Russia titanium producer to make parts for Boeing's Dreamliner

Aircraft maker Boeing and Russian titanium producer OAO VSMPO-Avisma, which is the world's largest titanium producer, have formed a joint venture to make titanium forgings for Boeing's new 787 Dreamliner, Russian news agencies reported on 21 August. Ural Boeing Manufacturing (UBM), a 50-50 JV, will be based at Verkhnaya Salda in the Ural Mountains. (See: August Boeing in titanium joint venture with Russia's VSMPO-Avisma)

The deal was announced at the MAKS-2007 air show, which started on 21 August in Zhukovsky, near Moscow, and will run until 26 August. Over 540 Russian companies and 240 foreign firms from over 100 countries are participating in the exhibition.

UBM will start operating in late 2008, when Boeing completes the purchase of equipment to be installed at the plant, in which the Russian government has so far invested around $5 to $6 million.

VSMPO-Avisma was established in July 2005. Boeing and European aircraft-making giant Airbus account for 30 per cent of the Russian company's earnings.

The deal comes in the wake of Russian flag carrier Aeroflot's deal with Boeing in June, to acquire 22 Dreamliners, for which deliveries are slated to start in 2014. It will primarily manufacture pressed titanium components, which will undergo finishing at Boeing's factory in Portland, Oregon, before assembly.

The deal was originally announced in August 2006, but was put in cold storage after fears that the leading US aircraft maker could become too dependent on a supplier effectively controlled by the Kremlin. VSMPO-Avisma is 66 per cent owned by state arms exporter Rosoboronexport.

VSMPO-Avisma also said that it planned to reach an output of 46,000 to 47,000 metric tonnes by 2012, up from this year's target of 27,600 metric tonnes. The company controls one third of the global titanium market. Company sources said it needed investments of up to $1 billion to achieve this goal, which would be raised from equity capital and borrowed funds.

VSMPO-Avisma's clients include aviation companies Boeing, Airbus, Snecma, GE Aircraft Engines, Rolls Royce Aerospace and Pratt&Whitney. It plans to hold an initial public offering (IPO) in 2009-2010, on European bourses and on US exchanges in the form of American Depositary Receipts (ADRs).