Kurgan: a new stage in the development of Wheelabrator Allevard

Wheelabrator Allevard is continuing to expand and undertaking new investments: on 20 July we inaugurated our 14th abrasives plant in Kurgan (Russia). This new undertaking confirms our group's international growth and our position as the world leader in our core business.

Situated near Yekaterinburg in the Urals, 1700 km from Moscow, the Kurgan plant lies at the heart of a region producing 15% of Russia's industrial output, with large-scale activities in the metallurgy, mechanical engineering, energy and chemical sectors.

We chose this location because it offers a number of strategic advantages: locally-available energy and raw materials; proximity of a major market for metallurgical products in the Urals and, further afield, the rest of Russia and certain neighbouring countries such as Kazakhstan; and the opportunity to create a joint venture with Russian group Kurganstalmost (KSM). This major metal bridge manufacturer took a minority stake in this investment and provided the land and qualified personnel. We particularly appreciated the policy of supporting foreign investment in industry being implemented by the Plenipotentiary Representative of the President in the Urals Federal District, Mr Vinnichenko and his deputy, Mr Sevrikov, as well as the Governor of the Kurgan region, Mr Bogomolov.

The new Kurgan plant is a benchmark in terms both of the industrial processes it employs and its environmental performance. It capitalises on the advances made at the two research centres and the other plants owned by the group. It is equipped with state-of-the-art technologies compliant with the most stringent environmental requirements – in relation to water treatment in particular: the plant will consume five times less water than required by the usual standards.

The initial shot production capacity of 20,000 tonnes per year could be increased subsequently to 40,000 tonnes in line with market growth. For the time being the new plant will enable Wheelabrator Allevard to double its sales in Russia and, eventually, cover nearly half of the national market, with a strong focus on premium products. The Kurgan plant proposes high-quality products with excellent wear resistance that can hence be reused several times, enabling users to reduce the volumes of shot they consume by 50% or more.

This new investment illustrates our group's ability to plan for the future; after a decade of strong growth, Wheelabrator Allevard's sales fell sharply in 2009, because the capital goods, automobile and construction industries, its main outlets, were hit particularly hard by the global economic crisis.

However, the stock reductions carried out during 2009, government stimulus policies (e.g. car scrappage schemes), the gradual recovery in northern countries and ongoing strong activity in emerging industrial countries have brought about renewed growth in 2010.

Wheelabrator Allevard hence intends to continue consolidating its positions: having completed major extension work at its French plant in Le Cheylas in late 2008 and set up industrial operations in Russia in 2010, the Group is considering substantial developments in China in the medium term.

Yves BARRAQUAND

Chairman and CEO