In our August 11, 2006 article “US Titanium Firms Angry at Senate Deal; Russian Firms Angry at US Firms,” DID reported on VSMPO-Avisma, the world’s #1 titanium firm. At the time, we discussed both its pending merger with Rosoboronexport and a potential long-term supply deal with Boeing. The deal with the state-owned weapons exporter is especially meaningful for a number of reasons, including Rosoboronexport’s status under US sanctions for its dealings with Iran.

Over the weekend, Bloomberg reported that Rosoboronexport has confirmed the acquisition of more than 51% of VSMPO, based in Verkhnaya Salda in the Ural mountains. They also noted its context as part of an ongoing effort by President Putin to regain state control of key economic sectors, and discussed some of VSMPO-Avisma’s future plans…

Rosoboronexport CEO Sergei Chemezov, a close friend of President Putin’s who shares his KGB background, said that ”...all the agreements and contracts have been signed, we just have to pay the money now.” He did not put a value on the deal, but trading in Moscow values the company’s total shares at 68.4 billion rubles ($2.6 billion).

VSMPO currently supplies about 40% of the titanium used by Boeing in civil aircraft and 60% of the titanium used by Airbus (who signed a $1 billion contract in May 2006 to last into 2011). Rosoboronexport has said that all contracts VSMPO has will be honored, and the profits reinvested in boosting production.

VSMPO reportedly expects to increase production 11% this year to 23,500 metric tons, but plans to be producing 46,000 tons of titanium ingot, wire, forged material and machine parts by 2012.