Uralvagonzavod picks Caterpillar for partner

Russia's Uralvagonzavod, one of the world's largest railway car and tank makers, could form a strategic partnership with U.S. Caterpillar to produce heavy-duty machinery, road building equipment and develop its rail car business, Kommersant business daily reported on Monday. The paper quoted Uralvagonzavod CEO Oleg Siyenko as saying that a joint venture was a possible option for cooperation with Caterpillar, the world's largest manufacturer of machinery and engines. Uralvagonzavod plans to start joint production in Chelyabinsk at its ChTZ-UralTruck plant, investing 13 billion rubles in the joint venture with new technologies from Caterpillar. "Partnership with Caterpillar will first of all focus on production of diesel engines with a capacity of up to 4,000 horsepower for vessels, locomotives, mine dump trucks and other heavy road-building machinery," ChTZ UralTruck General Director Semyon Mlodik told the paper. "We expect production to start in 2012 and reach 70-80 percent of local content in the future," he said. Mlodik said annual output would not exceed 1,000 engines, as the price of a heavy-duty engine was high and could reach $100,000. The two companies may also cooperate in the production of pipe layers. Uralvagonzavod hopes the partnership will help modernize ChTZ-UralTruck. VTB Capital analyst Vladimir Bespalov believes the two companies will expect steady orders and sales as such products are in high demand. "There could also be demand for pipe layers because pipeline construction projects are being actively developed," Bespalov told Kommersant.