cerba quarterly news (spring 2007) · 03 cerba quarterly news (spring 2007) presence would be...

Canada Eurasia Russia Business Association (CERBA)Association d’affaires Canada Russie Eurasie (ACCRE)˚ æŒ º ææ Ł Ł — ææŁŁ Ł ¯ ŁŁ ( ˚ ˜ —¯ )www.cerbanet.org

CERBA Offices International:MOSCOW CHAPTERElena Settles - Regional DirectorTel: 7 (495) 230-6132Fax: 7 (495) 787-2701E-mail: [email protected] CHAPTERFrank Kense - Regional DirectorTel: 1 (403) 218-4164Fax: 1 (403) 218-8727E-mail: [email protected] TORONTO CHAPTERVadym Kozub - Regional DirectorTel: 1 (416) 867-8097Fax: 1 (416) 352-5183E-mail: [email protected] MONTREAL CHAPTERBrendan Scully - Regional DirectorTel: 1 (514) 344-3347Fax: 1 (514) 371-4605E-mail: [email protected]

CERBA Boards of Directors:National Board of DirectorsChairmanDonald Whalen, High River Gold MinesDirectorsPiers Cumberlege, StraightviewPaul Drager, Macleod Dixon LLPNathan Hunt, Ronald A. Chisholm InternationalMoscow Board of DirectorsPresident Nathan Hunt, Ronald A. Chisholm InternationalDirectorsAnatoly Andriash, Macleod Dixon LLPSheldon Bennett, Ernst & YoungIan Bird, Golden Telecom, Inc.Luc Jones, Antal InternationalJohn Kur, Embassy of CanadaRon Lewin, TerraLink TechnologiesRen? Marion, Barrick Gold CorporationCarol Patterson, Baker & McKenzie Gerald Rohan, PricewaterhouseCoopersNeil Withers, Bank VozrozhdeniyeCalgary Board of DirectorsChairmanJim Chernyk - Foremost IndustriesVice ChairmenHans Gjerdrum - KUDU Industries Inc.; Paul Drager - Macleod Dixon LLPDirectorsLinda Niro - Export Development CanadaRichard Donaghy - CIBCRandy McCord - Schenker Steines LogisticsKurt Kennedy - IMV ProjectsToronto Executive CommitteeChairmanDonald Whalen, High River Gold MinesBoard of DirectorsFrank Herbert - Centerra Gold CorporationPeter Antonoff - Aluma SystemsBoris Aryev - Marhope SystemsDmitri Buterin - BonasourceRuth Fothergill - Export Development CanadaPiers Cumberlege - StraightviewJohn Ivany - Kinross Gold CorporationSteven C. Nichols - Canadian Urban InstituteAlina Pekarsky - York University, Schulich School of BusinessPeter Solomon - University of TorontoSergei Timoshenko - Access AirMontreal Local BoardChairmanRon Denom - SNC- Lavalin International DirectorsPiers Cumberlege - StraightviewAnne Leahy - Foreign Affairs CanadaAlexander Lokshin - Dana & Co. Trading Inc.Edouard Namts - WE Consulting Inc.Jocelyn Neron - Quebec Ministere of Economic and Regional DevelopmentElise Paul-Hus - McMillan Binch Mendelsohn (Law Partners)Jo-Ann Roux - International Trade Canada

CERBA News Editors: Elena Settles and Vojin MajstorovicCERBA News Publisher and Layout: Troy Media

Page 2:Looking Back - Past CERBA Events:Highlights on the Horizon; Who’s New at CERBAPage 4:Tatarstan-Alberta Heavy Oil Seminar; MIOGEPage 5:Interview with Ralph Lysyshyn, Canadian Ambassador to Russia Page 6:NAFA’s Torches Light the Way in MoscowPage 7:Canada and Russia at the G-8 SummitPage 8:New Legislation Affecting Status of Foreigners in RussiaPage 9:Charity AuctionPage 10:Paper Week 2007 in MontrealPage 11:Employment in 2007 - Who wins and Loses?Page 12:Kinross Gold Achieves Record 4th Quarter and Full-year ResultsPage 13:EDC Finances USD 50 Million Line of Credit with Russia’s UralSibBankPage 14-15:KUDU Industries Inc. Announces a Joint Venture with CANAROSSof Russia

01

CERBA Quarterly News (spring 2007)

In This Issue:

Canadian Ambassador to Russian Federation His Excellency

Ralph Lysyshyn

MoscowOn November 24, 2006, CERBA helda Luncheon Seminar, at its Moscowheadquarters in the Baker &McKenzie offices. In an informalatmosphere, over snacks and tea,Securities Lawyer from Canada,Barbara Hendrickson, delivered anhour-long presentation on differentaspects of companies listing on theToronto Stock Exchange.

