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. Last Updated: 07/27/2016

Rails, OMK Sign $800M Wheel Deal

The Railways Ministry has signed an eight-year, $800 million deal with United Metals Cos., or OMK, to supply train wheels.

OMK will increase train-wheel supplies to 40,000 per month by the end of 2003. A price of 6,000 rubles ($190) per wheel was used in the agreement, but that figure will be modified to keep up with inflation.

The company will use the funds to "build a program for modernizing wheel production more rationally and allocate investments more effectively," Anatoly Sedykh, chairman of the board of directors at OMK, said Wednesday.

The agreement "gives the ministry the guarantee that quality products will be supplied," said Railways Ministry spokesman Valery Zudin.

The ministry is looking to refurbish old rolling stock as cargo flows increase, Zudin said.

The ministry does not plan to sign similar agreements with other companies, he added.

Analysts said the ministry is protecting itself from a deficit and the deal comes as demand peaks.

The ministry initially had wanted supplies to begin in March 2003, but this date was pushed back to the end of next year, said a source close to the ministry who asked to remain unidentified.

Industry insiders are predicting a year of heightened demand for train wheels as railroads throughout the Commonwealth of Independent States update their rolling stock.