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Alcoa, VSMPO in joint venture to develop aerospace products

Klaus Kleinfeld, Alcoa Chairman and CEO arrives to meet with U.S. President Barack Obama and other CEOs at the White House in Washington February 5, 2013. REUTERS/Joshua Roberts

NEW YORK (Reuters) - U.S. aluminium company Alcoa Inc (NYS:AA) has formed a joint venture with Russia's VSMPO-Avisma Corp (MCX:VSMO), the world's No. 1 titanium producer, to develop high-end aerospace products to feed growing demand from the sector, Alcoa said on Tuesday.

The two firms will collaborate on manufacturing high-specification products, such as landing gear and forged wing components, at Alcoa's Samara facility in Russia, where it makes flat-rolled products, forgings and hard alloy extrusions.

Few other details were available, although a statement said the new venture is expected to be operational in 2016.

The news comes as Alcoa shifts its focus downstream to value-added aluminium products, aimed at the aerospace and automotive sectors, as it cuts its exposure to weak primary metal prices.

In the Samara venture, VSMPO will increase output and gain access to forging equipment, marking the company's continued shift towards value-added products, general director Mikhail Voevodin said in the statement.

Alcoa has previously projected the aerospace market will grow by 9 percent to 10 percent this year. While the outlook for aerospace industry growth is encouraging, the race to produce high-strength, lightweight and low-cost materials in planes has accelerated and the global aluminium industry is facing intense competition from new carbon composites in aerospace.

The move comes after Alcoa expanded its aluminium lithium capacity in the United Kingdom earlier this year. The firm is also building a new U.S. facility in Indiana to produce 20,000 tonnes per year of aluminium lithium.

Aluminium lithium alloy is used in forgings, sheet and plate applications in airplane wings and fuselage components. Alcoa says it is more fuel efficient and lower-cost than carbon composites.

The Indiana facility is expected to come onstream by the end of next year.

(Reporting by Josephine Mason; Editing by Phil Berlowitz)