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New metal redistribution

Task

Owner of the enterprise that gathers metal scrap has planned to build new steel manufacturing plant in order to obtain bigger margin from products in the form of metal ingots instead of compressed metal scrap.

One could surely assess the flow of source material for future production and prospective sales of manufactured goods. It was necessary to receive financial support of the investment project.

Spot opportunities

IGM consultants have studied the situation of the given project and suggested to consider the opportunity to earn not on future income due to recycling of metal scrap, but on the difference between the number of project investments and cost of such plant after it would start working.

Solutions

The first stage was to prepare the justification of investment project. There was designed a business plan, which foreseen 2 stages of enterprise development: melting of metal into ingots itself and production of rolled-metal products (reinforced rods, metal wires, metal angle brackets) made of ingots. The head engineer of the future plant, potential suppliers of equipment, IGM finance and marketing specialists, have taken part in the design process.

During the second stage, IGM consultants helped in the organization of bank financing upon the security of the facility, where the scrap metal was gathered, and to receive taxation privileges and preferences for mentioned projects, which was eventually considered to be in priority for the development of the country.

During the third stage, there was built the steel-manufacturing facility of the plant and the production of ingots from scrap metal has begun.

The next step was to inform potential buyers about the investment perspectives and conduction of negotiations on the sale of the business.

Results

Owner of a plant in cooperation with IGM managed to earn more than 12 million USD over 3 years of work in the project, by sales on the first stage of production. Besides, he managed to avoid technological and other risks during further stages of plant development.

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