On December 5, by now the ritualChristmas Networking Receptionwas held by CERBA-Moscow. Theevent was hosted by Doug’sSteakhouse, an up-and-comingMoscow’s restaurant. In an informaland relaxed setting, over a hundredof CERBA members and friendsenjoyed themselves over fine wineand food.

The much anticipated Breakfast Briefon Issues Pertaining to CanadianVisas was organized by CERBA onDec. 12 at Marriott-Grand. PaulWhelan, Head of the CanadianEmbassy Immigration Section, deliv-ered a speech entitled "VisaRegulations in the Era of SovereignDemocracy", whose declared aimwas to demystify the visa-process.Peter Reinhardt, of Ernst & Young,also spoke on the subject of obtain-ing work permits in Russia. This wasdefinitely a "must-attend" event forRussians planning to travel toCanada as well as foreigners plan-ning to establish legal presence inRussia.

The opening event of the New Year,which was hosted by the Canadianembassy, was the January 17thBreakfast Brief with SergeyChernyshev, the Former TradeRepresentative of the RF in Canadaand current Director of theDepartment of Foreign EconomicRelations at Russian Ministry ofEconomic Development and Trade.Mr. Chernyshev’s address "Canada-Russia Commercial Relations andState Ownership in the NaturalResources Sector" was insightfuland beaming with optimism aboutthe future prospect for Russianeconomy.

On January 25, 2007, CERBAMoscow office held its 6th AnnualCharity Auction. The event was acomplete success, as we set the newrecord with over 77,000 USD pro-ceeds! Please read the full story inthis issue.

On February 15, CERBA and theRusso-British Chamber ofCommerce (RBCC) co-hosted theGovernor of Ulyanovsk Region,Sergey Morozov, at a joint event atthe recently opened Holiday InnSokolniki. Following Morozov’s con-vincing presentation on investmentopportunities in Ulyanovsk Region,Her Majesty’s Ambassador to RussiaMr. Anthony Brenton, and hisCanadian counterpart Mr. RalphLysyshyn, in the spirit of British-Canadian friendship, delivered wittyspeeches which benevolently pokedfun at each other’s countries.Afterwards, over 300 British,Canadian and Russian guestsenjoyed themselves alongside livemusic.

On February 28 the Minister-Counsellor and Head ofCommercial/Economic Affairs of theEmbassy of Canada in the RussianFederation John Kur hosted a recep-tion on the occasion of the forthcom-ing Canada-Russia BusinessSummit, which will be held inOttawa, Canada on 26 and 27 March2007 under the theme "Partners,Progress and Prospects." The eventtook place on the 29th floor of thenew Swisshotel Krasnye Holmy fea-turing breathtaking views over snow-covered Moscow city center. Mr. Kurwelcomed all the guests, commend-ed the participants on their enthusi-asm in promoting the Canada-Russia business and governmentrelations. Sergey Chernyshev,Andrey Kuznetsov of Russian Unionof Industrialists and Entrepreneurs(RSPP) as well as Nathan Hunt ofCERBA also made brief but inspiringaddresses.

(RSPP) as well as Nathan Hunt ofCERBA also made brief but inspiringaddresses.

