Noble Group to sell oil liquids unit to Vitol, flags $1.2 billion loss www.reuters.com

SINGAPORE (Reuters) - Struggling commodities trader Noble Group agreed to sell its Americas-focused oil liquids business to Vitol for about $580 million as part of a debt-cutting strategy, and warned of a big loss for its third quarter.

Monday’s move came after Reuters reported late on Friday that Vitol, the world’s largest oil trader, was nearing a deal to buy Singapore-listed Noble’s oil liquids unit.

Once Asia’s biggest commodities trading house, Noble is slashing jobs and selling assets to reduce its debt and win support from its lenders after a crisis-wracked two years. In July it agreed to sell its smaller gas and power business to Mercuria as it focuses on its core Asian coal trading and LNG businesses.

Annisa Lee, Nomura’s head of Asia ex-Japan’s flow credit analysis, said the asset sale was expected and the “longer-term concern” was the ongoing operating losses.

“I guess the question is when are they going to basically turn around their business, which is quite key. If they can actually provide more details, what sort of assets they can still sell, that would be great,” she said.

Hong Kong-based Noble was plunged into crisis in February 2015 when Iceberg Research questioned its accounts, and then the company was hit by a commodities downturn.

While Noble has stood by its accounts, the upheaval triggered a share price collapse, credit downgrades, a series of writedowns, as well as fund raising and management changes. Noble’s market value has plummeted to less than $400 million from $6 billion in February 2015.

Noble warned of a total net loss of $1.1 billion to $1.25 billion in the three months ending September, citing non-cash losses and underlying trading results. This follows a $1.75 billion net loss reported in April-June.

In July, it announced an up-to-$1 billion disposal plan for assets outside North America over the next two years as Chairman Paul Brough, a restructuring specialist appointed in May, sought to tackle Noble’s more than $3 billion of debt.

“Conservative liquidity management and constraints placed on the group’s access to trade finance lines led to disruption costs and prevented the group from taking advantage of profitable trading opportunities,” the company said.

Its stock fell 10 percent on Monday, extending losses to 80 percent this year.

NEGOTIATIONS WITH LENDERS

Noble has been locked in negotiations with its core lenders to support a $2 billion credit facility, secured on its inventories and working capital.

“Whilst no assurance can be given as to the outcome of these discussions, the group believes that these are open and constructive, and are moving forward,” it said.

Noble said the gross proceeds from the proposed sale of its oil liquids business would be $1.4 billion, and after deducting indebtedness of about $836 million, the cash proceeds would be about $580 million.

In August, ratings agencies S&P and Moody’s cut their credit ratings on Noble, citing high default risks.

Noble is a big player in the global physical oil market, trading crude and refined products. But its operations shrank this year due to higher prices and liquidity constraints. The company has blending and wholesale capabilities in North America and the Caribbean, alongside long-term storage leases globally.

A purchase of Noble’s oil liquids business will reinforce Vitol’s position as a leading oil trader.

Tesla Strikes Deal With Shanghai to Build Factory in China www.wsj.com

Electric-car maker Tesla Inc. TSLA -1.91% has reached an agreement to set up its own manufacturing facility in Shanghai, according to people briefed on the plan, a move that could help the company gain traction in China’s fast-growing EV market.

The deal with Shanghai’s government will allow the Silicon Valley auto maker to build a wholly owned factory in the city’s free-trade zone, these people said. This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China’s 25% import tariff.

Tesla is currently working with the Shanghai government about details of the deal’s announcement, such as timing, one of these people said. The effort comes as President Donald Trump, who has been critical of China’s trade policies, prepares to visit Beijing early next month.

A Tesla spokesman didn’t have a comment beyond reiterating the company’s previous statement in June that it planned to “clearly define” production plans in China by year’s end. The Shanghai government didn’t reply to a request for comment.

China’s electric-vehicle market—already the world’s largest—is primed for growth. The Chinese government is targeting seven million EV sales a year by 2025, up from 351,000 last year, and in September it ordered all auto makers already operating in China to start producing EVs by 2019. Officials have also said they are working on a plan to ban gasoline cars.

China had previously circulated a proposal that would allow electric-car makers into the country without local partners if they were to locate in the so-called free-trade zones. The government set up the country’s first such zone in Shanghai in 2013, and has since approved 10 more around the country.

Until now, foreign auto makers have built cars in China through joint ventures with local manufacturers. That allows them to avoid the 25% tariff on autos, but also forces them to split profits, and potentially share technology, with the local partner—something that has tripped up Tesla’s previous efforts to expand there.

Under current rules, the cars Tesla builds in the free-trade zone would still count as imports and incur the tariff. Auto analysts in Shanghai doubt the Chinese government has any incentive to give Tesla special treatment.

