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. Last Updated: 07/27/2016

Severstal, KamAZ Sign Cooperation Pact

Steel giant Severstal is hoping to breathe new life into state-controlled KamAZ, the nation's leading truck producer.

Severstal chief Alexei Mordashov and Industry, Science and Technology Minister Ilya Klebanov signed a wide-ranging cooperation agreement Friday that they said would strengthen KamAZ's position on the domestic market and help attract much-needed foreign investment.

KamAZ general director Sergei Kogogin said that while the partnership agreement with Severstal's automotive arm, Severstal-Avto, will not change the ownership structure of either company, he is not excluding the possibility of an asset swap or "something like that in the future if it is economically viable."

"Because KamAZ and Severstal-Avto produce an overlapping line of vehicles, joining forces will make it possible to offer a full line of trucks," the companies said in a statement.

"[The agreement] is in line with the process of integration that has been going on in the auto industry lately."

Severstal-Avto is comprised of UAZ, which makes off-road vehicles and vans, and Zavolzhsky Engine Plant or ZMZ.

UAZ general director Vadim Shvetsov said ZMZ is perfectly equipped to produce engines for a new line of KamAZ trucks.

Sevestal-Avto and KamAZ also intend to find a strategic foreign partner and produce components for foreign vehicles domestically.

"Severstal is in negotiations to create a commercial vehicle with a foreign partner," Shvetsov said.

UAZ has been in talks with Japan's Isuzu and Indian off-road car maker Mahindra & Mahindra. The company also has an agreement to supply SUV car kits to Italian De Tamaso for assembly in southern Italy.

Together, KamAZ and UAZ hold 35 percent of the off-road vehicle market, 35 percent of the light truck market, 43 percent of the heavy truck market and 31 percent and 8 percent of the mini-bus and bus markets, respectively.