Having Got Double Return of Investments, RUSNANO Exits the Magnesium Oxide and Hydroxide Production Project

01 August 2016

RUSNANO sells its ownership interest in the NikoMag portfolio company, specializing in production of nano-structured magnesium hydroxide (a fireproofing additive, the substance inhibiting inflammation and fuming processes), high-purity magnesium oxide (used in production of transformer steel and general mechanical rubber goods) and magnesium chloride used in oil- and gas-production, production of construction materials and in ice control activities.

The total project budget amounts to RUB 3.8 bln, including the RUSNANO ownership interest of RUB 1.3 bln. The purchaser of the RUSNANO ownership interest is the Group of Companies NIKOCHEM. Proceeds from this transaction are 200% greater than the investments made.

RUSNANO entered the project in 2010. During this time, there was built, equipped, and developed to its project capacity a unique plant, having no equals in Russia, occupying the area of 4.5 ha, and currently employing 262 employees.

The production capacity for magnesium hydroxide is 25 thousand tons a year; for magnesium oxide, 30 thousand tons a year. Before launching NikoMag, both products were wholly imported into Russia. In the nearest future, the company plans to occupy almost 100% of the Russian synthetic magnesium hydroxide market and 90% of the high-purity magnesium oxide market. NikoMag is included into the import substitution action plan for the chemical industry approved by the Ministry of Industry and Trade of the Russian Federation.

NikoMag’s products have a considerable export potential. The magnesium hydroxide and oxide, currently produced at the enterprise, are being tested at plants producing incombustible compositions, fuel oil additives, and catalytic agents in foreign countries, including the USA, India, and Denmark. Several large contracts on supply of magnesium hydroxide and oxide to Asian markets have already been executed, and about 1,500 tons have been shipped.

“Having visited the NikoMag site, I was greatly impressed by the highest technological level of production. As of today, the production plant in Volgograd is the most advanced in the world in terms of used engineering solutions, process configuration and management. Following the negotiations, a long-term contract was signed on supply of NikoMag magnesium hydroxide and oxide to the Chinese market. Considering the excellent quality level, I think highly of prospects for the Russian-made products to enter Asian markets,” said Mr. Yan Li, General Director of SINOPEC International Company Rus LLC.

“One of the success factors for this project is the effective choice of the niche, where the Company was able to propose a high quality product for a competitive price. Initially, we focused on it since we believe that the medium capacity chemistry sector in the Russian Federation has a very high potential and very high level of competitive capabilities on the global market. However, despite of strong fundamental indexes and availability of raw material base, it has been significantly undercapitalized recently; therefore, Russia imports chemical products for over $30 bln at the moment. Subsequently, we expect emergence of attractive new projects and activation of strategic players in this area,” pointed Mr. Dmitry Pimkin, Managing Director of Management Company RUSNANO LLC.

Additional information

Reference

RUSNANO Joint-Stock Company was founded in March 2011 through reorganization of state corporation Russian Corporation of Nanotechnologies. JSC RUSNANO contributes to implementation of the state policy on the development of the nanotechnology industry by investing directly and through investment funds of nanotechnology in financially effective high-technology projects providing the development of new production facilities in the Russian Federation. Its primary investment focus is in electronics, optoelectronics and telecommunications, healthcare and biotechnology, metallurgy and metalwork, energy, mechanical engineering and instrument making, construction and industrial materials, chemicals and petrochemicals. 100 percent of shares of JSC RUSNANO are owned by the state. Thanks to investments RUSNANO currently opened 73 factories and R&D centers in 28 regions of Russia.

Management of assets of RUSNANO JSC is carried out by Limited Liability Company established in December 2013, RUSNANO Management Company. Anatoly Chubais is the Chairman of its Executive Board.

Work to establish nanotechnology infrastructure and carry out educational programs is fulfilled by RUSNANO’s Fund for Infrastructure and Educational Programs, which was also established during the reorganization of the Russian Corporation of Nanotechnologies.