It’s Official – Pirelli to Buy & Build in Russia within JV

Pirelli’s intention to acquire an existing facility in Russia have been confirmed by official news of a joint venture agreement signed between the Italian tyre maker and state-owned firm Russian Technologies. According to the December 3 news, the terms of the agreement extend the collaboration to produce tyres and steelcord in Russia to not only include the construction of a plant in the Samara region in the second half of 2010. The 50/50 joint venture agreement will also cover, in Pirelli’s words, an already existing factory “which is currently being identified among some potentially interesting Russian enterprises”. The acquisition will most likely take place in 2010, Pirelli adds.

The agreement was signed in Rome on December 3 in the presence of Russian President Dmitry Medvedev and Italian Prime Minister Silvio Berlusconi, by the director general of Russian Technologies Sergey Chemezov and the chairman of the Pirelli Group Marco Tronchetti Provera. Construction of the greenfield site in the Samara region’s Togliatti industrial technology park will begin as soon as the Russian authorities make a decision on the area for production of automotive components, something anticipated to occur in the second half of 2010. The new factory will be built in two phases. In the first phase a factory for industrial vehicle radial tyres will be built, and the second phase of construction will focus on a steelcord manufacturing facility. At full capacity the site is expected to employ about 1500 workers.

In the framework of a five-year period, the new factories and the expected acquisition will together guarantee a manufacturing capacity of more than four million pieces, a quantity Pirelli says was outlined in the initial plans. Total resources to be committed by the joint venture, in line with what has already been announced, will amount to about 300 million euros.