VED Sale of scrap copper abroad (Germany)

Project summary

Problems:
- The main problems for European metal trading companies:
European steel companies face many challenges when trying to import copper scrap or any other metal from abroad, and here we show some of the same challenges that EU buyers face:
1- Failure to authenticate the seller
2. The language barrier is a big problem for some sellers because most of them do not speak English.
3- Sellers refuse to accept certain payment methods such as (Letter of Credit)
4- Inability to find the required characteristics of copper scrap.
5- Uncertainty of reserves for annual contracts
Buisness process:
Strategy:
Our company will offer its services to existing clients in Germany and the Czech Republic. It will also continue to monitor the copper scrap market and developments. The company will make a complete corporate offer (FCO) and send it to German and Czech buyers, and sign sales and purchase agreements (SPA) with them, which will guarantee the company's willingness to sell copper scrap and buyers' willingness to buy copper scrap. The company will start exporting to one customer within the first year. The buyer is ready to buy from 100 tons to 500 tons per month. The company will sign contracts with Asian sellers of copper scrap, and on behalf of the Buyers will carry out all payment and shipment procedures.
Sales plan:
Our company will buy copper scrap from sellers in developing and industrial countries such as China / Hong Kong, South Africa, Nigeria. And it will add a commission of 25% - 30% to the price and sell copper scrap to European buyers who are ready, willing and able to buy large quantities of copper scrap. The contracts will last for a year and deliveries will be monthly. Before buying, our company will sign a one-year contract with a European buyer. After signing the contract, we will provide the buyer with a pro forma invoice (PI), after which the buyer will issue a draft letter of credit (DLC). After that, our company will check the stocks, specifications, documents, bank accounts and shipping documents of the scrap copper seller. Upon completion of the inspection, he will sign an agreement with the seller for the monthly shipment of 100 tons to the buyer's port (Hamburg). The contract will be for 12 shipments. Our company will then pay the seller 1 batch of 100 tons, and the seller will start the delivery process. Upon receipt of the shipping documents, we will inform the buyer and he will issue a final letter of credit (FLC). After the cargo (100 tons) arrives at the buyer's port, the buyer begins the verification process. After completing the verification process, the buyer's bank transfers the payment (Letter of Credit) to the bank account.
During the first year, we will purchase copper scrap at $ 4,000 (CIF) for 1,200 metric tons and add $ 1,200 in service fees (value added value). The total price for the buyer will be $ 5200.
In the second year, the buyer will increase the quantity to 2,400 metric tons (MT), and our purchase price will be $ 3,800 (CIF) and the commission will be $ 1,300. In this case, the total price for the buyer is $ 5100. The $ 100 will be removed as a discount for the buyer when the quantity is increased, while our company will receive a cheaper price from the supplier, which will increase the commission. After the return to investors of the amount they invested in our company (500 thousand. First year - 760 thousand. Second year)
Profit will rise substantially in the second year, from 940,000 in the first year to 2,440,000 in the second year.