Solvay SA is entering the fast-expanding Russian compounding business through a joint venture with PVC producer Nikos Group. The move marks the second time in three years that Solvay has signed a PVC compounding deal in Russia.
In April 2001, Solvay announced an initial agreement with Russian compounder Vladimir Chemical Plant to form Solmir, a venture to make rigid compounds near Moscow for window profiles and later soft compounds for Russia's automotive market.
But that deal fell through after the would-be partners discovered they had ``differences over implementation,'' according to a spokesman for Brussels, Belgium-based Solvay.
This time, Solvay and Moscow-based Nikos have agreed to create a 50-50 venture, Soligran.
The venture's two manufacturing plants will begin operating this fall.
Combined capacity of the facilities is to reach 88 million pounds within the next two years, according to Solvay.
Soligran production will be concentrated in areas already seeing rapid plastics processing growth.
One operation will be based on an existing Nikos PVC compounding unit, set up in the 1990s with Swiss and Italian technology. That plant will be at Tver, about 100 miles north of Moscow, the Solvay spokesman said.
The other manufacturing plant will be installed at a large, existing Nikos chemicals complex in Volgograd with products including vinyl chloride monomer, PVC, polyvinylidene chloride and caustic soda.
Solvay, which has total PVC compound capacity of more than 550 million pounds annually, already exports small amounts of PVC compounds to Russia. More recently, with the increased strength of the euro, ``exports are way over plan,'' the spokesman said.
Solvay predicts that total annual demand for PVC compounds in Russia and other former Soviet Union states will grow to more than 330 million pounds annually, in the medium term.
Nikos is a diversified financial and industrial company that developed from a research and production cooperative set up in 1990 by a team of scientists from the physics faculty of Moscow University.
In 2002, Nikos recorded sales of about $200 million, according to Solvay.