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Hungary gains final EU approval for its Russian-built nuclear power plant www.rt.com

The European Commission on Monday gave a green light to a new Russian-backed nuclear power project in Hungary, ending an investigation which began in 2015. The project was challenged by Brussels, which accused it of non-compliance with EU rules.
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Russia's President Vladimir Putin (L) shakes hands with Hungarian Prime Minister Viktor Orban © Alexei Druzhinin'Brussels annoying' Hungarian PM Orban heading to Moscow to meet Putin
The Commission said Hungary’s investment in the Paks-2 nuclear plant, backed by a loan from Russia, did represent a form of state aid. It invalidated Hungary’s argument that the project was economically viable and imposed a number of conditions that came with the project’s approval.

“During our investigation, the Hungarian government has made substantial commitments, which has allowed the Commission to approve the investment under EU state aid rules,” said EU Competition Commissioner Margrethe Vestager.

An important project for Russia and Hungary, Paks-2 was agreed at the end of 2014.

The €12.5 billion contract, partly aided by Moscow’s €10 billion loan, would add two new 1,200 megawatt (MW) reactors to Hungary’s only operating nuclear power plant.

Located on the River Danube, about 100 kilometers from the capital, four Paks reactors produce up to 50 percent of the country’s electricity. However, Hungary says it may lose the bulk of its power over the next two decades, as the remaining reactors would run out between 2032 and 2037.

In November, the Commission ended an investigation into the way Hungary handed the contract to the Russian nuclear corporation Rosatom. Budapest argued only Rosatom was able to undertake the work, saying the existing reactors are Russian-built, and it made sense to contract Rosatom to build the new ones. It insisted that only Rosatom’s newest VVER-1200 reactors could fulfill all of its requirements for the project.



Asia infrastructure needs exceed USD 1.7 trillion per year, double previous estimate www.montsame.mn

Ulaanbaatar /MONTSAME/ Infrastructure needs in developing Asia and the Pacific will exceed $22.6 trillion through 2030, or $1.5 trillion per year, if the region is to maintain growth momentum, according to a new flagship report by the Asian Development Bank (ADB). The estimates rise to over $26 trillion, or $1.7 trillion per year, when climate change mitigation and adaptation costs are incorporated.

The report, Meeting Asia’s Infrastructure Needs, focuses on the region’s power, transport, telecommunications, and water and sanitation infrastructure. It comprehensively examines current infrastructure stocks and investments, future investment needs, and financing mechanisms for developing Asia.

“The demand for infrastructure across Asia and the Pacific far outstrips current supply,” said ADB President Takehiko Nakao. “Asia needs new and upgraded infrastructure that will set the standard for quality, encourage economic growth, and respond to the pressing global challenge that is climate change.”

Infrastructure development in the 45 countries covered in the report has grown dramatically in recent decades — spurring growth, reducing poverty, and improving people’s lives. But a substantial infrastructure gap remains, with over 400 million people still lacking electricity, 300 million without access to safe drinking water, and about 1.5 billion lacking access to basic sanitation. Many economies in the region lack adequate ports, railways, and roads that could connect them efficiently to larger domestic and global markets.

“ADB pledges to work with member countries and use our 50 years of experience and expertise to meet infrastructure needs in the region. As the private sector is crucial to fill infrastructure gaps, ADB will promote investment friendly policies and regulatory and institutional reforms to develop bankable project pipelines for public-private partnerships,” said Mr. Nakao.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.

Report Highlights:

• Developing Asia will need to invest $26 trillion from 2016 to 2030, or $1.7 trillion per year, if the region is to maintain its growth momentum, eradicate poverty, and respond to climate change (climate-adjusted estimate). Without climate change mitigation and adaptation costs, $22.6 trillion will be needed, or $1.5 trillion per year (baseline estimate).

• Of the total climate-adjusted investment needs over 2016-2030, $14.7 trillion will be for power and $8.4 trillion for transport. Investments in telecommunications will reach $2.3 trillion, with water and sanitation costs at $800 billion over the period.

• East Asia will account for 61% of climate-adjusted investment needs through 2030. As a percentage of GDP, however, the Pacific leads all other sub-regions, requiring investments valued at 9.1% of GDP. This is followed by South Asia at 8.8%, Central Asia at 7.8%, Southeast Asia at 5.7%, and East Asia at 5.2% of GDP.

