Chinese metal tycoon Dai Guofang, who once saw his first steel empire collapse under government pressure, tax evasion charges, and imprisonment, is now struggling to keep his second venture afloat. Nearly two decades after his initial downfall, Dai confronts a new crisis that threatens Jiangsu Delong Nickel Industry Co., a major global stainless steel producer he rebuilt from scratch. The company’s potential collapse could reverberate through China’s vast manufacturing sector and the beleaguered global nickel market.
Dai’s story is one of resilience. Starting as a scrap-metal collector, he built a fortune during China’s economic boom. However, with the economy now cooling, Dai faces a debt crisis endangering his company and other plants run by his wife and son. Local authorities have already taken over most of Delong’s plants to recover owed money and protect employees, according to insiders. The remaining factories are barely operational, with major commodity traders having cut ties long ago.
Court records reveal that Dai and his family are entangled in numerous legal disputes with contractors and suppliers over unpaid debts. Judicial rulings since April have frozen stakes in Delong subsidiaries valued at roughly three billion yuan (over $410 million), as per data provider Tianyancha.
Dai’s journey has been marked by an extraordinary comeback, uncommon among China’s billionaires. Known for his tenacity, the 61-year-old has weathered severe losses and drastic shifts in the nickel market over the past two years. Plummeting prices now force him to consider relinquishing control, according to industry sources.
Attempts to contact Delong’s headquarters and its Indonesian unit for comments were unsuccessful. Messages and interview requests to Dai’s family also went unanswered.
Delong’s operations span from China to Indonesia, making Dai a prominent figure in the private steel sector and a fierce competitor of Tsingshan Holding Group Co.’s Xiang Guangda. Xiang’s significant short position nearly disrupted the London Metal Exchange two years ago.
Born in 1963 in Jiangsu, Dai began his career on the streets, collecting and selling scrap metal. With minimal formal education, he taught himself steelmaking and expanded his operations. By 2000, Dai was producing a million tons of steel annually and aimed to build a massive 10-million-ton steel complex. However, a 2004 government crackdown on rogue investments led to his imprisonment for tax evasion, from which he emerged in 2009 after serving five years.
In his second venture, Dai capitalized on China’s economic boom by focusing on affordable nickel and stainless steel, similar to Tsingshan’s strategy. Before recent troubles, Delong boasted a stainless steel capacity of 6 million tons in China and 3 million tons from Indonesian joint ventures, ranking it second globally after Tsingshan.
However, the nickel and stainless steel markets have been destabilized by Indonesia’s rapid production expansion. Nickel pig iron prices have dropped over 40% since early 2022 due to oversupply, as reported by SMM Information & Technology. Decreased global demand has also lowered stainless steel prices, especially the nickel-rich type Delong specializes in.
Violent protests and deadly clashes at Delong’s Indonesian plants, coupled with permitting delays and increased costs, have eroded investor, creditor, and partner confidence. While competitors like Tsingshan have ventured into refining higher-grade nickel for batteries, Dai has lagged behind.
Facing limited financing options, Dai is negotiating with Jiangsu officials to salvage local operations. In Indonesia, Delong has been trying to sell its stakes to raise cash, including a majority share of one project sold to CNGR Advanced Material Co., a supplier to Tesla Inc., last July.
