OREANDA-NEWS. May 14, 2009. The European Bank for Reconstruction and Development is investing US8 million to acquire a minority stake in a Greenfield manufacturing project being set up in the Russian regions by Japan’s Komatsu, the world’s second largest maker of construction machinery and mining equipment, reported the press-centre of EBRD.

This is an important vote of confidence by a blue-chip investor in Russia’s long-term potential and the EBRD, as the single largest medium and long-term financial investor in this country, is proud to take equity in such a project, said Alain Pilloux, the Bank’s Business Group Director in charge of Russian operations.

Komatsu is building a plant to produce hydraulic excavators and fork-lift trucks outside the city of Yaroslav in central Russia at a cost of approximately US 100 million. The project is thus in synchrony with the regional strategy of the EBRD as over 90 percent of the projects the Bank finances in Russia are located outside Moscow and St. Petersburg.

Komatsu’s first integrated production plant in Russia is eventually expected to create 500 local jobs. It should also be a boon for domestic part-makers as the weakening of the rouble since the start of the crisis makes it logical to increase the proportion of local content as quickly as possible once local suppliers meet Komatsu’s quality requirements.

The project is part of Komatsu’s development strategy in emerging markets and having a local production facility will put the company in a good position to meet a future anticipated growth in demand spurred by the need to develop Russia’s infrastructure and natural resources.

It will also have the added advantage of transferring advanced technologies and know-how, as well as organisational and managerial skills, with expected positive repercussions for the whole of Russia’s construction machinery sector.

The EBRD is through this transaction acquiring common voting shares in OOO Komatsu Manufacturing Russia, which is part of the Komatsu group. Other financial details of the transaction were not disclosed.