| 2008-01-18 |
Published: The Kommersant Newspaper |
Oleg Deripaska shall tap new markets jointly with ITERA
Oleg Deripaska prefers developing construction materials’ business on a partnership basis. After establishing Strabag, a Joint Venture, a quarter of which is controlled by Bazovy Element (Basic Element), the billionaire agreed to cooperate with ITERA. An agreement with ITERA Oil and Gas Company on construction of cement plants in Byelorussia, Armenia, Turkmenistan and the Sverdlovsk Region shall allow Bazelcement for entering the promising markets of the CIS countries. Eurocement Group, the main rival of Bazelcement, has not been represented in those countries, yet.
An agreement with Itera-Invest-Story to establish a JV to be involved in construction of cement plants in Russia and the CIS countries was signed in late December of 2007, - Dmitry Savenkov, General Director of Bazelcement, told the "Ú". The partners’ plans for the next four years are to commission three or four cement plants with a total capacity of 6 to 8 million tons of cement a year in Byelorussia, Armenia, Turkmenistan and the Sverdlovsk Region. "The Program shall be financed fifty-fifty. We are currently looking for sites and cement deposits", - Mr. Savenkov explained.
The JV Bazelcement is the first project Itera is to accomplish in the cement market", - Victor Cheremukhin, Director of Mass Media Relations of ITERA, pointed out. "We are experienced in construction of cement production facilities, while ITERA has connections in those regions and desires to do a new business", - Dmitry Savenkov explained both parties’ interest in the Joint Venture. Partners declined to state an amount to be jointly invested in construction of the plants. Maxim Sotnikov, Chairman of the Board of OJSC Sukholozhskcement, believes the investment shall be within the range of ˆ1.2-1.6 billion, while Oleg Kuzmin, Head of Communications and External Relations of Eurocement group thinks it will be ˆ1-1.3 billion. A source close to the JV participants, sites a smaller amount of about US$ 800 million.
Bazelcement was established in 2006. It manages two operational plants. Those are Achinsk Cement Plant and Sastobe-cement in the south of Kazakhstan with a total capacity of 2 million tons of cement a year, and three plants under construction. Those are in the Ryazan Region (1.8 million tons), Tuapse (1.7 million tons) and Novgorod (2 million tons).
Itera-Invest-Story, a developer company, was registered in early 2006. It is a 100 per cent affiliate of IteraInvest Holding. Its developer portfolio is 8 million sq. m., and the value of its assets is assessed at US$3 billion.
Given the fact that ITERA is involved in the gas markets of Byelorussia, Armenia and Turkmenistan, it would be easier for Bazelcement to enter these markets a more comfortable way, - Maxim Sotnikov believes. Thus, the Company is involved in developing oil and gas fields in the Caspian shelf and in Central Kara Kum desert in Turkmenistan. Itera-Invest-Story plans to construct a hotel in the Avaza tourist zone in the Caspian Sea shore, a cycle track and a new office building for the Company in Ashkhabad. In Armenia, within the framework of JV Armrosgazprom (shareholding of Gazprom is 57.59 per cent, that of the Ministry of Energy of Armenia is 34.7 per cent, and that of ITERA is 7.71 per cent) the Company is going to construct gas distribution network. ITERA has signed an agreement with the Government of the Sverdlovsk Region to supply 88 billion cub. m. of gas in 2004-2008. In Byelorussia Itera-Invest-Story is developing a construction project worth US$30 billion in the central part of Minsk similar to that of the Moscow-City Project.
Andrew Verkholantsev, an AntantaPioglobal analyst, thinks the entry of Bazelecement and Itera-Invest-Story to the markets of Byelorussia, Armenia and Turkmenistan is timely: "In the mid-term, because of the expected building boom in those countries they will incur a cement deficit". He believes, though, that the alliance of Bazelecement and Itera-Invest-Story shall face tough competition in the Sverdlovsk Region: "The existing and expected cement production capacities in the region are over 3 million tons a year, while the current demand is 2.5 million tons a year". Eurocement group shall be the major competitor of the new JV in the Urals. Eurocement group owns Nevyansky tsementnik plant with 1.1 million tons of annual capacity that is to be raised to 2.4 million tons of cement a year in the future. Moreover, Eurocement has one more plant with a capacity of 1.5 million tons of cement a year in the neighboring Chelyabinsk Region.
For Oleg Deripaska, partnership with Itera-Invest-Story is not something exclusive in the cement market. Bazovy Element had established a JV with Strabag (Austria), 25% of which share capital belongs to Rasperia Trading, a Bazel structure (See Ú dated October 4, 2007). The JV plans are to commission at least ten new cement plants in Eastern Europe and Russia within two or three years, and to increase the total capacity of all production facilities to 10 million tons. Even foundation of all those Joint Ventures would not ensure Bazel outstripping Eurocement group, its main competitor: the production capacity of enterprises within the Philaret Galchev’s holding is 35 million tons of cement a year. The aggregate capacity of the two alliances (Bazel with Itera-Invest-Story and Strabag) will make 16-18 million tons of cement a year.
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