SIBUR Holding to transfer 222 M euro assets to Pirelli, Rustechnology

MOSCOW, July 25 (Itar-Tass) —— The state-owned corporation Russian Technologies, major Italian tyre-maker Pirelli and SIBUR Holding have made an agreement that determined the assets to be transferred to a joint venture being created by Russian Technologies and Pirelli.

The agreement signed on Monday, July 25, requires the transfer of control over the Kirov plant with a capacity of 7 million tyres a year to the joint venture by November 2011 and provides for a further transfer of assets in order to bring the joint venture’s production volumes to 11 million tyres by 2014.

“The assets being transferred have a combined value of 222 million euros,” Russian Technologies said in a statement. “This amount will be distributed among the partners proportionally, 55 million euros are to be paid in 2011 and 167 million euros in 2012.”

The production of Pirelli tyres can reach 50 percent of the estimated capacity, that is, about 11 million tyres. The joint venture will make winter tyres for the consumer market, including in Russia and CIS countries, and plans to control about 20 percent of the market.

The joint venture hopes it sales will reach about 300 million euros in 2012 and exceed 500 million euros in 2015. This will become possible due to 200 million euro investments in 2012-2014. The money will go into modernisation and expansion.

Under the agreement between Russian Technologies and Pirelli, the latter can increase its share from 50 percent to 75 percent through put and call in a three years’ time.

SIBUR is a leading petrochemical plant in Russia and Eastern Europe. The company operates across the entire petrochemical process chain from gas processing to the production of monomers and plastics, mineral fertilizers, tyres and industrial rubber items, as well as the processing of plastics.

SIBUR produces over 2000 different brands of products. The company processes more than half of APG and produces 23 percent of propylene, 23 percent of polypropylene, 17 percent of polyethylene, from 30 to 49 percent of different rubbers, 34 percent of tyres, 16 percent of nitrogen fertilizers, and considerable part of other petrochemical products in Russian market.

SIBUR incorporates plants that employ over 50,000 people in 20 Russian regions. The company is managed along product-division lines – Hydrocarbon Feedstock, Synthetic Rubbers, Plastics and Organic Synthesis Products, Mineral Fertilisers and Tyres.

Gazprombank Group is the principle shareholder of SIBUR Holding JSC, with control of more than 95 percent of the company shares. SIBUR Holding JSC is managed by SIBUR LLC that acts as the holding company’s sole executive body.

Over recent years, the company has consistently delivered healthy financial and operational results. In 2009, SIBUR Group plants processed 16,8 billion cubic metres of APG and produced 15 million tonnes of petrochemicals and 14.8 billion cubic metres of LPG.

Last year, SIBUR considered the possibility of a merger with Nizhnekamskshina, which is part of the oil company Tatneft.

Tatneft Deputy Director-General, Nizhnekamskshina Manager Zagit Sharafeyev supported a possible merger.

“Nizhnekamskshina and Sibur’s plants are Russian tyres,” he said.

Each enterprise makes 10 million tyres a year.

According to specialists, about 43 million tyres are sold in Russia annually.

“As competition with Western producers becomes increasingly fierce, it is necessary to consolidate the efforts of domestic tyre manufacturers,” Sharafeyev said.

In his opinion, it is possible to keep the market share only by making competitive innovative products.

Nizhnekamskshina is Russia’s largest enterprise of in the tyre industry. Practically every third tyre manufactured in Russia comes from Nizhnekamsk. The company was established in 1971 as the basic enterprise for production of tyres for the leading domestic automobile makers VAZ and KAMAZ, as well as for the saturation of the secondary market of tyres for passenger cars, trucks and agricultural machinery.

Nizhnekamskshina is capable of producing 130 types and sizes of tyres for any operational condition. The company never ceases to retool the tyre production, thus expanding the range and improving the quality of its products featuring high consumer properties.

The development of new tyres, as well as the elaboration of new formulas of rubber mixes and own technologies is carried out at the RD centre established in 2005.

In late 2009, Nizhnekamskshina put into operation the all-steel truck and bus tyre plant (Nizhnekamsk CMK Tyre Plant).

The efficiency of quality control system has been certified by ISO 9001 Certificate.

Nizhnekamskshina has been manufacturing the radial tyres KAMA-EURO that enjoy ongoing popularity since 2004.

The company has modern domestic and foreign equipment imported from the well-known British, French and Italian firms and produces high quality tyres of 31 types and sizes.

The company’s current main target is to increase production of radial tyres that have a long service life and high dynamic characteristics. Radial tyres are used by all large Kamaz trucks, Lada single-drive cars, Volga GAZ-32 cars.

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