The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced that it has signed a long-term general agreement on cooperation and partnership with Russia's largest carmaker AvtoVAZ.
Under the terms of the agreement, MMK will make regular deliveries of a guaranteed volume of steel products to AvtoVAZ, which will receive preferences as a constant customer.
In addition, as part of the cooperation, MMK has agreed to restructure AvtoVAZ's overdue debt. In the second and third quarters of 2009, the companies will agree on a pricing plan based on MMK's production costs and the debt repayment schedule.
Within the framework of the agreement, MMK is to carry out research and development works for the production of new promising types of steel products, which correspond to up-to-date international requirements. According to MMK CEO Viktor Rashnikov, the production of automobile-body sheet, which will correspond to international requirements, is one of the strategic issues focused on by the company, which is first of all oriented towards domestic steel product consumers.
The Russian government has prioritized the saving of AvtoVAZ, a major employer in the Samara region. Prime Minister Vladimir Putin promised loans and aid worth more than $1 billion on a visit to the plant last month.
According to Interfax, the Russian auto industry owed MMK a combined total of Ruble 3 billion (approx. $88 million) at the end of 2008.