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14:59 GMT +3 hours20 December 2014
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Avtotor, Magna Sign $3.5 Bln Kaliningrad Auto Cluster Deal

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Kaliningrad Region carmaker Avtotor and Canadian automotive parts manufacturer Magna have signed an agreement on establishing an automotive cluster in Russia’s westernmost region with annual production capacity of no less than 250,000 cars, Avtotor said on Thursday.

MOSCOW, November 22 (RIA Novosti) - Kaliningrad Region carmaker Avtotor and Canadian automotive parts manufacturer Magna have signed an agreement on establishing an automotive cluster in Russia’s westernmost region with annual production capacity of no less than 250,000 cars, Avtotor said on Thursday.

The auto cluster project, estimated at 118 billion rubles (around $3.5 billion), will integrate 21 new auto plants, with six of them being full-cycle automobile manufacturing plants and 15 involved in automobile component production.

The auto cluster will provide a big boost to the Kaliningrad exclave's economy, creating 27,000 new jobs, Vladimir Shcherbakov, chairman of the Avtotor board of directors, said.

“At the new stage [of cooperation between the two companies], we’ll build 21 plants and the project will develop associated industries, first of all, chemicals, petrochemicals, plastic production and the output of metal articles, primarily made of aluminum.”

Magna International Europe AG Gunter Apfalter said the companies had held intensive talks in the past 18 months and would develop a plan next month to increase the share of local output and supplies in the Kaliningrad Region.

Currently, the share of local output in auto production is 30 percent and is expected to rise to 48 percent by 2018 and to 50 percent by 2022.

The project, which will comprise plants of Avtotor’s current partners - BMW, General Motors, Kia and others - will be implemented in two stages. The first stage is to be completed by 2016 with 14 plants, and the second by 2018.

Magna will be responsible for the engineering portion of the project

Avtotor currently manufactures cars made imported parts for Kia Motors, BMW, GM and Opel.