Aug. 6 (Bloomberg) -- Russia will start building two plants in October to make Kalashnikov assault rifles in Venezuela, the first country to win a production license for the guns since the fall of the Soviet Union.

Production of the AK-103 in Venezuela is scheduled to begin ``by the end of 2009 or the start of 2010,'' said Vladimir Grodetsky, head of state-run arms maker Izhmash. One plant will produce AK-103 assault rifles and the other will produce .762 millimeter bullets, Grodetsky said in an interview today in Izhevsk, the central Russian city where Izhmash is based.

Venezuelan President Hugo Chavez discussed the factories with President Vladimir Putin in June during his fifth trip to Russia. Chavez is continuing an arms buildup that has cost more than $4.3 billion since 2005. Russia is the South American nation's main weapons supplier. Chavez has said he needs the arms to defend against what he calls a threat of U.S. invasion.

Izhmash will provide technology, training and licensing to Venezuela to produce the rifles, and a team of Venezuelan specialists have already visited the plant, Grodetsky said. ``The experts who came here were well qualified,'' he added.

Small-Arms Exports

Izhmash, which is 67 percent state-owned, accounts for 90 percent of Russian small-arms exports. About a million Kalashnikov rifles are produced each year, mostly outside Russia. Izhmash spokesman Alexander Baditsa said this deal is the first since the 1991 fall of the Soviet Union under which production of the guns abroad will be ``fully legitimate.''

Venezuela has spent more than $3 billion on Russian weapons since 2005, signing contracts to buy 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su-30 jet fighters. The country is also seeking to buy eight Russian diesel-powered submarines, and Chavez visited Russia's neighbor Belarus in June for talks with President Alexander Lukashenko on buying a short-range air defense system.

This year marks simultaneously the 60th anniversary of the original Kalashnikov rifle, the AK-47, and the 200th anniversary of weapons production at the Izhmash plant. Mikhail Kalashnikov, the inventor of the rifle which bears his name and is renowned for its simplicity, will be 88 in November.

To mark the anniversaries, the head of the Russian Orthodox Church, Patriarch Alexy II, yesterday consecrated a new cathedral in Izhevsk, across the road from the Kalashnikov museum. Finance Minister Alexei Kudrin is due in Izhevsk tomorrow as part of the celebrations.

Izhmash produced more small arms during World War II than the entire German Reich, according to the Kalashnikov museum.

To contact the reporter on this story: Ellen Pinchuk in Izhevsk via the Moscow newsroom at epinchuk@bloomberg.netSebastian Alison in Moscow at Salison1@bloomberg.net.

Last Updated: August 6, 2007 08:55 EDT