• The $1.7 trillion annual climate-adjusted estimate is more than double the $750 billion ADB estimated in 2009. The inclusion of climate-related investments is a major contributing factor. An even more important factor is the continued rapid growth forecasted for the region, which generates new infrastructure demand. The inclusion of all 45 ADB member countries in developing Asia, compared to 32 in the 2009 report, and the use of 2015 prices versus 2008 prices also explain the increase.

• Currently, the region annually invests an estimated $881 billion in infrastructure (for 25 economies with adequate data, comprising 96% of the region’s population). The infrastructure investment gap—the difference between investment needs and current investment levels—equals 2.4% of projected GDP (climate-adjusted) for the 5-year period from 2016 to 2020.

• The People’s Republic of China (PRC) has a gap of 1.2% of GDP in the climate-adjusted scenario. Without the PRC, the gap rises to a much higher 5% of the remaining 24 economies’ projected GDP. Public finance reforms could generate additional revenues estimated to bridge around 40% of the gap (or 2% of GDP) for these 24 economies. For the private sector to fill the remaining gap (3% of GDP) it would have to increase investments from about $63 billion today to as high as $250 billion a year over 2016–2020.

• Regulatory and institutional reforms are needed to make infrastructure more attractive to private investors and generate a pipeline of bankable projects for public-private partnerships (PPPs). Countries should implement PPP-related reforms such as enacting PPP laws, streamlining PPP procurement and bidding processes, introducing dispute resolution mechanisms, and establishing independent PPP government units. Deepening of capital markets is also needed to help channel the region’s substantial savings into productive infrastructure investment.

• Multilateral development banks (MDBs), have financed an estimated 2.5% of infrastructure investments in developing Asia. Excluding the PRC and India, their contributions rise above 10%. MDBs are scaling up operations with a growing proportion financing private sector infrastructure projects. Beyond finance, MDBs are also playing an important role in Asia by sharing expertise and knowledge to identify, design and implement good projects. They are integrating more advanced and cleaner technology into projects and streamlining procedures. MDBs are also promoting investment friendly policies and regulatory and institutional reforms.

Source: Asian Development Bank



National program to improve maternal and newborn health www.montsame.mn

Ulaanbaatar /MONTSAME/ During its regular meeting on March 7, Tuesday, the Cabinet adopted a National Program on Reproductive, Maternal and Newborn Health.

Corresponding Ministers and governors of the capital city and aimags were assigned to project necessary measures to realize the program in their yearly action plan, reflect the required fund in their budgets, and fund the program through international aids and loans.

Although Mongolia’s maternal mortality rate upgraded from high to medium as a result of more than 10 programs that were implemented during the course of the last 20 years, maternal and infant mortality rate isn’t stably declining.

According to studies, factors that lead to maternal death in Mongolia are livelihood, migration, administration issues and late reception of medical services.

The program is expected to improve readiness of maternal, newborn and reproductive health services, introduce advanced diagnosis and treatment technologies, enhance human resource capacities, and increase access and quality of medical services.

Image source: Ministry of Health



Mongolia to double land open for exploration -mining minister www.reuters.com

Mineral-rich Mongolia plans to double the amount of land available for exploration in an effort to tap into the mining industry's appetite for new resources and help shore up its finances following an IMF-led bailout.

Mongolia will increase the land to 20.9 percent of the country from 9.6 percent currently, and could announce the change later this month, the minister of mining and heavy industry, Dashdorj Tsedev, said in an interview on Monday.

Miners say Mongolia ranks as one of the best prospects in the world for new copper reserves, as the best quality ore bodies in many other parts of the world have been depleted and electric vehicles raise the possibility of a surge in demand.

The expansion reflects improved geological surveys, and the land open for exploration could increase as further improvements are made, the minister said at the Prospectors and Developers Association of Canada conference in Toronto.

"A big amount of land will be up for exploration and license," said Tsedev, speaking through a translator, adding that ecologically sensitive areas are excluded.

The land-locked country is home to Rio Tinto's massive Oyu Tolgoi copper-gold mine. Rio decided in June to go ahead with a $5.3 billion expansion, which will take five to seven years.

