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Russian Machines, Canada's Magna to make auto parts in Russia

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MOSCOW, May 23 (RIA Novosti) - Russian Machines, which manages engineering assets of Russian industrial holding Basic Element (BasEl), including auto maker GAZ, will produce auto parts in Russia with Canada's Magna, the GAZ press office said Wednesday.

RM Systems, a wholly-owned subsidiary of Russian Machines, signed an agreement May 23 with the Canadian automotive supplier Magna to establish a joint venture in the Volga city of Nizhny Novgorod in the third quarter of 2007 to manufacture auto components, GAZ said in a statement.

The JV will focus on the production of large modules and automobile interior and exterior parts. Initially, the JV's products will be used in GAZ vehicles, the statement said.

Magna and GAZ also signed an agreement to establish a joint venture supplying components for the Russian automaker's new class D car, the statement said.

"These agreements are our first and serious step towards cooperation with Magna in providing the Russian automobile industry with premium components corresponding to world standards," said Pyotr Zolotaryov, chairman of the GAZ board of directors and general director of Russian Machines.

Zolotaryov also said cooperation between Russian Machines and Magna was part of a strategy to expand the Canadian company's presence in Russia.

In early May 2007, Russian Machines announced the purchase of 20 million Class A subordinate voting shares of Canada's Magna for $1.54 billion, saying the deal would accelerate the companies' efforts to capitalize on growth opportunities within the Russian and other automotive markets.

Magna is also expected to sign an agreement in Vienna May 23 with Russia's largest carmaker AvtoVAZ to form a joint venture to design, develop and produce class C cars in Russia. The deal will be signed as part of Russian President Vladimir Putin's official visit to Austria, said Sergei Ivanov, a first deputy prime minister.

AvtoVAZ and the Canadian car parts manufacturer plan to build a plant in the Volga city of Togliatti, where the Russian carmaker is based, which will put out 450,000-480,000 cars annually, with investment totaling $1.6-1.7 billion.

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