Black Gold 1983

"Of course I don't have 50,000 yuan." Renye waved his hand.

In this era, 50,000 yuan has the purchasing power to buy two or three courtyard houses or properties in prime locations in Beijing or Shanghai outright.

For a rural family where a single "big unity" note can last for one or two months, this figure is terrifying.

But mining is not like running a restaurant. Equipment purchase, worker wages, safety and compliance—all of these cost money.

With 50,000 yuan, starting a mine is already the limit that Renye can currently manage.

Even so, he still plans to buy second-hand equipment.

Therefore, if conditions permit, Renye will definitely choose to contract out the business to an individual.

This plan is the most practical because it avoids shareholder disputes. The problem is that the initial investment depends entirely on oneself, and even if one were to sell oneself, one wouldn't be worth 50,000 yuan.

Moreover, personal loan business was extremely limited during this period, with only small business loans available for individual business owners. Housing and consumer loans were virtually nonexistent, and obtaining a loan from a bank in one's own name was almost impossible.

Moreover, Renye had learned that in 1983, banks had strict regulations on loans to township coal mines.

The requirement is that the company's own funds should not be less than 30%-50% of the total investment amount of the project.

Simply put, if you want to do a project worth 50,000, you need to put up at least 20,000 of your own funds, and the bank will only lend you the remaining 30,000.

"Then what the hell are you talking about!" Ma Maocai retorted irritably.

Renye ignored him and continued, "There are ways to play even if you don't have money. The second option is to raise funds and invest."

"What is fundraising for shares?" Ma Xiaojun asked.

"It's about everyone pooling their money, based on shares. I plan to release a total of 5,000 shares, priced at 10 yuan per share, with everyone subscribing voluntarily. Once all shares are raised, we'll have exactly 50,000 yuan in start-up capital."

Renye knew very well that this method of small-scale fundraising and profit sharing based on shares was both novel and practical for farmers in 1983. It had low barriers to entry, was easy to understand, and was the easiest way to bring people together.

After all, if you say that you need to invest 50,000 yuan in the early stage, people won't even bother to listen to the plan and will just run away.

But if you tell them that they can invest and share the profits with just one dollar, they will develop a gambler's mentality. After all, it's not much, so they might as well try their luck.

Then, once the first "gambler" is identified, it will trigger a herd mentality.

Renye remembers that after the policy was introduced in April of his previous life, many village collectives in southeastern Shanxi lacked funds, so they started this form of fundraising.

This type of ore is called "molecular ore".

Many later coal mine owners made their first fortune through this method.

However, this method also has many drawbacks.

For example, some farmers only focus on the few hundred yuan dividend at the end of the year and are unwilling to invest money in safety. They only think about mining coal and selling it quickly. Once an accident occurs, the responsibility becomes confused, and they are very likely to get burned.

However, Renye's immediate goal is to get some quick money, a sum of start-up capital that will allow him to get back on his feet.

This mine is not the end, but just a stepping stone.

Once he has the money, with his vision, he can acquire mines through individual contracts and then expand the scale like a snowball, preparing for future business diversification.

"You mean you can invest with just ten yuan?" Ma Xiaojun asked in surprise.

"Of course. You can subscribe to as many shares as you like. Year-end dividends will be calculated based on the number of shares held. The more you invest, the more you get; the less you invest, the less you get."

"What if we lose money?" Ma Maocai asked again.

Renye looked at him and said seriously, "There's no such thing as a guaranteed profit in business. But I can tell you, this mine won't lose money."

"What makes you so sure?"

Renye didn't answer directly, but instead asked, "Do you know how much a ton of that layer of coking coal under our feet can sell for now?"

Everyone shook their heads.

"The starting price is 30 yuan, and that's the price for centralized purchase. If it's for self-sale, it can sell for at least 60 yuan per ton."

"Sixty!" Ma Xiaojun jumped up from the ground, then scratched his head: "What's a 'centralized purchase price'?"

Ma Tiejun explained, "The state-purchased price is a fixed price at which the state buys coal according to a plan. To put it bluntly, the coal you mine can only be sold to the state, not on the market yourself. Selling coal privately is called speculation and profiteering, which is illegal."

Ma Xiaojun immediately realized something was wrong: "Then all that coal we sold before was illegal?"

Ma Maocai was so angry he laughed: "We're all fucking miners, and you're still discussing whether it's illegal or not?"

Ma Xiaojun gave an awkward smile and said nothing more.

As Ma Tiejun said, coal can only be sold to the state at this time. The reason for this is that the country is in a stage of rapid development, and the public must take priority in all aspects.

This situation continued until 1985, two years later, when the country officially implemented the "dual-track coal pricing system".

This system allows coal mines to sell any excess coal produced beyond their planned targets on the market, thus creating a pricing model that combines "planned purchase price" and "extra-planned market price".

Specifically, after the implementation of the dual-track system, the state will issue mandatory purchase plans for coal mines in various regions.

After a coal mine has completed its planned allocation tasks, any excess production beyond the approved quota can be sold to the market independently.

However, this "dual-track system" had already appeared on a small scale as early as after the reform and opening up.

Coal mines exchange or sell excess coal at a "cooperative price" that is higher than the unified purchase price but lower than the market price.

This falls into a gray area after policy relaxation, where the authorities usually turn a blind eye, and can be seen as the prototype of a dual-track system.

Renye estimated that for a small mine like the West No. 2 mining area, with the current start-up capital of 50,000 yuan, the planned output approved by the higher authorities would be at most 10,000 tons per year, based on the scale of manpower and equipment that can be coordinated.

This 10,000 tons of coal must be handed over at the state-controlled purchase price of 30 yuan per ton, with a total revenue of 300,000 yuan, which still includes costs and profits.

But the real profits are all outside the plan. As long as the output exceeds the 10,000-ton limit, the extra coal can be sold off-site. At the self-sale price of 60 yuan per ton, every extra ton mined means an extra ton of profit.

"Sixty is still the current market price," Renye added. "Once the policies are relaxed and demand picks up, prices will rise again. So, now it's up to you guys to see if you have the guts to join me."

Silence fell once again in the dugout.

After a long pause, Ma Maocai smiled and said, "You've told us all this. We know the policies now, and we know there's good coal down below. Aren't you afraid we'll kick you out and the village will go it alone?"

This question was undeniably tricky, and everyone looked at Renye.

Hearing this, Renye showed no sign of panic. Instead, he burst into laughter: "Of course you can do that, provided you understand equity operations? How are shares determined, how are dividends calculated? If someone wants to withdraw their shares, how should the money be settled, how should the rules be established? Do you understand these things?"

"Do you understand the approval process? How do you get mining rights? Where do you apply for a business license? Who approves the safety permit? Do you know which way the county coal bureau's door faces and who you should talk to?"

"Do you understand management? How do you arrange the manpower underground, how do you divide the work, and how do you pay wages? Can you handle all of that?"

"Do you know anything about mining? Where do you buy the equipment? How much should you stock? How do you spend the money to avoid losing money? Can you do the math?"

He stopped smiling and stared into Ma Maocai's eyes: "I understand these things. Do you understand?"