OREANDA-NEWS. On 06 March 2008 LSR Group one of the leading real estate developers and building materials producers in St. Petersburg and the Leningrad region, announced that as part of Group’s strategy and investment program, it approved a contract for the construction of a new brick factory in the Kirovsky District, Leningrad Region. The total cost of the project is expected to be around Euro 95 million, to be financed through loans as well as proceeds from the recent IPO of the Group.

Following a tender, ZAO Kompakt was chosen as general contractor on this project and will undertake the full design and construction of the plant. OJSC Pobeda LSR, a fully owned subsidiary of LSR Group and a leading brick manufacturer in Russia will lead the project.

 The construction work will be undertaken in three stages over a total of 34.5 months to ensure a gradual launch of the production facilities. The first production line is expected to be completed by 2010 with a capacity of 120 million of building bricks a year, followed by the launch of the facing brick line with a capacity of 75 million bricks, with further lines to be launched to reach a total plant capacity of 220 million units a year.

Commenting on the announcement, Mr. Levit, CEO and member of the Board of Directors of LSR Group, said:

“We are witnessing an increasing demand for building materials, particularly bricks, driven by the growing construction volumes in the region and a rapid development of the regional property segment. The new plant will help to meet the demand for this building material, further strengthening the Group’s revenue streams.”

It may be noted that early this year LSR Group has also entered into a contract for the supply of equipment with CERIC international industrial group (contract amount of around ?71 million). The plant is to be started up by LSR Group in 2010. The total project investment volume is $280 million.

 According to the Russian research and consulting company Resheniye, the size of the ceramic brick market in St. Petersburg and the Leningrad Region increased from 356 million units in 2006 to over 390 million units in 2007.