30 May 2014

Russian titanium supplier VSMPO warns Airbus: “It's impossible to find an adequate replacement in less than 3-5 years"

VSMPO-Avisma, the world's largest titanium producer, warned Airbus it would be forced to pay penalties if the European planemaker terminated a $4 billion contract with its Russian supplier.

VSMPO is 25% owned by Russian state defence conglomerate Rostec, whose CEO Sergei Chemezov was made the subject of Western sanctions in late April for Russia's role in the Ukraine crisis.

"Contracts remain valid and cannot be cancelled for no reason. Otherwise, penalties come into force," VSMPO CEO and co-owner Mikhail Voevodin said.

"A contract until 2020 was signed with us. And it is difficult to assume that the largest European aircraft maker would neglect the terms of the existing partnership."

"The advantage of a long-term contract is stable conditions. We always strictly fulfil the terms of the contract, so do our partners ... Politics is politics and business is business: all of our contracts are mutually beneficial," said Voevodin. “It's impossible to find an adequate replacement for VSMPO products in less than three-five years" he added.

Airbus COO Guenther Butschek said this month there were no short-term impacts from the crisis in Ukraine but that the firm was looking to safeguard supplies of titanium, which is used in the A350.

VSMPO meets 60% of titanium products demand at Airbus and 40% of demand at Boeing.

Based on the article “Russia's VSMPO says Airbus to face fines if quits $4 bln titanium contract” published in Reuters.

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