market, BHP Billiton and their financial backers would certainly have used financial maneuvers to buy up all the low-priced iron ore and maintain their monopolistic market position.

Unfortunately for them, they had run into the Homo Sapiens Company. The existence of the Jin Yuan completely shut down any possibility of manipulation by financial capital from Europe and America.

After all, to purchase the Homo Sapiens Company’s iron ore, they would need to have at least several hundred billion Jin Yuan ready.

Right now, the total amount of trade Jin Yuan circulating worldwide was only just over three hundred billion.

The capitalist powers of Europe and America simply couldn’t scrape together that much Jin Yuan, so naturally, they had no way to counter the Homo Sapiens Company’s iron ore strategy.

Even if they could gather that much Jin Yuan, the Homo Sapiens Company could just play dirty, directly restricting their purchases and requiring buyers to be steel enterprises to qualify. That would be enough to foil their opponents’ scheme.

Faced with this kind of head-on confrontation, BHP Billiton and the others felt extremely uncomfortable.

For now, cutting capacity and laying off employees was the only way they could barely stabilize their internal situation.

But production cuts and layoffs were merely a case of drinking poison to quench a thirst.

It was one thing not to mine the ore, but the large-scale excavation equipment, ore dressing and washing facilities, sintering plants, heavy-haul railways, and iron ore transport ships were all depreciating every moment. Those costs could not be cut.

If production stopped for a year or two, all this equipment would turn into scrap.

What was even more serious was that once skilled industrial workers were lost, training a new generation would be incredibly difficult.

If an industry ceases production for more than ten years, the associated industrial workforce, and even the related specialized programs in schools, could all disappear completely.

This was the very problem North America was facing now. Decades of industrial hollowing-out had caused North America to lose a massive number of industrial workers and the corresponding training systems.