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. Last Updated: 07/27/2016

Report: Arms Dealer Wants Into Titanium

State-owned arms dealer Rosoboronexport is interested in buying a majority stake in the world's largest titanium producer, VSMPO-Avisma, part of a drive to create a large state-owned metals holding, Russian newspapers reported Friday.

Rosoboronexport, which last year took charge of the country's largest carmaker, AvtoVAZ, has offered to buy 60 percent in the company, Vedomosti reported, citing unidentified sources.

The report comes amid mounting speculation about government interest in the metals sector, with partly state-owned diamond monopoly Alrosa thought to be looking at Norilsk Nickel, which is currently privately owned.

Sergei Chemezov, the head of Rosoboronexport and a close ally of President Vladimir Putin, offered to buy the VSMPO-Avisma stake at a recent meeting with its board chairman, Vyacheslav Bresht.

Bresht owns 30 percent in VSMPO-Avisma, and general director Vladislav Tetyukhin owns 30 percent as well.

Rosoboronexport is also interested in taking control of truck maker KamAZ, Vedomosti said.

Rosoboronexport refused to comment on the report. Bresht on Friday told Interfax that he had not been made such an offer, but said he would sell his stake if the state considered it necessary.

"All that exists for now are talks at the level that it would be great to build a bridge. I understand that 2006 is the year of a quiet nationalization of Russian assets. ... So far, I assure you, nothing is happening," Bresht told Interfax.

While Rosoboronexport has no metals businesses currently, it recently helped set up a new company, AT-Spetstekhnologia, to help coordinate the operations of metals companies that supply the defense and aerospace industries, it said in a statement last Tuesday.

The new venture, partly owned by Rosoboronexport, will also prevent the gradual takeover of metallurgy firms by "various structures acting in the interest of foreign capital and often resorting to illegal means," it said, without elaborating. As a next step, Rosoboronexport plans to form a state metals holding to include a number of key firms in the special metals business, with AT-Spetstekhnologia at its helm.

"That does not read like a press release. It sounds like an internal signal," said a Moscow-based analyst, who requested anonymity.

Before taking the wheel of AvtoVAZ, Rosoboronexport said that placing its representatives at the helm of leading Russian industrial companies was becoming common practice and marked a new step in developing the country's machine-building industry.

Its representatives sit on the boards of KamAZ, Kazan Helicopter Plant and Kurganmashzavod, a maker of infantry fighting vehicles.

Rosoboronexport's policy is in line with the government's overall policy to snap up control of strategic sectors of the economy, which began with oil and gas, said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies defense think tank.

"It remains to be seen what will come out of it," he said.