Hit by western sanctions, Russian tank maker finds relief in Algeria’s $8.3 billion railway bonanza

Africa’s largest natural gas producer is one of the biggest weapons markets for Russia, buying as much as $13 billion in arms since 2006.

SANCTIONED by the U.S. and the European Union, Russian tank and railcar maker Uralvagonzavod is finding relief in an $8.3 billion Algerian transport spending programme. 

Uralvagonzavod last week signed an agreement with Algeria’s EPE Ferrovial Spa to set up a joint production facility to make freight cars, rail tankers, bulldozers and other construction equipment. 

The plan includes doubling existing output at a Ferrovial manufacturing plant. “We have an unprecedented potential for growth in ties as Algeria diversifies its economy,” the Russian state enterprise’s Chief Executive Officer Oleg Sienko, who also co-heads a Russo-Algerian business council, said in an interview Wednesday in Moscow. “We’re sure Russian companies will be in demand, including our technology.” 

Africa’s largest natural gas producer is one of the biggest weapons markets for Russia, buying as much as $13 billion in arms since 2006, according to the Moscow-based Centre of Analysis of Strategies and Technologies. 

Uralvagonzavod, which the research group estimates has sold more than 300 T-90 battle tanks to the North African state, makes about half its revenue from producing railcars. The sanctions, part of measures imposed last year to pressure Russia to end support for rebels in eastern Ukraine, restricted U.S. and European financing for Uralvagonzavod. 

Finding way 

“We will find a way to make things work,” Sienko said. “Of course it makes it harder. The fact that we are on the sanctions list creates difficulties for us.” 

Volvo AB, the world’s second-largest truckmaker, in April 2014 suspended a project between its French unit and a subsidiary of Uralvagonzavod to manufacture armoured personnel carriers. 

The Russian government agreed to provide loan guarantees of 16.7 billion rubles ($260 million) to the Nizhny Tagil-based producer, Interfax reported last week, citing Industry Minister Denis Manturov. 

In March, the company said it had asked for government guarantees of as much as 60 billion rubles. Uralvagonzavod is also pursuing railcar production projects in Vietnam, Azerbaijan, Latvia, Cuba, according to Sienko.

In Algeria, the government has allocated 832.7 billion dinars ($8.3 billion) on a five-year programme to 2019 to develop the transport industry, including the railway network and a new port to help exploit coal reserves, he said.


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