Fascinating how China is made up of unique architectural design. Have you ever ponder where the large-scale supply of steel comes from? This article highlights key events that took place leading to the Du Shuanghua sale of Rizhao Steel in 2010.
After the establishment and formation of Rizhao Iron and Steel in 2003, a 15-year contract agreement was signed between Mount Gibson to supply 1.5 million tons of iron annually in 2007 to Rizhao. Du Shuanghua has made bread and butter in the steel business as the chair of Rizhao Steel Holding Group; as a result, he is named by Forbes as one of the richest men in China. So, Shandong Iron and Steel Group Co Ltd which is also known as Shandong Steel got involved to buy out Rizhao in 2009; but unluckily, the plan was inefficacious. Due to the confrontations between political competitors, Shandong Iron and Steel acquired 67% shares in cash while Rizhao held 33% net assets.
What led to the selling of 33% Rizhao shares?
The key contributing factor that motivated Du Shuanghua to sell his 33% shares in the company; was influenced after the merging of Rizhao and Shandong Steel in 2010. This joining forces of the two steel organizations resulted in the restructuring of the business and assets hence diversifying Shandong’s supply of steel and iron to coastal regions. Just like any other professional business, challenges are inevitable and ‘part of the game’. In the same year 2010, Rizhao encountered a $114 million loss as a result of failing to keep and fulfil their agreement made in 2007 with Mount Gibson.
Between 2013 to 2020, Du Shuanghua’s decision to sell his shares which pushed for the reorganization of assets; led to the emergence of multiple opportunities such as investing in Arvedi ESP plants, signing contracts, and expansion to 17mt steelmaking.
Indeed, hard work pays. In 2021, Rizhao owns maximum stakes in Minmetals Yingkou Medium Plate Co Ltd. Continue reading: https://thebossmagazine.com/du-shuanghua-inside-the-philanthropic-work-and-successful-legacy-of-a-passionate-chinese-entrepreneur/