Xiang Guangda, the metals ‘visionary’ who brought the nickel market to a standstill

To grasp why Xiang Guangda is thought to be the Steve Jobs of metals, have a look at an aerial shot of the Morowali Industrial Park on the Indonesian island of Sulawesi. It’s right here that the Chinese language businessman constructed an unlimited manufacturing advanced that stands as a testomony to his domination of the worldwide stainless-steel business.

“Xiang is a visionary,” says Kenny Ives, the previous head of nickel buying and selling at Glencore. “Tsingshan’s success in each China and Indonesia over the past 10 to fifteen years is extraordinary.”

But as we speak the self-made billionaire is within the highlight for an additional motive — an enormous wrong-way wager that has introduced international nickel buying and selling to a halt and plunged the London Steel Trade into turmoil. On Tuesday, simply after 8am, the 145-year-old alternate was pressured to cease buying and selling in its benchmark nickel contract after the worth greater than doubled to over $100,000 a tonne.

On the centre of the drama was Xiang and his firm Tsingshan Holding Group, the world’s largest producer of nickel and stainless-steel. Over a number of months the tycoon had amassed an enormous wager that the worth of nickel would fall, however when the market moved sharply the opposite manner following the invasion of Ukraine he was left uncovered to losses of doubtless billions of {dollars}.

Russia is without doubt one of the world’s prime suppliers of nickel, which is used to make stainless-steel and likewise within the batteries that energy electrical autos. Merchants concern sanctions may disrupt provides.

Hit with demand for further money from his brokers, Xiang was pressured to shut a few of his place by buying LME contracts. However his shopping for solely served to additional push up costs till the alternate was lastly pressured to behave. Nickel buying and selling stays suspended and it isn’t clear when it’ll resume.

“Our positions and operations don’t have any issues,” Xiang instructed the monetary information supplier Yicai International this week. “Tsingshan is a wonderful Chinese language enterprise.” The corporate declined to remark for this story.

But at the same time as Xiang is sitting on enormous paper losses he’s not about to surrender on his wager, in keeping with individuals with data of the scenario. He has secured credit score guarantees from Chinese language and western banks to fulfill additional calls for for money from his brokers and should obtain help from Beijing to shut his quick place

The tycoon who has change into often known as “Huge Shot” was born right into a working-class household in Wenzhou, a buzzing metropolis within the coastal Zhejiang province famend for turning out a few of China’s most well-known entrepreneurs.

In response to Chinese language media reviews, he received his first job fixing equipment at a state-run fishery, the place he was assured work below China’s “iron rice bowl” employment system earlier than Deng Xiaoping’s financial reforms. Within the late Eighties he joined thousands and thousands quitting their state jobs to begin up companies — in his case, it was a manufacturing unit making home windows and doorways for state automakers that earned him his “first bucket of gold”.

In an interview with an area broadcaster in 2015, Xiang recalled a revelation he had throughout a enterprise journey to Germany in 1992: BMW and Mercedes-Benz didn’t outsource their doorways and home windows — they made their very own. The manufacturing unit again dwelling couldn’t final. With the clock ticking, he pivoted to stainless-steel, the place he noticed a chance for home producers to wean China off its dependence on imported steel.

In a 2020 speech he laid out the explanations for his firm’s success: “It’s that Tsingshan hasn’t modified,” he mentioned. “We’re the identical now as we have been 30 years in the past. We put on the identical garments, get out of the identical automobile, and head to the entrance line.” Xiang himself favours sneakers and button down shirts striped in white and pink hues.

Xiang’s household has emerged as probably the most highly effective industrial dynasties in Zhejiang, with a sprawling enterprise empire that features stakes in commerce, schooling and metal firms. Hurun Report, which tracks the wealth of China’s richest people, estimates his internet price at about $4.1bn based mostly on his stake in Tsingshan, which employs 75,000 individuals and has an annual income of $40bn, in keeping with Fortune.

“Within the mid-2000s they have been a small stainless-steel producer in Wenzhou. Final yr they have been accountable for virtually 1 / 4 of world manufacturing,” says a metals analyst. “They’ve gone from nothing to by far the largest participant.”

Acquaintances describe Xiang as “unassuming” however “extraordinarily educated” about his business. A choice to spend money on Indonesia simply earlier than the nation introduced plans to ban exports of nickel-bearing ore in 2014 proved astute. Merchants have been initially dismissive, saying Xiang had underestimated the dangers. However not for the primary time he proved them fallacious. A very good relationship with Luhut Binsar Pandjaitan, the military normal thought to be the right-hand man of Indonesia’s President Joko Widodo, is alleged to have smoothed the best way.

For all his success, Xiang has one weak point, say business fingers: “The man has an Achilles heel, which you typically see amongst profitable individuals in China: he likes to punt,” mentioned a nickel knowledgeable. “I suppose he felt that he was essentially the most knowledgeable celebration available in the market . . . and needed to commerce on that.”

Regardless of that, few individuals are ready to put in writing him off. “China’s most hardworking individuals are Wenzhounese,” Xiang mentioned in a 2015. “So long as an individual will get uncovered to Wenzhou’s hustle tradition, she or he may have an impulse to do one thing.”

neil.hume@ft.com