NOKIA, Finland (Oct. 19, 2007) — Nokian Tyres P.L.C. has agreed to become a minority partner in a $230 million project to build a passenger tire plant in Kazakhstan, enhancing its presence in central Asia and the former Soviet republics.
The new factory will be a joint venture company called Ordabasy-Nokian Tyres J.S.C., with Nokian Tyres holding 10 percent initially with an option to increase that to a minimum of 50 percent. The partner is Ordabasy Corp. J.S.C., a Kazakhstanian multi-industrial company that owns Kazakhstan's only tire plant, a former Soviet-built and operated unit in Chimkent.
Nokian said it will provide the joint venture with the know-how and expertise needed to build a tire factory and to produce tires. The factory will make Nokian- and Nordman-brand products for Nokian Tyres along with a new brand to be developed for the joint venture. The products will be sold in Kazakhstan, as well as in central Asia, Russia and Eastern Europe.
The factory, to be built over the coming two years in Astana, Kazakhstan, will resemble Nokian Tyres' 2-year-old plant in Vsevolozhsk, Russia. At start-up in 2009 the plant will have a nameplate annual capacity of 4 million tires, although the partners don't expect to reach this level until 2012-13.
During the first five years 35 to 65 percent of the capacity will be reserved for Nokian Tyres and a minimum of 35 percent thereafter, Nokian said.
The $230 million investment will be financed through equity of approximately $47 million and external loans, Nokian said. Ordabasy also has signed long-term technical and management aid agreement with Nokian.