UK says signs over 9 billion pounds in deals during PM's China trip www.reuters.com

SHANGHAI (Reuters) - Britain signed deals worth more than 9 billion pounds ($12.83 billion) creating over 2,500 jobs across the United Kingdom during Prime Minister Theresa May’s visit to China this week, the British government said on Friday.

Alibaba to buy 33% of spinoff Ant Financial www.asia.nikkei.com

HONG KONG -- China's largest e-commerce company, Alibaba Group Holding, said Thursday that it has agreed to buy a 33% stake in Ant Financial Services Group, a mobile payments affiliate controlled by Alibaba founder Jack Ma Yun.

Under a deal announced the same day as better-than-expected quarterly earnings, Alibaba will buy new shares in the operator of the popular Alipay payment service in exchange for certain intellectual property rights owned by the e-commerce giant. There will be no cash impact on Alibaba following the closing, it said.

The move will align the duo's interests further in areas including user acquisitions from offline and online platforms and international expansion, Alibaba Executive Vice Chairman Joseph Tsai said in a conference call. Their strategic partnership dates back to 2014, when Alibaba and Ant Financial reached a profit-sharing agreement.

This will mark Alibaba's first investment in the affiliate, valued at more than $74 billion by Hong Kong-based brokerage CLSA in 2016.

Alipay was established in 2004 under Alibaba but spun off as a separate entity in 2011 to come under the control of Ma. The move, which followed regulations requiring third-party payment services to be wholly owned by Chinese companies or individuals, led to a dispute between Alibaba and foreign shareholders SoftBank Group of Japan and Yahoo of the U.S.

Alibaba's reunion with Ant Financial is also seen as preparation for the affiliate's anticipated public listing in addition to fueling its global acquisition drive. Tsai said Alibaba expects Ant Financial to continue its fairly aggressive plan to continue to gain more new users and take market share. The agreement comes not long after Ant Financial's plans to acquire U.S. money transfer company MoneyGram International fell through. That deal failed to win approval by the U.S. government over national security concerns last month.

Meanwhile, Alibaba's revenue jumped 56% on the year to 83.02 billion yuan ($13.18 billion) for the three months ended December, supported by Chinese consumers' enthusiasm for online shopping. This compared to the average estimate of a 49.95% rise to 79.84 billion yuan by analysts polled by Thomson Reuters. The company's bread-and-butter commerce segment continued to drive growth, especially with a push from China's biggest shopping event on Nov. 11.

For the event -- Singles Day -- Alibaba claimed to have broken its own record again by selling $25.3 billion of goods on that day alone, 40% more than last year. Alibaba also has been pushing its artificial intelligence technologies to attract customers through personal recommendations.

Its cloud computing business also reported revenue growth of 104% on the year to 3.59 billion yuan, pushed by increasing paying customers and more customers willing to pay for higher-value-added products, the company said. Karen Chan, equity analyst at Jefferies, said in a recent report: "We estimate Alibaba Cloud to reach breakeven with 3.2% operating margin by fiscal year 2019."

Alibaba also accelerated its push into offline retailing, aiming to pull customers into its empire. In November, the company said it would invest 22.4 billion Hong Kong dollars ($2.86 billion) in China's top hypermarket operator, Sun Art Retail Group. Looking ahead, the company pledged to double its Hema supermarket branches by the end of 2018. Hema customers will be able to receive fresh products in about 30 minutes after clicking from an additional 30 stores in Beijing and three new ones in Xian by the end of 2018.

Germany Approves Gazprom Pipeline In Territorial Waters, Despite U.S. Opposition www.themoscowtimes.com

Russia’s energy monopoly Gazprom has welcomed Germany’s approval of a multibillion-dollar gas pipeline to Europe that is viewed with suspicion by Moscow’s geopolitical rivals.

New airway to be opened between Mongolia and China www.montsame.mn

The agreement on opening new airway between Mongolia and China was reached during the official visit of the Minister of Road and Transport Development to People’s Republic of China.

Mongolia,United Kingdom : EBRD and EU support expansion of Mongolian pharmaceutical company www.tendersinfo.com

Luvsan Khurelbaatar started a small pharmaceutical and cosmetics workshop in 1990, using locally-grown herbal ingredients to produce skin lotions, powders and solutions for respiratory diseases. Over the years, it grew into a large factory, with more and more people joining him.

Today, the workshop that became a factory has moved to a large industrial site on the outskirts of Mongolias capital Ulaanbaatar with the help of the EBRD.

Monos has turned into the largest player in the sector in the country: it employs more than 800 people and produces a wide range of cosmetic, medical and pharmaceutical products.

The EBRD has committed to provide a second loan of US$ 5.5 million to help Monos build a new production plant, develop training activities and support its wholesale business. The company aims to secure a certification of Good Manufacturing Practice (GMP) and to employ at least 30 new staff trained to GMP standards.

Long-term partnership for growth

Were the largest manufacturer in the Mongolian pharmaceutical market and it is very important to us to meet best manufacturing practices, said Anand Khurelbaatar, the companys CEO.

Our cooperation with the EBRD and various investments into both our equipment and processes are helping us to achieve this goal.

It takes a long time in the medical sector to create new products, usually five or six or sometimes even up to 15 years, he added. Thats why it is so vital to have a long-term partner, such as the EBRD, willing to invest and offer expertise.

The new production facility has allowed Monos to increase its capacity more than fourfold. Furthermore, the company has developed a strong portfolio which not only includes production but also research and development, drug wholesale, retail and distribution. The company is still owned by Luvsan Khurelbaatar and his family.

