Journey 1995:Non-Stop

Chapter 425 Indicators
2008 was an incredibly lucrative year for Yan Hui, who spanned three major industries and achieved success in different fields, but still didn't have much national influence.

He's just a wealthy local entrepreneur; his fame only extends to a few industries in the two cities.

If he wants to take the next step, he still has to rely on chemicals. If chemicals can achieve technological breakthroughs and become a B2C brand, then the steel and tile businesses may be relegated to "plywood businesses" and become peripheral projects.

It looks simple, but it's actually very difficult to do.

Scientific research and market changes are inherently uncontrollable, and there are too many other uncontrollable factors. Furthermore, if he does achieve a technological breakthrough, he might face even more severe suppression.

For example, he might not be able to buy some highly sophisticated equipment. This isn't a story; it's a problem that any company in the world could encounter.

After his business was fully on track, Yan Hui encountered more and more other things, and he attended countless government meetings. Countless accolades and titles were bestowed upon this young man who had just turned 30. In early 2009, Yan Hui successfully joined a certain association and became a member of the district's association.

He has even been nominated in the city.

I won't go into the specifics of this.

Besides these, another important topic in 2008 and 2009 was environmental protection.

According to national requirements, sulfur dioxide emissions should be reduced by 10% in 2010 compared to 2005, and chemical oxygen demand should also be reduced by 10%.

Although Yan Hui owns a chemical company, the polyurethane production does not require much electricity and has little pollutant emission. It has always been a star enterprise and a trusted enterprise of the leaders in Quancheng High-tech Zone.

The problem lies with the tile factory.

The tile factory is located in Linzi City. Firing tiles requires a large amount of coal. County leaders have spoken with the factory many times, and expanding the production line is no longer an option; maintaining the current output is already difficult. (The coal-to-gas conversion began in 2013.)
As mentioned earlier, why did Yan Hui buy such a tile factory instead of building a new one? This involves issues related to environmental protection and emission standards.

Emissions reduction efforts began in 05, but were not given much attention in the early stages. In 2008, the State Environmental Protection Administration (now the Ministry of Ecology and Environment) imposed "regional restrictions" on areas that had not met emission reduction targets, suspended all new projects, and mandated emission reductions.

Yan Hui's tile factory has also installed advanced desulfurization and wastewater treatment facilities. After Yan Hui took over the production line, he invested about 1000 million yuan, of which at least 300 million yuan was in environmental protection-related equipment.

However, this is only part of the requirements. Even if the environmental impact assessment is passed, a quota for the total amount of pollutants discharged is still required.

At the start of 09, Yan Hui was busy with these few things.

The total amount of wastewater discharged is limited and must be allocated from a larger pool. Yan Hui's tile factory has a relatively high production capacity, which has already caused dissatisfaction among many individuals and businesses.

For various reasons, Yan Hui was given a performance target at a meeting.

According to current regulations, the government should allocate quotas to key projects or through competitive bidding, ideally through "equal replacement" or "reduced replacement." To build new projects, outdated production capacity must be shut down and small boilers phased out, thus freeing up quotas of equal or greater quantity for new plants. Similarly, if a company has the capacity to eliminate and replace a large amount of highly polluting production capacity, it can acquire new quotas.

On the secondary peak of Baifeng Mountain in Linzi City, there is a limestone deposit of very good quality. It is a sedimentary rock, mainly composed of calcite, with an average calcium carbonate content of over 94%. This mine has always been operated by a traditional local state-owned enterprise, which also holds the mining permit.

This mine has been in operation for almost 30 years. The reserves are decent, but the production capacity is average. The equipment is very outdated, and the mine is currently operating at a loss. It also supports a number of employees and related small industries, with nearly a hundred people making a living off the mine.

Currently, the county wants to eliminate outdated production capacity and end the extensive mining practices here, which requires companies to spend money to buy the mining permit for this mine.

“We will hold a public tender here, but I estimate there will be very few companies with the strength to participate. We need companies to invest 5000 million yuan to shut down outdated production capacity and build new related factories.” The person Yan Hui was talking to was named Zhang Wei, but we won’t mention his identity.

"So, you're saying you spent 5000 million to buy a license plate quota?" Yan Hui frowned slightly upon hearing this figure. "How could you possibly break even with 5000 million?"

Yan Hui has already conducted preliminary research on this mine. It's estimated that at most tens of millions of tons of calcium carbonate can be mined here annually. This type of ore has relatively low value, high mining and transportation costs, and very low after-tax profits, making it not a sought-after high-quality mine. Its only advantage is that the calcium carbonate here has a relatively high grade, making the processing of quicklime slightly easier.

Acquiring the mining rights to this mine alone would only require around ten million yuan. However, the relevant departments are unlikely to sell only this mine.

“There will be a tender for a piece of supporting industrial land here, covering an area of ​​about 70 mu (approximately 4.7 hectares), with a price of about 150,000 yuan per mu. Of course, this also needs to be tendered. In other words, this piece of land is worth more than 10 million yuan and can be used to build supporting factories,” Zhang Wei said.

"Would this factory be allowed to produce quicklime?" Yan Hui was somewhat intrigued.

If an investment of 50 million can secure sufficient production quotas for ceramic tiles and quicklime, then it's a business that makes a small profit.

“Of course it’s allowed, but there are quota restrictions.” Zhang Wei picked up a pen and drew a line for Yan Hui.

"I need to take another look at this." Yan Hui finished looking at the number, said nothing, but was already cursing in his heart.

"Yes, the timeframe is quite tight, and our bidding process will begin soon. Mr. Yan, please make the necessary preparations," Zhang Wei said with a smile.

"Understood, thank you for this opportunity." Yan Hui smiled and shook hands with Zhang Wei.

After returning home, Yan Hui pulled Zhou Ping aside and did a proper accounting.

If the 5000 million yuan isn't spent, the tile factory's production capacity will inevitably decrease, which will trigger a series of chain reactions, leading to the cancellation of many contracts and the forced relinquishment of market share.

If they spend 5000 million, the production quota for quicklime will definitely not be enough. In that case, they can only consider selling the mined calcite to more distant places. However, for this kind of low-priced mineral, distance and transportation costs are the core factors affecting the price. Selling it to a distant place means that they won't make any money at all. Bulk coal transportation has railway lines, which Yan Hui cannot afford to invest in.

“No matter how you calculate it, we’re going to lose money. If that’s the case, we’d rather reduce the tile factory’s production capacity or find a way to buy some quotas from other companies.” Zhou Ping and Yan Hui discussed for half an hour, and finally shook their heads. “I can’t figure out how to make a profit here. The best outcome is to break even and waste 5000 million here.”

(End of this chapter)