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Rosoboronexport's acquisition of a stake in Vsmpo-Avisma will stabilize supplies of components to U.S. aircraft giant Boeing
Rosoboronexport's acquisition of a stake in titanium company Vsmpo-Avisma [RTS: VSMO] will stabilize supplies of components to U.S. aircraft giant Boeing, a leading presidential economic adviser said Tuesday. Earlier today, Renaissance Capital Group announced a consortium it led had sold a 41% stake in Vsmpo-Avisma, the world's biggest producer of titanium products, to state arms exporter Rosoboronexport. "This is about investment in the future," said Arkady Dvorkovich, the head of the Expert Department with the Kremlin administration, adding that the deal was a long-term investment project with Boeing as a key partner. He said Boeing was interested in stable long-term supplies and was planning to place more orders for components on the Russian market. Vsmpo-Avisma, which is based in the Perm Territory in the Urals and employs about 7,500 people, is an attractive asset because it controls a third of the world's titanium market. Its main partners are U.S. and European aircraft giants Boeing and Airbus, who account for 30% of its earnings. Preliminary estimates show the corporation's earnings in 2005 in line with U.S. GAAP were $746 million, with a net profit totaling $228 million. Boeing [NYSE: BA] and Russian titanium monopoly Vsmpo-Avisma announced August 11 the establishment of a joint venture with an authorized capital of $60 million to assemble titanium parts for Boeing passenger liners. The United States announced August 4 sanctions against Russian state export agency Rosoboronexport and state-owned plane maker Sukhoi over their cooperation with Iran and alleged violations of non-proliferation commitments. But titanium supplies to Boeing will be unaffected by the sanctions because they apply to purchases by U.S. government agencies rather than by private companies. Vsmpo-Avisma was established in July 2005, when Avisma (Special Aviation Materials, a Soviet-era enterprise) merged with Vsmpo (Verkhnaya Salda Metallurgical Production Association).
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