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Metafrax Controlled by Seyfeddin Rustamov Plans to Build an Industrial Complex of EUR 950 Million

Metafrax Controlled by Seyfeddin Rustamov Plans to Build an Industrial Complex of EUR 950 Million


According to Interfax, a Russian news agency, PJSC „Metafrax” controlled by Seyfeddin Rustamov is starting an ambitious investment project of EUR 950 million, which is due to complete in2021. During the press conference held on 1st November, Armen Garslyan, Chairman of Metafrax Board of Directors, said that Metafrax plans to complete construction of a large chemical complex producing ammonia, carbamide and melamine in Gubakha (Perm Territory) in 2021.

“Total project cost is over EUR 950 million excluding interest,which we will pay to the bank. The loan is arranged in two currencies: in euro for the equipment and engineering, and in rubles for the general contract. We participate in the project by 15% in cash. Our share, including the advance payments for the equipment, is settled, and our part of the loan is already paid,”- stated Mr. Garslyan.

According to Garslyan, the company will sign two loan agreements for the project implementation for EUR 280 million and RUB 27 billion respectively with one of the leading Russian banks.

According to his words the project payback period is 13 years and Company will not suspend any previously agreed investment projects, agreed within the framework of current development strategy.

“This project is of strategic importance for us. After the plant startup, more than 75% of products will be used for captive use”, so Garslyan.

Vladimir Daut, Chief Executive Officer of PJSC Metafrax, mentioned during the press conference that first product output would take place in autumn 2020.

He told: “All preparatory stages are over. We made a draft project and feasibility study, participated in public consultations, prepared our construction site, and obtained a building permit. The first construction to start in November.”

Daut expects that new plant will create 400 jobs.

Vladimir Daut announced: “This is unparalleled one-of-a-kind project. No plants have been built in the world in the last 20 years, which would combine three chemical units at the same site . This complex is integrated with our existing methanol production units, where methanol is our key product.”

According to Metafrax documentation, estimated complex capacity will be 307871 tons of ammonia, 575795 tons of carbamide, and 41325 tons of melamine per year.

It was announced during the conference that “almost all ammonia will be consumed by carbamide and melamine plants and will not be resold to third parties. Urea will be used for further processing by urea-formaldehyde concentrate (UFC) facilities of PJSC “Metafrax” in Gubakha, synthetic resin facilities of “Metadynea LLC” in Gubakha and Orekhovo-Zuevo, and as a main feedstock with the melamine plant at the main complex. The rest of carbamide will be sold locally and for export.”

Most of produced melamine will be used by “Metadynea LLC” as a feedstock to produce synthetic resins.

During press conference PJSC “Metafrax” officials signed two agreements with general contractors, “Uralenergostroy LLC” responsible for the installation of basic equipment, and “JSC Research and Design Institute of Urea” that will build infrastructure facilities. According to Garslyan, the total cost of two agreements is 33.5 billion rubles.

One more project participant is Casale SA, a Swiss company that will act as a project developer and equipment supplier and licensor, and will control entire technological process until plant becomes operational.

As announced previously, on 2 October 2017 Metafrax entered into agreement with Casale SA, amounting to EUR 388 million.

Under this agreement Casale SA will provide its design services, buy and deliver products necessary for the equipment installation and manage complex construction process. In addition, Casale SA will exercise construction supervision to comply with project documentation and to train the staff.

In October 2016, “JSC Research and Design Institute of Urea” and Metafrax signed agreement for developing complex project documentation.

Garslyan said to the journalists: “Our main shareholder Seyfeddin Rustamov was involved in this project from the moment of negotiations and decision-making. Decision on entering into that agreement was made in January 2016. Seyfeddin Rustamov had meetings with our colleagues from Casale to discuss the project and ways of its implementation, after that final decision was taken.”

Metafrax is one of the largest Russian producers of methanol and formaldehyde.

The main production is located in Gubakha. The group is represented by Karbolit chemical plant (MOEX:KARB) in Orekhovo-Zuevo, Metadynea synthetic resin production plant located at two sites: in Moscow suburbs and Perm Territory. The group also includes Metadynea Austria, formaldehyde and synthetic resin production company located in Krems, Austria. The group’s construction assets include Metatransstroy, “MK Khimstroy” and “SK Khimspetsstroy” companies. “Metafrax-Inform” provides IT support.

According to the list of affiliated companies, as of September 30, 2017 JSC “MetaHolding” (Perm) holds 92.37% of Metafrax’s share capital, Vladimir Daut, Metafrax CEO owns 0.487% of the share capital.

Since March 28, MetaHolding possesses 92.55% of Metafrax shares. According to SPARK-Interfax database, MetaHolding belongs to two entities registered in Delaware, USA. As reported by “Kommersant daily”, one of the ultimate beneficial owners of MetaHolding is Seyfeddin Rustamov.

Casale SA was founded in 1921 in Lugano, Switzerland. The company acts as a general contractor under the project of JSC “Navoiyazot” (Uzbekistan) for organizing nitric acid production; and as a licensor under the project for construction of urea processing facility for PJSC “Togliattiazot” (MOEX: TLAZ).

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