Tatneft to buy Uzbekistan tyremaker BRZ LLC

Tatneft has signed an agreement with JSC Uzkimyosanoat to purchase Uzbekistan tyre manufacturer Birinchi Rezinotexnika Zavodi (BRZ) LLC. According to the Interfax news agency, Tatneft will hold 100 per cent of the enterprise’s shares following the deal.

Prior to the takeover, Tatneft and Uzkimyosanoat had planned to establish a joint venture having signed a deal to that effect in November 2019. In August 2018, Linglong reported that it had provided technical support to a tyre factory project in Uzkimyosanoat.

Interfax reports that BRZ LLC was founded in 2014 on the back of instructions from the president of Uzbekistan: “On measures to organize the construction of a rubber products plant on the territory of the Angren free industrial zone in the Republic of Uzbekistan”.

Manufacturing began in July 2018, with the intended annual production capacity: 3 million car tyres, 200,000 agriculture tyres, and 100,000 linear metres of conveyor belts.

BRZ LLC itself reports that it is “the only manufacturer of car and agricultural tyres… in Central Asia”. According to the company, the plant uses production equipment from sources including Fischer, Kobe Steel, Comerio, VMI and Xylon. And the plant holds ISO 9001:2015, ISO 50001:2018 quality management certificates as well as EC117, EC – 30, IATF – 16949:2016 certification.

According to Interfax, in 2021, BRZ LLC reportedly manufactured 244,900 car tyres, 4,630 agricultural tyres and 29,700 linear metres of conveyor belts. However, other local news reports suggest that, as of September 2021, the Birinchi Rezinotexnika Zavodi tyre plant built for $156.4 million was only operating at 15 per cent of capacity. Citing local chamber of commerce officials, they report that the plant was built with funding from the Eximbank of China and was intended to produce 3 million tyres a year with the intention of supplying domestic carmakers, thereby replacing their tyre import demand.

At that point in September 2021, not only was the factory running at 15 per cent capacity, but 100,000 unsold Bars branded tyres had accumulated in the warehouse. According to the reports, the primary reason for the build-up of inventory was lower than expected product quality.

At the end of October, Tatneft agreed to buy Nokian Tyres’s Russian tyre operations for roughly 400 million euros.