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July 2015

Mega Interview with Lou Naumovski, VP of Kinross Gold and Honorary Member of MK2025: On gold mines, Visa in Russia, Faith in Macedonia and more

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Lou Naumovski is Vice-President of the Kinross Gold Corporation from Canada and an Honorary Member of Macedonia2025. Mr. Naumovski has worked with Visa International in Russia and has been a member of the Canadian diplomatic corps. The interview which we offer in its entirety was published in the June issue of the Macedonian business magazine Ekonomija i Biznis.

E&B: You are a Canadian businessman of Macedonian descent. Tell us about your moving from Yugoslavia to Canada, your beginnings. Has the Canadian society eased the process of adaption for the newcomer?

L. Naumovski:

My mother, sister and I arrived in Canada from Bitola (where the three of us were born) in March 1961 to join my father, who had been there since 1958.  As I was only four and a half years old, I adapted to Canada very quickly and very well.

The Canada that we found on arrival was a land of immigrants, but mostly from Europe.  In the fifty-four years since, Canada has invited immigrants from all over the world so the country is much more ethnically diverse.  Canada is a country noted for its policy of  multiculturalism, versus the American focus on melting pot, where immigrants are much more likely to practice their languages and cultures in Canada for much longer (over several generations) than in the US.  As for me, my parent’s ability to instill love and respect for our Macedonian language and traditions has been one of the great inheritances I received from them.  A love of language and the ability to learn several additional languages has provided me one of the main skills that I have used as I have built my professional career internationally.

E&B: Currently, you are an honorary member of the Board of Directors of “Macedonia 2025”. What was your motive for joining this organization? What are your expectations and how do you envisage the output from your engagement in “Macedonia 2025”?

L. Naumovski:

When John Bitove Senior called me in 2005 and asked if I was interested in joining the organization, I was very honoured, as I did not really feel that I was in the same league as the Bitove Family and some of the other prominent business people in the USA and elsewhere that had been recruited.  My motivation was very simple; based on my pride in my ethnic background and my desire to share my experience, contacts and efforts to help the country of my birth, there was no way to say no.  In fact, I had extensive experience in business associations as I was the first Executive Director of the Canada-USSR Business Council that was established in 1990, and that experience proved very useful to me as I joined Macedonia 2025.

Despite the fact that we all shared a Macedonian background, all of us had different business, government and personal experiences to bring to the organization.  My long-standing involvement in Canada-Russia economic and investment relations gave me a perspective that I tried to apply to my work in Macedonia 2025.  In particular, I had the privilege to help to launch and participate in a very successful business training project in Canada (the East-West Enterprise Exchange Program, established at York University School of Business and partly funded by the Government of Canada) in the early 1990’s, and I saw first-hand the benefits of providing western-style business training (albeit in a concentrated form) and exposure to real companies in Canada.  My good relationship with the Dean of Business at York University, Dezso Horvath (himself an immigrant to Canada with Hungarian Nationality and Swedish citizenship!) was to prove very helpful more than 20 years later.  Several hundred business people and government officials from the former USSR and Eastern Europe went through this program, and I am acquainted with many of them who say that this experience was very important for their own “transition” from the thinking and approach to business in the former centrally-planned economies.

With this experience, I promoted the importance of business education at Macedonia 2025, and my colleagues in the organization were very supportive when we started the Leader Program with the Richard Ivey School of Business at the University of Western Ontario.  A little later, I approached my old friend Dean Dezso and he was very understanding and supportive of what we were trying to do, even allowing us to send the initial Macedonian candidates to the Schulich Executive Education Centre free of charge!

Having now joined the Honourary Board of Macedonia 20205, I am very pleased that both programs not only continue, but have taken on an even greater importance in the work of the organization.

E&B: You have started your professional career in the Canadian diplomatic services, basically declining the post in Chicago, USA, for a post in Russia. Where has this inclination for Russia come from? Strategically, looking back, do you consider this as a good career move?

