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. Last Updated: 07/27/2016

Magna Signs Deal on Plant

Magna International, Canada's largest auto-parts maker, will build a car factory in Russia to profit from surging domestic demand for new vehicles, the government said Monday.

The company has signed a preliminary agreement with the Economic Development and Trade Ministry, an official said, declining to give his name.

Magna spokeswoman Tracy Fuerst wouldn't confirm the expansion, saying it was speculation.

"We know about this project," said Alexander Filatov, strategy director for Russian Machines, an aircraft and car manufacturer. Russian Machines has a separate venture with Magna.

"There is a potential role for Russian Machines and GAZ," Filatov said, referring to Russian Machines' GAZ carmaking unit. The agreement Magna has signed with the Economic Development and Trade Ministry is "a 100 percent Magna project" and separate from the May deal struck between the Canadian company and Russian Machines, he said.

It is really an "operational matter" for Magna, he said. Russian Machines is a unit of Basic Element, the holding company of billionaire Oleg Deripaska.

Deripaska agreed in May to spend $1.5 billion for a stake in Magna, giving the Canadian company access to the Russian car market in return for help in overhauling the GAZ business. As part of the agreement, Deripaska acquired 20 million Class A Magna shares and the right to appoint six of 14 board members of a new company that controls Magna.