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Boeing inks JV deal with Russian titanium producer

US aircraft-manufacturing giant Boeing signed an agreement Tuesday with Russia’s VSMPO-Avisma, the world’s largest titanium producer, to set up a joint venture to make components for the Dreamliner passenger aircraft. VSMPO-Avisma plans to almost double titanium output by 2012.

According to the document signed at the MAKS-2007 air show near Moscow, the new company, Ural Boeing Manufacturing (UBM), will be owned on a parity basis by Boeing and the Russian titanium maker, which is 66%-owned by state arms exporter Rosoboronexport. It will primarily manufacture pressed titanium components, which will undergo finishing at Boeing’s factory in Portland, Oregon, before assembly, VSMPO-Avisma said. The deal, originally announced in August 2006, has been met with apprehension in the West, which fears the leading US aircraft maker could become too dependent on a supplier effectively controlled by the Kremlin.

The Boeing 787 Dreamliner is a new long-haul passenger aircraft. To date, 47 customers worldwide have ordered 677 of the planes, worth more than $110 billion at current list prices, with the leading Russian air carrier, Aeroflot, buying 22 Dreamliners to upgrade its long-haul fleet. The UBM joint venture will start operating in late 2008 when Boeing completes the purchase of equipment to be installed at the plant in the Sverdlovsk Region in Russia’s Urals, in which the Russian government has so far invested around $5-6 million, VSMPO-Avisma said. VSMPO-Avisma was established in July 2005. Boeing and European aircraft-making giant Airbus account for 30% of the Russian company’s earnings.

The MAKS-2007 air show started Tuesday in Zhukovsky, near the Russian capital, and will run until August 26. The organizers said over 540 Russian companies and at least 240 foreign firms from over 100 countries are participating in the exhibition.

Russia’s VSMPO-Avisma said Tuesday it planned to increase output to 46,000-47,000 metric tons by 2012, up from this year’s target of 27,600 tons. VSMPO-Avisma CEO Vladislav Tetyukhin said the company, which controls one third of the global titanium market, needed investment of up to $1 billion to achieve its goal. Tetyukhin said the company would use equity capital and borrowed funds to invest in the company’s development. The chief executive said VSMPO-Avisma, whose clients include aviation companies Boeing, Airbus, Snecma, GE Aircraft Engines, Rolls Royce Aerospace and Pratt&Whitney, planned to hold an initial public offering in 2009-2010, most likely on European trading floors and on US exchanges in the form of American Depositary Receipts (ADRs). (