Russia: Russky Solod (Russian Malt), a malt-producing company fully-owned by Russia's Avangard bank, has signed a US$ 7 million agreement with Germany's Buhler company to acquire equipment for its malting plant in Russia's Oryol Region, Zmievka village, Avangard bank said in a press release on January 21, according to Prime-Tass. The malting plant in Oryol started to be built in November 2003. Its production capacity is planned to be at around 100 thousand tonnes of malt per year. The plant will process 130 thousand tonnes of malting barley.

Avangard bank is to provide financing for five years and German export agency Hermes operates as the guarantor. Avangard bank also financed the construction of the Oryol Region-based malting plant as well as of two other Russky Solod malting plants, which are located in the Moscow and Voronezh regions, where similar equipment has been installed. The malting plant in the Moscow Region is already in operation, while the plant in the Voronezh Region is to be launched in spring 2005.

The total investments of Avangard in its the three malting plants overcome US$ 100 million. These plants are to cover 30% of malt needs in the Russian brewing industry.

Russky Solod was created by Avangard bank two years ago. It was supposed to build three malting plants and to offer them to strategic investors like Soufflet or Cargill in the future. However, now Avangard has changed its plans and it is not going to give up its malting business but to develop it independently, Kirill Minovalov, the bank’s president, told Vedomosti newspaper in autumn. According to Minovalov, the company is going to invest about US$ 40 million in developing malting barley production. Three fourths of the funds will be directed to the acquisition of agricultural technique for barley growing. By 2007 the bank plans to decrease the cost of malt production by EUR 100 –110 per tonne. Under such conditions Avangard bank will be able to sell its malt not only on the Russian market, but also to export it, especially to China or Latin America.

23 January, 2004