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Suzuki postpones construction of car plant in Russia - newspaper

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MOSCOW, December 26 (RIA Novosti) - Japanese carmaker Suzuki has postponed construction of a new factory near St. Petersburg, a leading Russian business daily reported Friday.

The plant was to have been built and put into operation in the second half of 2009. Kommersant wrote that the postponement was due to the global economic crisis and problems with the construction site, which was discovered to contain peat deposits.

Maxim Sokolov, the head of the St. Petersburg administration's investment committee, confirmed to the newspaper that "the project really went off schedule due to complicated geological conditions." He pledged "to clarify issues on the location of the plant by April."

"However, we have received no statements from Suzuki on a refusal to continue the project," he said. Kommersant failed to obtain a comment from Suzuki Manufacturing Rus, the operator of the project.

Suzuki is the second Japanese carmaker to halt investment in Russia during the crisis. In mid-December, Isuzu announced it was halting a project to produce heavy trucks with a Russian company due to low demand.

Suzuki signed an agreement to build the plant in Russia in June. The plant's capacity was assessed at 30,000 cars annually with prospects to increase to 50,000 by 2012 and then to 100,000. Suzuki Grand Vitara and SX4 were to be the main models produced.

Initial investment was assessed at 85 million euros ($120 million at current rates).

Bank of Moscow analyst Mikhail Lyamin told Kommersant that Suzuki could have revised its plans because the models to be built at the plant would not be in great demand because of the crisis.

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