TorontoOn March 1, CERBA Toronto held a"Business Breakfast for RussianBankers’ Delegates". The event wasHosted by

and sponsored by:

Don Whalen, CERBA Chairman,made opening remarks aboutCERBA involvement in the FinancialIndustry, which were followed by thebrief presentations from RussianDelegates regarding their businessinterests in Canada. NikolaySmirnov, Consul General and BorisBurmistrov, First Secretary of theRussian Embassy in Canada werealso participating as panel members.The following financial institutionswere represented among the eventattendees: Federal Service forFinancial Markets, Association ofRussian Banks, Agency forResidential Mortgage Lending,European Trust Bank, Peresvet-Invest Company, Yamal AssetManagement Company,Promrekonstruktsiya Limited LiabilityCompany, and Regional Agency forResidential Mortgage Lending.

MontrealOn Feb 26 in Montreal at the invita-tion of Igor Golubovsky, RussianConsul General in Montreal, CERBAVice Chairman Piers Cumberlegeco-chaired the Russian-CanadianBanking Seminar with YuriVoskresensky, Vice President,Russian Bankers Association. ADMFrancois Bouilhac (MDEIE) wel-comed the Russian delegation onbehalf of Quebec Premier JeanCharest before a series of presenta-

tions brought the Canadian financialcommunity up to speed on the grow-ing sophistication of the Russianmortgage market, and the continuedreal estate boom which is attractingmajor institutional investors such asIvanhoe Cambridge, the internation-al real estate division of Quebec’sCaisse de depot et placement(CDP). Another Canadian contribu-tion is in the growing place of wood-frame housing in Russia. Fromforestry operations to pre-fabricatedhousing and advanced building tech-nologies, an increased Canadian


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LOOKING BACKPast CERBA Events

Joint CERBA-RBCC reception. From left:Nathan Hunt, Anthony Brenton, Neil Cooper,Sergey Morozov and Ralph Lysyshyn.

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presence would be welcomed from Kaluga toKhabarovsk. CMHC and EDC are at the forefront inmortgage market development and export and invest-ment support respectively, butwhether through privateequity such as Cordiant and CIBC Wood Gundy or tradefinance such as RBC and Scotiabank, Canadian finan-cial institutions now have increasingly well-developedinstruments and a multitude of solid Russian partnerslooking to bring the advantages of longer-term credit tothe Russian market. After the Seminar in Montreal, theRussian financial delegation headed to Ottawa and thento Toronto, where CERBA Chairman Don Whalen hosteda breakfast with the delegation and members of theToronto legal and financial community at McMillan BinchMendelsohn.

Platinum Sponsors:

Gold Sponsors:

Moscow April 8 Easter BrunchMay 17 EDC ReceptionJune 2 10th Annual LobsterfestJune 26 MIOGE 2007

9th Moscow international Oil and Gas Exhibition5th Russian Petroleum and Gas Congress

Kazan, RussiaMay 21-22 Tatarstan-Alberta Heavy Oil Seminar

Highlights on the Horizon: Ottawa

March 26�27 Canada Russia Business Summit

CERBA is happy to welcome Vadym Kozub as the new TorontoRegional Director.

Vadym joined the CERBA team in January 2007. A native ofUkraine, Vadym has recently earned MBA degree concentrating atInternational Business and Investment Management from theSchulich School of Business in Toronto. It followed his Master ofEngineering degree from the National Technical University ofUkraine. His professional experience started with a BusinessDevelopment role at 3M Company. Vadym was driving the busi-ness of 3M newly established and highly diversified representa-tion office in Ukraine for 10 years. After moving to Canada he tookSales Manager position in an IT company in Toronto. Vadym’sstrong strategic thinking and analytical skills as well as outstand-ing interpersonal competence helped him to become a respectedteam leader in a business and academic life. He is extremelyhealth life and sport oriented. Hence you can have a very produc-tive meeting with Vadym not only in the CERBA office but also inthe winter forest, tennis court or in the tropical deep water.

Who’s new at CERBA:


04

Highlights on the Horizon:

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KKaazzaann,, RReeppuubblliicc ooff TTaattaarrssttaannRRuussssiiaa

Participating partners in this ground-breaking event in Russia include

as well as Canadian Embassy - Moscow and other Russian and Canadian private sector heavy oil companies.Please contact Rockford Lang [email protected].

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Interview with Canadian Ambassador in

Russia His Excellency Ralph Lysyshyn

Ralph Lysyshyn was appointed Ambassador of Canada to the RussianFederation in September 2006. While recognizing the challenges ofdoing business in Russia, he sees great potential and increased oppor-tunities for Canadian enterprises interested in the Russian market.