The mine will eventually be responsible for around 30 percent of the economy, Rio said, but direct benefits for Mongolia will be delayed. According to a 2009 agreement, investors must recoup their original investment costs before Mongolia can collect dividends for its 34 percent shareholding in the mine.

Mongolia's economy grew at a double-digit annual rate over 2011-2013 as foreign investors rushed in to take advantage of its vast untapped mineral deposits, but it has been hit hard by an economic crisis since 2016 due to government overspending and declining revenues from commodity exports.

Slowing demand for coal and copper, Mongolia's chief exports, and a plunge in foreign investment have left the world's most sparsely populated sovereign country with soaring debts and a rapidly declining currency, forcing government to hike interest rates and slash spending. (Additional reporting by Barbara Lewis in London; Editing by Leslie Adler)



Airbus sales chief sees some export credit cover in 2017 www.reuters.com

Airbus (AIR.PA) expects to have access to European export credit financing on a "case by case" basis in 2017, its sales chief said on Monday, granting it a respite from a series of setbacks.
European Export Credit Agencies (ECA) suspended financing for Airbus deliveries in 2016 amid a UK investigation into discrepancies in paperwork over the use of intermediaries.
"I would be expecting that we will get ECA cover on a case-by-case basis this year," John Leahy, chief operating officer for customers said in an interview on the sidelines of the ISTAT Americas air finance conference.
Covering a range of topics on the sidelines of what could be his last such meeting before retiring around the turn of the year, Leahy said Airbus would need until at least 2018 to recoup production levels it had originally planned for its A320neo jet following production problems at engine maker Pratt & Whitney.
"I think Pratt has been frustrating. We are certainly capable of delivering the airframes the moment we have engines. The good news is the engine is meeting and exceeding our expectations," Leahy told Reuters.
Airbus delivered 68 A320neos in 2016, well below earlier expectations, and predicts it will treble this number in 2017.
Industry sources say deliveries of the new Pratt & Whitney Geared Turbofan engine to Airbus and Canada's Bombardier (BBDb.TO) fell as much as 50 percent below the original plans in 2016, raising questions over how quickly it could catch up.
That has implications for the penalties that planemakers may continue to have to pay to airlines beyond 2017 and that they will in turn want to recoup from the U.S. engine maker.
Leahy confirmed the overhang of late deliveries caused by missing engines would persist into 2018.
"We will still be cumulatively behind by the end of 2017 but we will still be in the process of catching up. We can always hope that they will do more, but at this point their track record isn’t that impressive."
Pratt & Whitney has acknowledged the industrial problems in two parts inside the engine and production of its front fan blades, but says it is well on the way to resolving them.
"We will execute and get this behind us," sales chief Rick Deurloo told the conference.
A320 snags and high early costs for its A350 helped push Airbus margins down last year, despite higher deliveries and lower spending on research and development.
Analysts say profits have also been squeezed by the legacy of lower pricing for an earlier version of A350, which was relaunched in 2006 with a bolder design and higher price tag.
Some of the airlines taking A350s are those such as Finnair which had ordered the earlier version and believed to have been granted permission to change to the new design at the same price. In all, Airbus sold more than 100 of the earlier version, a derivative of its A330, before opting for an all-new design.
"We did honor some firm contracts that people had for the original airplanes," Leahy told Reuters, asked about the impact of the pricing switch, adding: "We are almost through it".
Airbus is also still studying a possible larger A350-2000 version, but is in no hurry, Leahy said.
"We are studying it but this market right now is soft for wide-bodies, so I don’t see a big queue of customers saying I want to launch a new program ... We have time to study it."
The A350-2000 is a 400-seater designed to compete with Boeing's 777-9, whose development the U.S. company's marketing chief Randy Tinseth said was ahead of schedule.
In a setback to the A350-2000 idea, Singapore Airlines (SIAL.SI) placed a big order for 777-9s last month.


Copper will trend lower this year: Jiangxi boss www.mining.com

The head of China's second-largest copper refiner is sounding a bearish note on the red metal, even as the country is targetting higher economic growth.

