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. Last Updated: 07/27/2016

Fiat Signs Russian Aluminum Deal

ROME — Prime Minister Mikhail Kasyanov said Italy's Fiat and Russian Aluminum have agreed the carmaker would expand its presence in Russia with investments that could reach hundreds of millions of dollars.

Kasyanov started a three-day visit to Italy on Sunday by meeting Fiat officials in Turin, saying he hoped his trip would give a fresh boost to Fiat's projects in Russia. The prime minister told reporters on arrival at Rome's airport for the second leg of his trip that Fiat and Russian Aluminum had signed a memorandum in which "Fiat confirmed it would expand its presence in Russia not only in Nizhny Novgorod," where Fiat is to jointly build an auto plant.

"The project provides for hundreds of millions of dollars of investment over the next few years," Kasyanov said without giving a precise figure.

Russian Aluminum accounts for about 70 percent of Russia's aluminum production.

For its part, Fiat said its plans in Russia were not limited to Nizhnegorod Motors, a joint venture with Russian carmaker GAZ that is due to start production by 2002, suggesting it might decide to step into other sectors.

"Kasyanov … said he wished that today's meeting would be an occasion to give a new impulse to [Fiat's] industrial collaboration projects in Russia," Fiat said in a statement.

"Fiat's projects do not only concern the production of autos for which Nizhnegorod Motors was set up, but also new activities in the motors, industrial-vehicles and bus-production sector," it said.

In December, Fiat reaffirmed its commitment to its $400 million joint venture with GAZ, seeking to reduce concern surrounding the firm and the planned joint venture. At the time, markets had worried that aluminum group Siberian Aluminum, which had acquired a blocking stake in GAZ, might decide to cancel its investment in the joint venture with Fiat. Siberian Aluminum is one of the founders of and a part of Russian Aluminum.

Under a Fiat-GAZ investment agreement signed in March last year, a factory was to start making cars for the Russian market by 2002, but construction in Nizhny Novgorod in central Russia has yet to begin. Fiat and GAZ own 40 percent each in the venture, with the other 20 percent held by the European Bank for Reconstruction and Development, GAZ's biggest creditor.

Fiat has repeatedly said it has a long-term commitment to the Russian market. Last week it said it expected its sales in Russia, so far tiny, to increase significantly this year as consumers recover after the country's 1998 financial crisis. Fiat said Kasyanov met with Fiat honorary chairman Umberto Agnelli, chairman Paolo Fresco, chief executive Paolo Cantarella and the chief executive of Fiat's car-making unit, Fiat Auto.

"We are very satisfied that cooperation with Italy is on the way up. Italy is our special partner, relations are developing very well, trade turnover reached $10 billion last year," Kasyanov said.

On Monday, Kasyanov held talks with Prime Minister Giuliano Amato and Foreign Minister Lamberto Dini, after which the Italian Foreign Ministry said Russia hopes to receive continued Western support to avoid social, economic and financial vulnerability and so its reform process can succeed.

Kasyanov also met with Pope John Paul II at the Vatican. A Vatican statement said they discussed the situation in Russia and Europe and Vatican-Russian relations, but gave no details.

There was no mention of the prospects of a trip by the pope to Russia.

Kasyanov is scheduled to meet with Italian business leaders Tuesday and with Italian President Carlo Azeglio Ciampi, before leaving Italy in the afternoon.

(Reuters, AP)