L. Naumovski:

I suppose in the end, my focus on Russia has been an excellent choice, given the variety of the roles I have held in or related to Russia and the richness of experience that I have accumulated. However, at times of political tension when Russia and its allies are not communicating with each other very well, I do wonder whether the work that I and other western business people and diplomats have done there for all these decades has actually had a positive effect

E&B: You joined Visa International in August 2000 and became a general manager of the Visa’s Russian office. You were responsible for development of Visa’s business in Russia and had to introduce visa credit cards in such a big country. It must have been quite a complex challenge. How would you describe it?

L. Naumovski:

I must say that without equivocation, my job at Visa was the most satisfying and rewarding role that I have ever held.  When I was a diplomat or at the EBRD, I held the view that one had to be an “official” to be able to make a real impact in international affairs (indeed, as the Resident Representative of the EBRD in Russia I held the rank of “Head of Diplomatic Mission”).  This turned out to be a very anachronistic belief, since at Visa I and my colleagues had a much more significant impact on Russian banking, finance and financial literacy in the country than I could have ever imagined.  We not only increased the number of Visa cards in circulation from around 800.000 in August 2000 to about 43 million cards in July 2007 when I left the company, we also helped to modernize the payment of salaries (into bank accounts linked to a Visa debit card), to increase non-cash electronic payments, and even sponsored a campaign to increase financial literacy amongst Russian citizens.

It was indeed a challenge, but despite the initial criticism that was levelled at Visa and at me personally since I was seen as a non-specialist in the card business, I managed to build an excellent team of dedicated specialists that together ensured that Visa was the absolute leader in all categories in the Russian payment industry.  The key to our success is that I and my team recruited not necessarily the most famous specialists in the business, but those candidates who demonstrated the most sincerity and integrity.  In my experience, such people make much better team members than those who continuously try to impress others with how much they know!  Finally, I am also proud of the way that we enforced the rules of the Association (Visa became a public company only in 2008) and did not give unnecessary discounts to our fees, while at the same time adopting special rules for the Russian banks as together we built the card issuance and acceptance infrastructure in the country.

E&B: At present, you are a Vice-president and General Manager of the Moscow office of Kinross Gold Corporation. Could you provide us with the key information about the company and its business? How does your company cope with the environmental issues that are becoming an important aspect of the business of mining?

L. Naumovski:

Kinross Gold Corporation is a Canadian public company with listings on both the Toronto and New York stock exchanges and producing gold and silver internationally.  We employ about 9000 people and have nine mining operations in six countries (the USA, Brazil, Chile, Ghana, Mauritania and Russia).  In our company we speak five languages (English, French, Portuguese, Spanish and Russian).  Kinross ranks as the fifth largest gold producer in the world, buy volume of production.

In Russia we have two operating mines and several exploration properties.  Russia contributes about 30 percent of our total annual production, and we have about 2250 employees in Russia, with about 98 per cent of our staff coming from Russia or the former Soviet republics.  Our Russian mines located in the Chukotka Autonomous Region (in the far North East of Russia) are not only among the best in our company, but also among global gold mines.  This year we are celebrating our 20th anniversary of successful operations in Russia, where in total we have operated four gold mines over the years.  We have invested well over $3 billion in our Russian operations, and our long success is in large measure due to our excellent Russian engineers, geologists, miners and other employees.

As a global, publicly listed company, Kinross is governed by the highest standards of health, safety and environmental care.  We adhere not only to the EQATOR principles of the World Bank, but exceed them wherever possible.  One example of our attention to environmental protection is that Kinross was the first mining company (and so far the only one) to receive full-cycle certification under the International Cyanide Code for the transportation, use and destruction of cyanide in our operations in Russia.

We believe that unyielding adherence to principles of health, safety and environmental protection is the only way to operate in the mining business.  Moreover, our company is among the leaders in global mining as concerns stakeholder engagement and corporate social responsibility.  In Russia this is evident in our excellent record of support for the local population in Chukotka and Magadan, and especially in our support for the indigenous peoples of Chukotka.

E&B: The world goes through very turbulent times. In these circumstances, many perceive the gold as a safe haven investment. What is your perception of the world’s gold market and what are your expectations about the world’s price of gold in the next 12 months?

