You will hear a conversation about investment assessment and further development of a steel-making company. For each questio

Woman: Why did Valin decide to invest in overseas iron ore resources now?
Man: We had such thoughts earlier because we wanted to build a supply chain and raw materials base. Valin lacks mining resources. So it is not a sudden idea. We started accelerating our pace last year. Now 50 percent of our iron ore supply, or 9 million tons a year, comes from imports.
Woman: Before investing in Fortescue, did Valin try to access raw materials through acquisition?
Man: Last year, we bought about an 11 percent stake in Australian iron ore miner Golden West Resource Ltd. The company is small but can supply us with 4.5 million. tons of ore annually under a long-term contract.
Woman: Fortescue held investment talks with many Chinese steel companies, but all proved fruitless. Why did it reach a deal with Valin in just a few months?
Man: That’s because Fortescue has built a production capacity-of 55 million tons, as well as railway transportation and ports. The second is its potential. Its business covers-a large area of 520,000 square kilometres, comprising the whole iron ore-rich Pilbara region. The potential reserves of the region are said to reach 20 billion tons, which is quite attractive. And third, although it’s a large company, it doesn’t have the common operational flaws that usually exist in large companies in developed countries.
Woman: When did you first start paying attention to Fortescue?
Man: We started frequent contacts with Fortescue three or four years ago, when we signed supply contracts through our subsidiary Xiangtan Steel Co. Last year, I went to Fortescue twice and met Andrew(the company’s chief)four times. The first two meetings were for studying the deal, and the last two were for negotiations. We finally discussed the price and settled the deal over the telephone.
Woman: Was the financial crisis a factor that pushed forward the deal?
Man: We originally planned to buy a 14.9 percent: stake in Fortescue for 26 billion yuan, and we were willing to cut the deal at that price. What we’re getting now is good, but you can’t say if s the best.
Woman: Why did Fortescue finally choose Valin?
Man: Andrew has a very good strategy in mind. He said Fortescue is a strategic ally of Chinese steel companies in all domains. It is absolutely correct. You can only win in the future with vitality by cooperating with China. Because China’s steel sector is under development. China is in its process of industrialization and its steel demand is strong. And orders from China are growing every year. The market is growing. Isn’t it a smart deal to cooperate with China?
Woman: What’s the next step for Valin-Fortescue cooperation?
Man: There will be three projects for resource development. One is a low-quality mine. The second is materials processing. And the third is to expand Fortescue’s production capacity. We will support it as a shareholder.
Woman: You said earlier that Valin has three major tasks this year. What are they?
Man: We will actively fight the financial crisis and also take it as an opportunity. The first task is to invest about 10 billion yuan in steel projects, which will produce high-end steel products. The second is the deal with Fortescue, which will be settled after it gets government approval. And the third is to take the opportunity to launch mergers and acquisitions. This year is the year for reshuffling China’s steel industry, and we want to grab the chance. We will pay 20 billion yuan for these three tasks.