Sibur to exit tyre business - eventually

By David Shaw, ERJ staff

Duesseldorf, Germany -- Sibur expects eventually to exit the tyre business which it currently participates in through its subsidiary, Sibur-Russian Tyres. Dmitry Konov, chair of the executive board and president of Sibur told journalists at a press conference that he expects the domestic Russian tyre makers to consolidate significantly in the coming years, before disposing of the tyre manufacturing assets at a profit.

Sibur is currently in the process of acquiring the shares of the bankrupt Amtel NV. Over the summer Sibur acquired the debt of Amtel, but the shares are still owned by a consortium led by Alfa Bank. The situation is complicated, but according to a Sibur spokesman, Sibur now has full operational control of all the assets of Amtel. Konov said he expects to buy the shares of Amtel from the bank at, "an attractive price."

He said the intention is to make Sibur-Russian tyres the primary tyre manufacturer in Russia. Once this process is complete and the consolidation of the Russian tyre industry is advanced, Konv said he intends to sell the tyre assets at a profit. "My shareholders would not like me to sell at a loss," he noted. Konov said it was unlikely to be sold as a whole unit, due to its large size. Sibur makes 7.6 million tyres each year.

A spokesman said that Sibur is discussing wih Nizhnekamskshina about a possible participation in the acquisition of the Amtel shares, and the three companies would then rationalise their assets and consolidate the business before aiming to sell assets to a third party. He said this would not breach competition rules, because there is a significant foreign tyre manufacturing presence in Russia, so a combination of Amtel, Sibur Russian Tyres and Nizhnekamskshina would not form a monopoly.

Sibur said currently the three domestic tyre makers need to broaden the range of tyres they make, adding new sizes and dimensions in consumer tyres and improving the technology used in truck tyres. In consumer tyres, Sibur intends to raise the public perception of its various brands, removing the negative connotations of the made in Russia label, so that the companies can compte in the broad middle range of tyres fitted to imported cars from Hyundai and others. He said SRT does not expect to compete with Michelin and Nokian at the top of the brand tree, but to offer fierce competition in the mid range.

Part of this process wil be to invest in the near-complete Voronezh 2 tyre plant, which has been standing idle for two years since the main tyre building halls were completed prior to Amtel's bankruptcy. The mixing room still needs to be installed to make silica compounds for tyres. The Sibur spokesman said it was possible Nizhnekamskshina might participate in that investment.

The spokesman said silica tyres would be destined for the export market. He said there is no mood from either the public or the Russian government to move toward energy éfficient tyres.

In response to a question, Konov said Sibur has good supplies of butadiene, but the west should not expect Russia to be a source of cheap butadiene in the mid-term. Sibur expects to be in the first quartile on the pricing front.