Sail across the sea

Chapter 469 issued an ultimatum.
A few weeks later, the Ministry of Geology and Mineral Resources issued a notice stating that, based on a comprehensive calculation of the smelting costs and transaction prices of rare earth oxides and rare earth metals in the international market, a special resource tax would be levied on ion-adsorption type rare earth ore from southern China. The resource tax for mixed rare earth ore containing 92% rare earth oxides was US$2 per ton, equivalent to RMB 6.4.

Previously, the trading price of mixed rare earth in the south was only RMB 2.6 per ton. Now, with the sudden addition of a resource tax of RMB 6.4, coupled with the impact of the relative depreciation of the RMB against the US dollar, the trading price in Zeshan immediately rose to nearly RMB 10 per ton.

This price has little impact on rare earth mine owners, as their ore can only be sold to government-designated purchasing stations at a price of over 3 yuan per ton. The government then adds resource tax when selling the ore to smelting companies or exporting it.

The international rare earth market was thrown into turmoil as soon as the policy was introduced. Chinese rare earth, which was originally priced at $1 per ton, suddenly jumped to $3 per ton. Who could tolerate such a thing?

Japanese rare earth smelting companies such as Yttrium Corporation and Sugon immediately raised the prices of rare earth oxides, explaining to their customers that this was due to rising prices of upstream raw materials.

The price of raw materials increased from $1 per ton to $3, a rise of 200%, while the price of their own 4N grade yttrium oxide only increased from $11 per ton to $16, a rise of 45%, making them a truly conscientious company.

In the past, customers would have gladly accepted this, because they could use it as a reason to raise the prices of their electronic products. After deducting the cost of rare earth oxides, they could still make a net profit. Why not?
This time, however, the client shook their head repeatedly, claiming that a Chinese rare earth smelting company could provide them with more cost-effective rare earth oxides. Their 4N-grade yttrium oxide was only $90,000 per ton, which included China's rare earth resource tax. How could Yttrium Corporation dare to quote such an exorbitant price of $160,000?

Helpless, Yttrium Corporation could only try to negotiate with its customers, claiming that its technology was more advanced and that the solution used to purify rare earths was 70-year-old fountain water, which smelled of the feet of three generations of Japanese craftsmen and was incomparable to the crudely made rare earths from China.

In the industrial sector, brand factors still play a certain role. Customers are willing to pay a premium for well-known brands such as Yttrium Corporation and Sande Alloy, provided that the premium is not too outrageous.

After negotiations, the customer finally agreed to accept a slight price increase, with the transaction price not exceeding $12 per ton; otherwise, they would have no choice but to turn to China for rare earth supplies.

Having finalized supply contracts with its clients, Yttrium Corporation immediately began pressuring China, arguing that China's imposition of high resource taxes was unfair. If China did not abandon this practice, Japanese rare earth producers would collectively refuse to import rare earths from China and instead seek supplies from the United States and Türkiye.

"Director Pei, General Manager Gao, isn't the resource tax that the government has increased too much? We're under a lot of pressure now."

In his office, Zhong Jiangang, the deputy county head of Gu'nan County in charge of industry, was making Kung Fu tea for Pei Hengxue and Gao Fan when he timidly asked a question.

"County Chief Zhong, aren't you heartless to say that?" Gao Fan sipped his tea and teased Zhong Jiangang with a smile.

"Mr. Gao, what are you saying? How am I heartless?"

Zhong Jiangang argued, but dared not show any disrespect to Gao Fan. He knew that although this young man was not even half his age, he was a highly capable person whom everyone looked up to. Not to mention that he himself controlled a large private chemical company, the high-purity rare earth smelting plant developed by Zeyan Institute was put into operation under Gao Fan's impetus.

Gao Fan took Pei Hengxue to the United States and contacted more than 20 clients. The total amount of agreements reached during this period has exceeded 20 million US dollars.

Gu'nan County's annual industrial output value is less than 2000 million RMB, yet Gao Fan single-handedly secured a 2000 million USD order for Zeyan Institute. Would Zhong Jiangang dare to underestimate such a person? "As far as I know, the national resource tax allows Gu'nan County to retain 1 RMB per ton. Gu'nan's annual rare earth production exceeds 1000 tons, which easily translates to 1000 million RMB in fiscal revenue. County Chief Zhong still complains that the national resource tax is too high," Gao Fan said.

Zhong Jiangang shook his head repeatedly: "No way, last year we only produced 720 tons of rare earth. The portion that the state retains is not much of what we get. While the state retains our share, it also assigns us environmental protection tasks, requiring us to restore the environment damaged by rare earth mining. The investment in this area is a bottomless pit."

"Even the emperor doesn't starve his soldiers. How could the country possibly use up all the reserves allocated to you?" Gao Fan said. "For Gu'nan County, the resource tax is practically free money. It's all part of our smelting company's costs. Director Pei hasn't even complained yet, so how dare County Chief Zhong complain here?"

“Yeah, I was just about to complain,” Pei Hengxue chimed in. “We were negotiating with our clients in Atlanta for $8 per ton, but now with the $2 resource tax, our product is only worth $9. We’re actually losing $1.”

Zhong Jiangang said, "The US dollar is worth more now. If you sell it for $9, the RMB you get after conversion will definitely be more than before."

Pei Hengxue retorted, "But prices have gone up too. Look at how much meat costs on the street now."

"Stop, stop, gentlemen, calm down." Gao Fan could only step in to smooth things over. "County Chief Zhong, you just said you're under a lot of pressure, what exactly is that pressure coming from?"

"Japanese businessmen," Zhong Jiangang suddenly remembered what he had just said.

You were clearly talking about the resource tax, so how did you veer off-topic in just a few words?
"A Japanese businessman has contacted you?" Gao Fan asked with interest.

“Of course,” Zhong Jiangang said. “Ever since rare earth elements were discovered in our county, more than a dozen Japanese businessmen have been visiting our county every few days. They don’t just visit our county; they visit other counties as well, but they just visit our county more often.”

"and then?"

“Then a few days ago they came to me and gave us an ultimatum, saying that if we can’t lower the price of rare earths, they won’t buy them.”

"Not buying anymore? That's great!" Gao Fan chuckled. "I'd love for them not to buy. From now on, Zelian will be a monopoly, the only one of its kind, with no other branches."

　After some consideration, I've decided to change the update time to 9 AM and 9 PM from now on... I mean, if there are any updates...

　　(End of this chapter)