Finnish tyre manufacturer Nokian Tyres Oy is to invest about €21.5 million in the expansion of its Russian tyre plant in the town of Vsevolozhsk in the Leningrad Region, Nokian Tyres said in a press release cited by Prime-Tass on Friday.

Nokian Tyres signed an agreement with YIT Construction Ltd., which is to build a mixing department and a warehouse at the Vsevolozhsk tyre plant, the company said. Construction work is to begin immediately and is scheduled for completion at the end of July 2006, the company added.

The contract also covers the completion of regional works and infrastructure on the site, the company said.

The tyre plant, €valued at 55 million, began production of Nokian Hakkapeliitta 4 winter tyres in June when the test production line was launched. The plant will start production of premium tyres by the end of the year.

Nokian Tyres officially launched the first stage of the tyre plant on Thursday. The opening ceremony was attended by the president of Finland Tarja Halonen.

The annual capacity of the plant is expected to be 1 million tyres, the president of Nokian Tyres Kim Gran said, adding that this year the plant is expected to produce 300,000-400,000 tyres.

The plant's capacity is expected to increase to 2 million tyres by the end of 2005 and then to double in 2007, general director of the Russian subsidiary of Nokian Tyres Andrei Pantyukhov said on Thursday.

Further in the future the company plans to increase output to 8 million tyres a year and even higher, Pantyukhov said.