L. Naumovski:

After eight years in the gold mining industry, I still feel myself very much a neophyte, especially since I do not have a technical background.  However, one thing I have definitely learned is not to speculate on the gold price.  People far more experienced and steeped in the gold industry than I continue to incorrectly predict the gold price.  I have learned that for all gold producers, it is far more effective to concentrate on the costs of gold production, especially on those that can be controlled or somehow influenced (such as hedging the cost of fuel).  As a consequence, our company emphasizes continuous improvement, reduction of costs and increased efficiency so that we can ensure appropriate margins and protect the quality of our balance sheet.

In my personal opinion, the paradigm under which people tracked and tried to predict the gold price in the past hundred years or more is now broken.  The “safe haven” status of gold as a hedge against inflation, currency fluctuations and the negative economic consequences of wars and skirmishes does not fully apply.  At the same time, retail and institutional investors have many more opportunities to invest in gold than they used to.  The emergence of gold exchange traded funds (ETFs) in the past ten years has given investors a more liquid way in which to move in and out of gold investments might partly account for the more volatile changes and general weakness in the gold price in the past few years.

E&B: It seems that the international business became dependent on the global geostrategic political decisions. Nowadays, doing business with Russia is burdened by the sanctions against this country. Being a Canadian company doing business in Russia, how do you assess the sanctions against this country and its effects so far and in the future?

L. Naumovski:

We have remained relatively unaffected by Western sanctions against Russia and Russia countersanctions.  Our operations in Russia function as normal.  Of course, with our long-standing history in Russia, we remain hopeful for a peaceful settlement of the crisis in Ukraine and a return to better government to government relations between Russia and Canada and the other Western countries.  As a mining company we have learned to plan far in advance since the average gold mine requires between eight and twelve years to go from discovery to actual production.  Therefore an end to the hostilities and the resumption of normal relations amongst all countries involved will make it much easier to continue to plan, explore and mine more gold and silver in Russia.

E&B: Recently, you have been in Skopje, attending an event organized by “Macedonia 2025”. What was this about and what were your impressions from the event?

L. Naumovski:

Not having been in Macedonia for almost eight years, I was not sure what to expect.  The warm reception that I received for the young and talented staff members of the Macedonia 2025 was truly overwhelming.  They prepared a very interesting program for me, and I enjoyed speaking to a group of around 30 people about my career and experiences in Canada-Russia trade and investment.  Judging from the number of people who wished to speak with me after the event, I believe that it was successful.  My meetings with representatives of Macedonian business, academia and government were quite interesting and I hope productive for those people with whom I met.  I tried to convey my sincere willingness to assist companies and individuals from Macedonia with contacts in Russia and in Canada, and to try and apply my experience and contacts to the benefit of Macedonian business.  As I approach the latter stages of my career, I hope to be able to turn my attention increasingly towards Macedonia in whatever capacity might be possible in the future.

By far the biggest impression that I received was from the many young business people that I met in the two short days I was in Skopje.  Exceedingly bright, multi-lingual and already well-experienced in international business.  These people are the future of Macedonia and the future is bright.  They need support and further guidance, and they also need the conditions for business in the country that can allow them to continue to work for the benefit of their homeland.

E&B: Having in mind your authentic interest in the prosperity of the Macedonian economy, what is your message for the Macedonian businessman?

L. Naumovski:

It is difficult to come for a brief visit and to presume that I have any greater insight than those people who live and work in Macedonia as to what they should do.  However, from my own experience, I have found that it is essential remain flexible and to deal with whatever challenges and twists in the road that might appear.  Belief in one’s abilities and skills, yet all the while remaining open to new experiences and opportunities is essential.  Also, working in teams in which egos are kept in check, and where everyone is pulling in the same direction is critical.  Finally, to the managers of Macedonia I would say: “do not be afraid to hire a younger person who is smarter than you”.  Again, in my experience both as a senior manager and when I was a junior official or executive, the best and most inspirational leaders are those who are not afraid to admit that they are not the smartest person in the room.

E&B: Thank you for the interview.