Interviewed by Bloomberg on Sunday, Jiangxi Copper Co. Chairman Li Baomin predicted copper will average 45,000 (US$6,524) to 46,000 (US$6,673) Chinese yuan per ton in 2017, down from an average 47,513 yuan (US$6,892), year to date. Chairman Li cited worries over the raising of U.S. interest rates, which would increase the cost of financing major infrastructure projects, along with unclear U.S. policies and uncertainties over upcoming European elections. “There are things worrying us,” he told Bloomberg.

On the brighter side, he said global copper demand is set to exceed production, noting China is predicted to grow at 6% this year versus 5.8% last year, along with greater demand for copper used particularly in power grids and electric vehicles. For its part, Jiangxi Copper is planning on cranking out the tonnage, from 1.2 million tons last year to its maximum capacity of 1.36 MT, said Li.

Last week copper for delivery in May gained for the fourth day in a row, jumping 2% to hit a day high of $2.7685 per pound or $6,103 a tonne as a return to production at two top mines – combined responsible for some 8% of global output – looked increasingly doubtful in the near term.

Today on the Comex, copper for May delivery, the most active futures contract, was down by 4 cents, to close at $2.6520 a pound.

Chairman Li's remarks temper what analysts said about copper in December, with several forecasting a banner year for the red metal, based on increased demand from China leaving the market in a tighter supply situation. Although, even if copper in Chinese yuan drops to 45,000 (US$6,524), that is still higher than the price forecast by Goldman Sachs. The influential bank was the most bullish of five analysts quoted by MINING.com in January, predicting copper could go to $6,200 during the first half of 2017.



Iron ore price drops to 1-month low, coking coal rebounds www.mining.com

The Northern China import price of 62% Fe content ore fell 2.8% on Monday, to a near-one-month low of $89.00 per dry metric tonne according to data supplied by The Steel Index.

After a 85% rise in 2016, the price of iron ore has improved by 12% so far this year and has more than doubled in value since hitting near-decade lows at the end of 2015.

The rise in the price of the steelmaking raw material has flummoxed market observers given supply growth expected in 2017, record-setting inventory levels at ports and an uncertain outlook for demand from China.

The bears received more ammunition over the weekend after inventories at major Chinese ports jumped to 130 million tonnes the highest since at least 2004 according to Steelhome data.

However, Reuters reports the bulk of inventories are low to medium-grade material and the availability of high-grade iron ore remains limited as "most Chinese mills are opting for higher grade iron ore to boost productivity in order to push out more steel as prices remain high."

The bulk of inventories are low to medium-grade material and the availability of high-grade iron ore remains limited
Iron ore prices should also be supported by news over the weekend that Chinese authorities will enforce crude steel production capacity cuts of 50 million tonnes. The announcement form part of Beijing's efforts to tackle chronic air pollution and restructure the steel industry which for decades have suffered from overcapacity, inefficiency and low-quality steel output.

The Chines push should favour high-grade ore from Australia, Brazil and other exporting nations over domestic production which is low grade and remains unprofitable even at today's iron ore price.

On Monday, the market for coking coal continued to rebound with the steelmaking raw material advancing to $163.10 after three weeks of unbroken gains. Met coal prices are being supported by the decision to further cut coal production in China with a goal of eliminating 150 million tonnes this year. While the cuts target coal used in power generation, steelmaking quality coal will also be impacted.

A reduction in allowable work days at the country's coal mines last year sparked a massive rally in coal prices, lifting met coal prices to multi-year high of $308.80 per tonne (Australia free-on-board premium hard coking coal tracked by the Steel Index) by November from $75 a tonne earlier in 2016. The price had fallen back to $150 a tonne three weeks ago.

Outlook murky
FocusEconomics in its February survey of analysts and institutions shows the price of iron ore averaging $56.70 a tonne during the final quarter of next year. For Q4 2018, analysts expect prices to moderate further to average $55.60 over the three month period.

None of the analysts foresee iron ore holding at today's prices – Dutch bank ABN Amro is the most optimistic calling for a $76 average towards the end of 2017 while London-based Investec sees an average of $71.50 over the cours of this year.

BMO Capital Markets see prices correcting sharply from today's levels to average $45 during the first quarter of 2018 while Oxford Economics expects iron ore to average $53 this year and below $50 in 2018. Iron ore averaged $56 last year, a slight improvement over 2015.

