Construction firm Strabag SE said Monday it is pulling out of a joint venture with a unit of Basic Element, the holding of Russian metals magnate Oleg Deripaska, as developers battle tougher global financial conditions.
Strabag, in which Deripaska acquired a 25 per cent stake last year, said it made its decision to exit the deal with BaselCement in light of falling cement prices in Russia after the removal of import tariffs and the expansion of production capacity.
"In the worldwide financial crisis it is our most important task to stay financially flexible and independent," Hans Peter Haselsteiner, CEO of Austria-based Strabag, said in a statement. "In the current financial markets environment, we have to select our investments carefully."
Basic Element, or Basel, said it would continue with existing plans.
"BaselCement is continuing with its plans to build new cement plants in Russia and is upgrading its existing cement facilities as currently planned," said Douglas Lund, co-head of Basel’s construction operations, in an emailed statement.
Last fall, Basel and Strabag said they were setting up a joint venture to produce cement in Russia, the former Soviet Union and Eastern Europe. BaselCement said it planned to pour US$3bn into new cement production by 2012.
Basel’s interests range include aluminum, real estate and banking. There are indications that some of its operations have come under pressure amid a domestic liquidity crisis, worsened by steep falls in local stock markets. Basel said last week it poured cash into its Soyuz bank in the wake of the crisis, and boosted its capital by nearly US$230m.