“Government regulators examine every deal and try not to set a precedent,” said Bill Russo, chief executive of Automobility, a Shanghai-based consultancy, and a former Chrysler executive. “Whatever deal Tesla gets, others will want it too.”

A plant in Shanghai’s free-trade zone still has clear benefits, Mr. Russo said. It would give Tesla a base from which to export to the region, while offering proximity to the Chinese supply chain, thereby lowering production costs and the sale price of Tesla cars sold there. Today, a Tesla costs roughly 50% more in China than it does in the U.S.

Manufacturing in Shanghai would also put Tesla in good standing with the Chinese government, said Michael Dunne, an auto-industry consultant who spent years in Asia. Having Tesla cars built on Chinese soil would please Beijing officials, he said, which “in turn, will give Tesla goodwill leverage to negotiate better China market-access terms in the future.”

The auto maker reported more than $1 billion in revenue in China for 2016 on sales of roughly 11,000 imported vehicles, representing about 15% of total revenue. Sales in China were up from about $319 million in 2015.

In June, Tesla revealed it was in talks with the Shanghai government about the possibility of opening a factory and reiterated that it aims to define its China production plans by year’s end. A month earlier, Chief Executive Elon Musk cryptically had told analysts that a change in China rules would be “good timing.”

Mr. Musk has said Tesla could cut prices in China by one-third by reducing shipping costs and avoiding import duties.

Mr. Musk has previously signaled a desire to expand manufacturing capabilities in China and Europe. The company, which manufactures its vehicles in Fremont, Calif., does final assembly at a facility in Tilburg, Netherlands, for the European market.

Fremont is currently under pressure to expand manufacturing capacity to meet Mr. Musk’s ambitious goals of making 10,000 Model 3 sedans a week by the end of next year. The Model 3, priced starting at $35,000, is part of his vision for expanding the auto maker beyond selling luxury niche vehicles.

While the cost of introducing the new vehicle has left the auto maker with little cash to spare, investors’ enthusiasm for Mr. Musk’s vision has helped push shares of the company up more than 50% this year so far, propelling Tesla’s market value to rival General Motors Co.’s .

Chinese internet company Tencent Holdings Ltd. acquired a 5% stake in Tesla in March, giving Mr. Musk a powerful ally in China.

China helps Myanmar in development of monetary services: Banker www.xinhuanet.com

YANGON — The Industrial and Commercial Bank of China (ICBC) has been helping Myanmar in development of the country's banking and monetary services by nurturing skilled banking personnel, He Biqing, general manager of ICBC's Yangon branch, has said.

Push to protect two of central Asia's rarest species www.gulf-times.com

Two of Central Asia's rarest species, Przewalski's Horse and the Gobi Bear, should be protected with stricter conservation measures, experts said ahead of an international conference in Manila.

Mongolia and ADB sign agreements to develop health, education master plans www.montsame.mn

Ulaanbaatar /MONTSAME/ The Asian Development Bank (ADB) and the Government of Mongolia signed two technical assistance (TA) agreements totaling $1.6 million to support the preparation of the country’s health and education sector master plans on October 20.

The Ministry of Finance’s Director General Dorjsembed Batsengee, and ADB Country Director Yolanda Fernandez Lommen signed the agreements at a ceremony in Ulaanbaatar. Additional co-signatories and witnesses included First Secretary Hiroshi Fukasawa of the Embassy of Japan in Mongolia, the Ministry of Education, Culture, Science and Sports’ State Secretary J. Bolormaa and the Ministry of Health’s Director General D. Tumurtogoo.

“The projects will help the Government of Mongolia develop a long-term plan for the health and education sectors to realize the goals established in Mongolia’s Sustainable Development Vision 2030,” said Ms. Fernandez Lommen. “Ensuring all major stakeholders are engaged in the development of new health and education sector master plans is one of the key objectives of the projects. The projects are consistent with ADB’s 2017-2020 Mongolia country partnership strategy, which aims to help the government provide better social services.”

The two projects are financed by the Government of Japan through the Japan Fund for Poverty Reduction (JFPR), which has supported 50 projects focused on poverty alleviation, livelihood improvement, and environmental protection in Mongolia over the past 18 years.

The TA on the health sector will assess previous master plan and major sector reforms, define core strategies in priority areas, establish a stakeholder’s consultation and coordination mechanism, and develop a midterm expenditure framework, financial, and investment plans.

Under the project, the Institutional and Human Resource Capacity Building Program will provide formal and on-the-job training to help officials at the Ministry of Health and local governments improve policy planning and implementation coordination.

The education sector TA, meanwhile, will help the Ministry of Education, Culture, Science, and Sports and associated institutions manage and coordinate the process of developing, implementing, and monitoring an education sector master plan.

The TA will draw on in-depth education sector studies in Mongolia and reviews of international experience and lessons. Stakeholders and development partners will jointly review and discuss progress in the sector and identify priority policy and reform actions, physical investments, and institutional capacity development.