FocusEconomics study of coking coal price predictions do not point to further rallies, but prices should stabilize near current levels. The research firm's panelists expect prices to average $149 per tonne in Q4 2017. Prices are set to remain stable throughout 2018 and average $141 during the final quarter of next year. Coking coal averaged $121 last year and $90 the year before.



Freight forwarding companies under examination www.montsame.mn

Ulaanbaatar /MONTSAME/ The ministry of Road and Transportation Development has started examination on all railway freight forwarding companies regarding their implementation of relevant laws, regulations, rules and meeting standards and requirements.

For this reason certificates of 82 freight forwarding companies are under suspension. The Ministry announced that the companies should apply for the examination within March 17.



Chinese firms to continue M&A global expansion www.chinadaily.com

Chinese companies are expected to continue to expand their global reach across a broader mix of industries, said David Fleming, partner and M&A specialist at international law firm Baker McKenzie.

He said uncertainties are unlikely to affect Chinese corporate investments in the Asia-Pacific region-including ASEAN members-fueling growth in industries ranging from food and health to telecoms and tech.

"Deals won't stop," Fleming said.

The expected quickening of cross-border investments from China is also in line with China's Belt and Road Initiative, which promotes business ties with nations along the ancient Silk Road connecting China and Europe, Africa and the rest of Asia.

At the same time, Fleming did see the inevitability for Chinese companies to adopt a more sophisticated approach and be more careful in a number of operations in their overseas expansion.

"To make successful deals, they will have to adjust their action strategies, deal sizes and structures, exchange and cost management policies, and corresponding legal practices in pursuit of mergers and acquisitions," Fleming said.

Based on their previous experience in Europe and elsewhere, companies would have to take a longer-term view and perhaps employ a more selective M&A approach.

Second, they were advised to act early to involve specialist services in the legal and other professional fields in the deal process.

Third, they needed to be more careful and flexible in designing the deal structure in order to mitigate a single company's exposure to any potential risk.

Fleming also said that companies must engage with local regulatory authorities early on in the process.

He also said that companies needed to consider the role that the media could play in a deal.

Deals that are pending regulatory approval are often reported in the media. Companies should be more sensitive to local prevailing social conditions, he said.

At a time of rising populism, companies were advised to be more careful and involve local public relations expertise and the local media.

Overall, Fleming remained confident that Chinese companies would continue to go overseas to seek diversification. He added that 2017 would be a year of continuation.

The Baker McKenzie M&A specialist said Chinese companies were quick learners and would work very hard to pursue their goals.

Legal services in China, including Baker McKenzie's Chinese partners, were making progress to adapt to the needs of their clients, "in order to be where deals are", Fleming said.



Tibet to open world's highest super-long tunnel www.chinadaily.com

The Mila Mount Tunnel on the Lhasa-Nyingchi Highway is expected to be opened in September, when it will become the world's highest super-long tunnel.

The tunnel is located at the junction of Lhasa and Nyingchi in the Tibet autonomous region at an average altitude of 4,740 meters above sea level, according to the Mila Mount Tunnel Project Headquarters.

As a key section of the Lhasa-Nyingchi Highway on the National Highway 318, the two lanes of the tunnel are 5,727 meters and 5,720 meters long respectively, according to the project headquarters.

Construction of the tunnel started in April 2015, and the project is about 70 percent complete to date, it said, adding that, hampered by the natural environment at high attitude, the construction process has encountered many obstacles.

"With a lack of oxygen and temperature lows of - 30 Celsius in winter, we require highly skilled workers," said Wang Liang, chief engineer of the project headquarters.

Wang said many workers suffered from attitude sickness during the tunnel's construction, and that much time and effort has been spent on recruiting qualified workers.

In order to overcome such difficulties, there are 15 oxygenators, an oxygen tank and five boilers on the project site, he added.

After it opens, traveling time between the cities of Lhasa and Nyingchi will be halved, Wang said.

"Driving from Lhasa to Nyingchi will take just three to four hours instead of about eight, and it will be much safer," Wang said.

"It will also have a positive impact on the social and economic development of these places, and it will make life much more convenient for local ethnic groups."