4 Jun '10
Philip H. de Leon, the author of this article, is the President of Trade Connections International, LLC, a Washington DC based consultancy focusing on international and business development. Mr. de Leon is a member of the Advisory Board of Marchmont Capital Partners.
In 2007, President Vladimir Putin initiated the creation of the Russian Corporation of Nanotechnologies (Rusnano) to give Russia a leading position in the world market of nanotechnology products. In February 2010, at a meeting of the Commission for Modernization and Technical Development of Russia’s Economy, President Dmitry Medvedev stated, “we must reduce our humiliating dependence on commodity exports and, perhaps more importantly, stop squeezing the last drops of scientific and industrial potential from the Soviet period.”
This comment explains why so much money and energy is allocated to building a new high-tech sector from the ground up. Rusnano operates by co-financing projects that can lead to the manufacturing of competitive nanotechnology-enabled products. The potential is huge and could generate global sales in excess of $2 trillion by 2015-2016, and lead to sales of Russian nanotechnology products to about $30 billion by 2015, according to Rusnano CEO Anatoly Chubais. By December 2009, Rusnano had committed to finance over 60 projects, while 237 projects were under evaluation out of 1,356 applications received.
So what has been achieved after two and a half years in existence? Are there any emerging trends? Are any Russian products rolling off any production lines? Is revenue flowing from the commercialization of the financed technologies? Is there any international collaboration?
Since out of the 65 projects, 48 were with startups while 17 were extension of existing projects, “it is too early to indicate the major or minor trends that are emerging as Rusnano is still at the initial stages of establishing a roadmap for technologies and products,” says Dr. Sergey Lourie, Senior Expert of the Department for External Communications at Rusnano.
Asked if any new technologies had been commercialized, Lourie comments “we already see sales of solar polycrystalline silicon (Nitol), vertical integrated lasers (VI-Systems) and hardened instrumental coatings (Saturn). The chemical catalogue-depot infrastructure project is also generating revenues,” but general revenue figures will be made public later.
Lourie, and Dmitry Gordienko, Senior Investment Manager for New Projects Origination, elaborated on some very concrete projects and on the market demand for products in the pipeline by sharing several examples, notably in the solar power and energy-saving technologies where Rusnano is concentrating a lot of efforts to see the birth of a new Russian industrial sector.
Construction of the first large-scale complex producing polycrystalline silicon and monosilane in Usolie-Sibirskoe, Irkutsk Region
Polycrystalline silicon is used for solar cells while monosilane in photovoltaics to prepare thin-film solar modules. Nitol, the company involved in this project, already started producing high-purity polysilicon batches in 2008 and will get from Rusnano 3 billion rubles in the form of guarantees and 4.5 billion via a long-term loan for a total project budget of 18.9 billion rubles.
Nitol’s principal export market is Europe and South-East Asia.
Co-investment to establish a Russia-based company to produce lithium-ion rechargeable batteries for electric vehicles, notably motorcycles and buses, in Novosibirsk, Siberia
The co-investment is between Rusnano and Thunder Sky Green Power Limited from Shenzhen, China. Rusnano will contribute 2.24 billion rubles in equity and will extend a loan of up to 5.5 billion rubles. Thunder Sky Energy Group Limited will invest 2.24 billion rubles in cash, technology, and intellectual property such as patented technology for rechargeable batteries. An external co-investor will lend 3.9 billion rubles to the project company. The budget to bring the project to fruition is estimated at 13.88 billion rubles.
Production will begin in 2011 with a capacity to turn out 300 million Ah annually; capacity will rise to 400 million Ah annually in 2012. Most of the production will be exported to China, to enable Thunder Sky to fulfill orders from Chinese manufacturers.
Co-investment with Renova Group from Russia to manufacture solar modules in Novocheboksarsk, Republic of Chuvashia
The technology is based on thin film technology provided by Oerlikon Solar from Switzerland and the manufacturing will take place in St. Petersburg. Rusnano will contribute 3.7 billion rubles in equity and lend 9.8 billion rubles. Renova will own 51% of the company and be responsible for business development. The total investment will be 20.1 billion rubles.
The primary export markets will be Germany and Southern Europe: Spain, Italy and Greece.
Ultimately, international collaboration, at a state level but also at a private sector level, is an integral part of Rusnano’s strategy. Cathleen Campbell, President and CEO of the U.S. Civilian Research and Development Foundation (CRDF), a nonprofit organization that promotes international scientific and technical collaboration, confirms this strategy. “Rusnano has reached out to researchers, investors, companies and policymakers around the world to share its vision for building a nanotechnology industry in Russia and to identify areas for collaboration.“
After several years setting up the playing field, 2010 will be a decisive year for Rusnano to start showing some results by having new products hit the market, notably in the following sectors: nano-structured materials, medicine and biotech, engineering and metal working, opto- and nanoelectronics.
The opinions and sentiments expressed herein are those of the author only and not necessarily those of Marchmont Capital Partners or any other person. This article is published for the first time by permission of the author.