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Finnfund finances steel strap production in Russia

10/12/2006

OOO VolgaStrap produces steel strap to bind steel coils, sheets, pipes and sawmill products. Russia is experiencing a strong increase in demand for steel strapping in packaging. Until now there has been no domestic manufacture and all steel strap has been imported.

VolgaStrap.web2.jpgOOO VolgaStrap produces steel strap, used for heavy duty packaging, in the Russian town of Kostroma, about 350 kilometres northeast of Moscow. Finnfund is participating in the finance of the plant with an investment loan and equity. Finance is also being provided by Swedfund and International Moscow Bank. The total value of plant investments is EUR 17 million. The plant covers 11 000 square metres and employs 100 people.

Russia is experiencing a strong increase in demand for steel strapping in packaging. Steel strapping is used to bind steel coils, sheets, pipes and sawmill products. Until now there has been no domestic manufacture and all steel strap has been imported. The new VolgaStrap plant uses domestic feedstock and reduces the amount of transport required.

“VolgaStrap represents an attractive project for Finnfund because it promotes development in a poor area, among other things by technology transfer, by using domestic raw materials, by replacing imports and by employing local people,” says senior investment manager Matti Kerppola, responsible for the project at Finnfund.

Russian market leader for transport packaging material

The sponsor of the project is Specta Group AG, a Finnish-owned company that is a market leader in supplying packaging material and machinery to the metals and wood

VolgaStrapweb.jpg
CEO of the Specta Group, Mr Erik Helin
processing industries in Russia. Specta has its own network of fourteen offices in all the main industrial areas of Russia and Ukraine. Until now the company has not had its own production but has imported packaging machinery and materials from Finland, Sweden, Central Europe, Greece, etc.

Specta’s clientele consists of major corporations that produce steel products, aluminium and wood products. Steel strapping is especially popular with the forest and metals industries because of its great durability.

Steel strap retaining popularity in Russia

The world market for steel strap used in packaging is over a million tonnes. Elsewhere in the world plastic strapping is becoming more popular but in Russia steel strap is keeping its market share, because Russian transport conditions make heavier demands on packaging. Russia transports many heavy industrial products and modern automatic strapping machines can use only high quality strap. Moreover, certain products such as steel cannot be strapped with plastic straps after production because they are still too hot.

The VolgaStrap project was announced in November at Moscow’s MetalExpo. Trial operations of the plant have already begun and normal production and sales will commence at the start of 2007.

 

For more information from Finnfund, contact senior investment manager Matti Kerppola tel. +358 9 3484 3334 or forename.surname@finnfund.fi