Task
The owner of the scrap metal business planned to establish a new steel plant to obtain a higher margin from finished products in the form of finished ingots than from compressed scrap metal. It was possible to assess with confidence the supply of raw materials for future production and the prospects for the sale of finished products. It was required to obtain financing for an investment project.
See Opportunities
IGM consultants examined the situation with the project and suggested considering the possibility of making money not so much on future income from scrap processing, but on the difference between the amount of investment in the project and the cost of such a plant after commissioning.
Solutions
The first stage was the preparation of a feasibility study for the investment project. A business plan was developed, providing for 2 stages of the enterprise's development: directly remelting scrap metal into ingots and obtaining rolled products (rebar, wire, angle) from ingots. The development was attended by the chief engineer of the future plant, potential equipment suppliers, financiers and IGM marketers.
At the second stage, IGM consultants helped to organize bank financing of the project secured by the base where the scrap metal was collected, as well as to obtain tax breaks and preferences for the project as a priority for the development of the country's industry.
At the third stage, the plant's steel shop was built and the production of ingots from scrap metal began.
The next step was informing potential buyers about the investment prospects of the plant and negotiating the sale of the business.
Results
The owner of the new plant, with the assistance of IGM, was able to profitably sell the business, having earned more than USD 12 million in 3 years of work on the project already at the first stage of the production launch. In addition, he avoided technological and other risks at the subsequent stages of the plant's development.