Bloomberg News

Magnitogorsk Plans $117 Million Auto Plant in St. Petersburg

August 30, 2007

OAO Magnitogorsk Iron & Steel (MAGN), Russia's third-biggest steelmaker, will spend about 3 billion rubles ($116.9 million) on a new auto-parts plant in St. Petersburg to expand in the country's fast-growing car industry.

The site, due to begin operations in 2010, will have an initial processing capacity of 125,000 metric tons, company spokeswoman Yelena Azovtseva said in a phone interview today. Capacity may be increased later to 300,000 tons, she said.

Carmakers such as Toyota Motor Corp., Nissan Motor Co. and General Motors Corp. are opening assembly lines in St. Petersburg to meet rising demand in Russia. Sales of foreign cars, including those made in the country, surged 70 percent to 720,143 in the first half of this year.

As part of its expansion, Magnitogorsk this month bought 75 percent of Intercos-IV, a St. Petersburg-based auto-parts producer that sells to Ford Motor Co., Volkswagen AG and Russian automakers including OAO AvtoVAZ and OAO Kamaz.

Magnitogorsk will spend $1 billion building a mill for producing an annual 2 million metric tons of automobile body sheet, Chairman Viktor Rashnikov said in July. The facility will boost the company's output to 16 million tons by 2012 from 12.5 million tons of steel last year. Magnitogorsk is also reviewing a plan to build a plant in Ohio to produce cold-rolled steel for carmakers, Rashnikov said.

Rashnikov will sign an agreement for the plant construction with St. Petersburg governor Valentina Matvienko early next month, Interfax reported.

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net.

To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net.


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