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. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in co-financing.

JPMorgan partners with data start-up to boost fixed-income trading www.reuters.com

NEW YORK (Reuters) - JPMorgan Chase & Co has partnered with data analytics start-up Mosaic Smart Data to help its fixed-income sales and trading business become more profitable.The bank, whose fixed-income trading revenue slumped last quarter, has signed a multi-year deal to use Mosaic Smart Data’s technology division globally, the companies said in a joint statement released on Sunday.

Rio Tinto wants out of Grasberg now www.mining.com

While Phoenix-based Freeport McMoRan remains at loggerheads with the Indonesian government over selling a majority stake in its Grasberg mine in the remote Papua province, Rio Tinto is reported to be seeking an out sooner rather than later.

Brexit: Business leaders call for swift transition deal www.bbc.com

Britain's five biggest business lobby groups are calling for an urgent Brexit transition deal, or they warn the UK risks losing jobs and investment.

In a joint letter being sent to Brexit Secretary David Davis, the groups, including the Institute of Directors and CBI, will say time is running out.
Sources told the BBC the letter is still in draft form, but will be sent in the next day or two.
A government spokesman said the talks were "making real, tangible progress".
The other lobby groups backing the letter are the British Chambers of Commerce, the Federation of Small Businesses, and the EEF manufacturing body.
Together they represent companies employing millions of workers.
More concessions
There has been a growing anxiety among businesses at what they see as a lack of progress in the Brexit negotiations.
One of the five groups told the BBC it was felt a joint letter would "emphasise our wish for a deal and clarity".
They say it is important that the Brexit transition period matches as closely as possible current trading arrangements with the EU.
Theresa May has suggested a period of about two years, with the UK and EU trading on broadly similar terms to now and payments to Brussels to meet Britain's budget commitments.
But although EU negotiators have agreed to start preliminary work on a future relationship, they still want more concessions on the UK's so-called "divorce payment" before starting talks on trade and transition.
Sky News and the Guardian reported they had seen the draft letter, which says an agreement on a transition "is needed as soon as possible, as companies are preparing to make serious decisions at the start of 2018, which will have consequences for jobs and investment in the UK".
The letter reportedly adds: "It is vital that companies only have to undertake one adjustment as a result of the UK's withdrawal, not two - and that businesses, the UK government and authorities in the EU have enough time to make the changes needed to deliver Brexit successfully."
The BBC understands that the business groups want the contents of the letter to remain private.
Concern about the loss of UK jobs and investment was underlined last week when the boss of investment banking giant Goldman Sachs, Lloyd Blankfein, tweeted that he will be "spending a lot more time" in Frankfurt.
Goldman, which employs about 6,000 people in London, is building up its presence in the German financial city ahead of Brexit.
Earlier this month, the deputy governor of the Bank of England, Sam Woods, warned that the UK and the EU must agree a transition deal by Christmas or companies would start triggering contingency plans.
And in a survey released on Monday, the EEF said that Brexit uncertainty was holding back the plans of manufacturing firms to invest in new plant and machinery.
The EEF said the outlook for investment among its members was "finely balanced", with 51% intending to spend more in the next two years. For the rest, uncertainty over the UK's exit from the EU was holding back planned spending.
'Deeply technical'
Mr Davis is due to travel to Paris for Brexit talks on Monday after France appeared to emerge as the most hardline EU member state when it comes to the divorce bill.
The prime minister is also due to update the Commons on Monday on the progress made during last week's summit of EU leaders in Brussels.
It is thought that Mrs May will say that negotiations are "deeply technical", but she has not forgotten that the lives of millions of people are at the heart of the process.
A spokesman for the Department for Exiting the European Union said the prime minister proposed a strictly time-limited implementation period in her Florence speech and had been clear that agreeing this principle early in the process would minimise unnecessary disruption to businesses.
He said: "We are making real and tangible progress in a number of vital areas in negotiations. However, many of the issues that remain are linked to the discussions we need to have on our future relationship.
"That is why we are pleased that the EU has now agreed to start internal preparatory discussions on the framework for transitional arrangements as well as our future partnership."

Mongolian political parties influence economic outcomes www.news.mn

While true that Mongolia’s economy is heavily dependent on fluctuating coal and copper prices, it is also true that the country’s political parties increasingly influence economic outcomes.

How to Help People in Mongolia: Organizations on the Ground www.borgenproject.org

27 years after the revolution that would lead the Mongolia to a democratic form of government, the country faces social and economic issues that have yet to be resolved. Mongolia’s current poverty issues are mostly connected to its climate and natural disasters such as severe snow storms over the winter and droughts during the summer. The characteristic nomadic way of living is slowly fading because of how animals, as well as their owners, are gravely affected by such climate conditions.