It was a very large and complex project in the medical sector one that was very important to both the Mongolian economy and its people, said the companys Chairman Mr Khurelbaatar.

Weve developed a lot of new products since we started working with the EBRD. This cooperation has provided us with a lot of new opportunities.

Building a competitive, diverse economy

Monos has also started to explore neighbouring markets. At the same time, several industry champions from Europe and east Asia have discovered the company and are interested in its production capacity.

The EBRDs investments in Monos are helping to build a more diverse economy in Mongolia. The European Union supports this project with funding aiming to improve access to finance and know-how in the country.

While the EBRD provided 52.7 million in total in investments, the EU has made available 9.3 million to support this finance.

The Bank has worked on various projects with Monos, supporting the company in its successive stages of expansions, said Irina Kravchenko, Head of the EBRDs Ulaanbaatar office.

It is one of many examples of how our work helps to develop the private sector and build competitive businesses in Mongolia.

This is a tangible example of how the EU and the EBRD can join forces to support the diversification of the Mongolian economy and increase employment at the same time, said Marco Ferri, Charg dAffaires of the EU Delegation to Mongolia.

We work together for the benefit of Mongolia and its citizens.

To date, the EBRD has invested over 1.4 billion in more than 90 projects in the country.

Mongolian Foreign Minister to visit North Korea www.news.mn

D.Tsogtbaatar, Minister of Foreign Affairs of Mongolia is to make an official visit to Pyongyang on 3-6 February at the invitation of his North Korean counterpart Ri Yong-ho.

Mongolia asks support from China in road sector www.gogo.mn

Bat-Erdene Jadamba, Minister of Road and Transport Development, is paying a visit to the People’s Republic of China at the invitation of his counterpart Li Xiaopeng. This is considered the first visit of the Road and Transport Development Minister since 2015.

Aeroflot secures $5bn deal for 50 Russian-built MC-21 passenger jets www.rt.com

Russia’s leading airline Aeroflot has leased 50 domestically made MC-21 jets for its fleet. The leasing contract has been signed for a period of 12 years with a possible extension.
Aeroflot will receive the first jet in the first quarter of 2020, with the full delivery to be completed by 2026. The total cost of leasing payments and maintenance fees exceeds $5 billion. Following this latest contract, the delivery of 220 MC-21 jets has now been confirmed.

Mongolia ranked 51 out of 113 countries for rule of law performance www.montsame.mn

Ulaanbaatar/MONTSAME/ On January 31, the World Justice Project (WJP) released the 2017-2018 WJP Rule of Law Index, which measures rule of law adherence in 113 countries worldwide based on more than 110,000 household and 3,000 expert surveys.

Rio Tinto denies Dutch NGO allegation it avoided Oyu Tolgoi tax www.reuters.com

JOHANNESBURG (Reuters) - Rio Tinto on Wednesday denied allegations by a Dutch non-profit organization that it had avoided paying $700 million of tax to Mongolian and Canadian authorities relating to its giant Oyu Tolgoi copper project.

Rio Tinto is investing about a $1 billion a year at Oyu Tolgoi in the Gobi Desert, where it operates a mine and is building an underground extension that would add approximately 500,000 tonnes of production a year in the next decade.

The Centre for Research on Multinational Corporations, known as SOMO, alleged in a report that Rio and its Canadian subsidiary Turquoise Hill used so-called mailbox companies in the Netherlands and Luxembourg to avoid $470 million in Canadian taxes and $230 million in Mongolian taxes.

Rio denied the allegations in a statement. Its shares were trading 0.5 percent lower at 1500 GMT.

“The flawed SOMO report contains a number of unsubstantiated and incorrect allegations regarding tax,” Rio Tinto said. It added Oyu Tolgoi’s (OT) structure was agreed in advance with the governments of Canada and Mongolia and the tax outcomes were in line with those in Australia, Chile and the United States.

From 2010 to 2017, the company paid more than $1.8 billion in taxes and royalties, it said. By the time the underground project begins production in 2020, shareholders will have invested approximately $12 billion, while so far only the government of Mongolia has received any return.

In a 14-page letter to SOMO, dated Jan. 17 and reviewed by Reuters, Turquoise Hill CEO Jeff Tygesen issued a detailed rebuttal of the SOMO report and said the company’s tax practices were compliant with local laws and international standards.

“The OT operation is substantially contributing to Mongolia’s economy and long-term development,” he wrote.

Analysts say Mongolia depends on foreign investors and needs the production of copper and other minerals if it is to meet the terms of an IMF bailout agreed last year.

At the same time, the Mongolian government has been looking to increase its income from its resource wealth.

It issued a tax bill for about $155 million to Turquoise Hill relating to an audit of payments made between 2013 and 2015, which Turquoise Hill earlier this month said it was evaluating.

Rio Tinto last week moved to strengthen its relationship with Mongolia, setting up a new office in the Mongolian capital, separate from Tolgoi, to focus on exploration and local ties.

The Oyu Tolgoi copper and gold mine is jointly owned by the government of Mongolia, with 34 percent, and Turquoise Hill Resources with 66 percent. Turquoise Hill is in turn 51 percent-owned by Rio Tinto.

Relations between the Mongolian government and Rio Tinto have been tricky in the past. They soured in 2013 during a dispute over costs and taxes related to the proposed expansion of Oyu Tolgoi. The matter was resolved in 2015.

Editing by Mark Potter