The portal then made speedy link-ups with other local metal trading platforms by establishing 50:50 joint ventures in China, South Korea and Russia. Since their launch in March this year, the four portals have generated revenue to the tune of $50 million . trade, or $500,000 commission income to the group, said Michael Cheng, WellNet Holdings corporate finance director said.

Cheng added that business volumes and commission revenue will double in the first three to four years of operation. Hopefully, the four portals will reach a cash flow break-even in the first half 2001, Cheng said. Apart from Asia, WorldMetal.com is also looking at the European online metal markets as its next step of expansion.

The company is currently in talks with UK-based Corus Group Plc and Germany-based Thyssen Krupp on starting online metal exchange joint-venture portals with local specifications, said co-chief executive officer Dicky Yu. The brisk expansion calls for additional financial back up. Cheng said the group is looking to tap funds in the equity market or through borrowings.

"We hope to get this done in the coming six months," he said. A spin-off and listing of WorldMetal.com will also be an option. Sources close to WorldMetal.com say that the company is in touch with investment bankers on arranging the share sale. Company executives declined to comment on the matter. Yu said the company is also in talks with China's biggest steelmaker Baoshan Iron & Steel on the latter becoming a trading member of the portal.

Baoshan Iron & Steel is planning a listing on Hong Kong's main board but no timetable has been fixed so far. WorldMetal.com originally earmarked $20 million as an investment budget for the next two years but that may be used up a quarter earlier, Cheng said.

He noted that marketing expenses in new local markets account for about 40 per cent of total investments. This is needed to attract domestic players to the portal. Domestic trade from local heavy industries such as construction companies, automobile firms. and ship manufacturers accounts for about 85 per cent of total online metal trade, Cheng added. The company has set aside 30 per cent of its total investments for hardware development while it has earmarked 20 per cent towards hiring manpower and technology professionals.

The remaining 10 per cent is used as general working capital. The company also plans to expand into the relatively mature markets in North and South America in 2001. Cheng said its existing business-to-business (B2B) portals are estimated to reach a total trading volume of 5.5 million tonne in the first year of operation. Online global metal sales are worth $1.25 trillion annually, representing about 700 million tonne of metal. Cheng said the company's first target is to achieve a 10 per cent share of the global market.

(The Wall Street Journal)