Russia to Create ‘Titanium Valley’

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Nov. 23 – Rolls-Royce Group and Goodrich Corp. may set up production in Russia’s new “Titanium Valley” special economic zone in the Urals Federal District, according to Sergei Chemezov, chief executive officer of Russian Technologies Corp.

The Russian government plans to create the US$1.3 billion “Titanium Valley” special economic zone in the Ural Mountains, which will make products for the aircraft, automotive, shipbuilding and medical industries. All involved enterprises will be given special benefits, including tax and customs privileges.

The building infrastructure would start next year. The cabinet will allocate funds for the project from the 2012 budget.

A total of 20 companies involved in shipbuilding, power-plant engineering, petrochemicals and medicine may participate in the project, said head of Russian Technologies Sergei Chemezov. Russian Technologies owns VSMPO-Avisma, the world’s largest titanium manufacturer, around which the economic zone will be created.

It produces 25 percent of the world’s titanium, a high strength metal used in aerospace and defense units as well as golf clubs, medical equipment and nuclear energy.

VSMPO-Avisma is a key supplier to both Boeing and EADS.

Chemezov said Russian Technologies planned to attract current partners of the titanium maker, and partners of Boeing, a stake holder in a joint venture with VSMPO-Avisma.

The U.S. aerospace firm already has a significant presence in Verkhnaya Salda via the Ural Boeing Manufacturing joint venture launched in 2009.

A number of industry leaders, including Finland’s Nokia, have already jumped on board, Reuters reports.

All companies will be free from VAT at import of the hi-tech equipment for 20 years. Moreover, the regional authorities may release them from property taxes and lower the profit tax to 5 percent.

The project will create a total of 20,000 jobs in Verkhnyaya Salda, home to VSMO-Avisma, Bloomberg reported, citing documents provided by the Sverdlovsk region government.

Russia’s 16 special economic zones, or territories providing economic benefits to investors, include two industrial zones, four innovation zones, eight tourism zones and two ports.