Could you tell our readers about yourself?

I joined the Department of Foreign Affairs and International Trade ofCanada in 1972. Since then, I served in Moscow, Lagos, Washington andBrussels. Between those assignments, I held different positions at head-quarters in Ottawa including Director of the Arms Control andDisarmament Division and Director General of the International Securityand Arms Control Bureau. I also served as the First President of theForum of Federations. Before coming to Moscow, I had the honor toserve as Canada’s Ambassador in Warsaw. Now, here I am again, backin Moscow, where my career in Canada’s Foreign Service began!

What have you found most surprising and unexpected aboutRussia, since you arrived in Moscow?

Well, as I mentioned, Russia has been one of my first loves. I followed itsmajor developments with great interest since my first assignment inMoscow, from 1974 to 1976. I also had the opportunity to visit on differ-ent occasions in the 1990’s and in recent years. So, I cannot say thatthere were big surprises. I was most pleased however to see how openand free Russian people are now compared with when I first came here.Of course, there are little things to which you need to adjust in every coun-

try you live in. Traffic in Moscow is a good example!Have you had the chance to travel in Russia since your arrival? Ifso, what is your favorite region? Where would you like to go?

Now that I have presented my credentials to President Putin, it is myintention to visit as many Russian regions as possible where Canada hasstrong bilateral interests and where Canadian companies are investingand trading. Regions that immediately come to mind are Chukotka,Magadan, Khanty-Mansiysk and others. My objective is to determine howto expand cooperation, partnerships and trade, but also to build up syn-ergies between Canada’s various programs in Russia, let it be Cultural Affairs, Technical Co-operation, Global Partnerships to nameonly a few. And of course, a visit to Vladislav Tretyak’s region of Saratovwill be a must.

According to your experience, how are Canada and Canadian busi-nessmen viewed in Russia?

I believe that Canada has a very strong and positive image in Russia.Areas such as culture and sport are well known and appreciated. In busi-ness, Canadian enterprises are recognized for their reliability and ethicalstandards. I also believe that Russian businesses like to partner withCanadian businesses. However, it is not clear to me that Russian busi-nesses fully appreciate how strong Canada is in key high technology sec-tors, given Canada’s expertise in enhanced oil recovery equipment, wire-less communications, aircraft structural assembly and systems, spacerobotics, to name only a few.

How would you rate the Russian political environment on Canadianbusinesses in Russia? Can you identify any major issues?

The Russian Federation is still a rapidly changing transitional economy.To succeed in this market, you need to make a strong commitment. Inaddition, you need to develop and maintain close connections with part-ners and contacts at all levels. Due diligence is not just good advice forinitial phases of doing business in Russia. It is an ongoing necessity. Ifyou have a product, technology or capacity that is in demand and isunique, you can do very well in Russia but again, reliability, consistency,determination and the capacity to manage risks are essential.

How would you rate the Russian political environment on Canadianbusinesses in Russia? Can you identify any major issues?

Canada performed very well last year. According to Statistics Canada,Canadian exports of goods to Russia increased 54 % in 2006 to over C$870 million. In my view, prospects for 2007 are equally good if not evenbetter. In fact, an estimate of the number of companies doing businesswith Russia is approximately 600. Many other Canadian companies,including small and medium size enterprises, are closely looking at theRussian market: some have already identified and approached potentialRussian partners and foresee good opportunities. Of course, the risk ofworking abroad can be considerable for small and medium size enterpris-es and requires a major commitment, but the rewards are high as welland partners such as EDC can help mitigate the risks. It should also bementioned that penetrating the Russian market can be expensive. Forinstance, not all small and medium size enterprises can easily afford the

costs of travels, trade shows, certification of products according toRussian standards and legal advice as appropriate. We at the Embassycan open doors where there is interest, and we look forward to workingwith CERBA, its members and Canadian companies that are new toRussia to further build on our success in this dynamic market.

05


CANADA�RUSSIA: GROWING PARTNERS

IN TRADE AND INVESTMENT

A magical night beganwith a torch lit pathwaythrough one ofMoscow’s warehouseareas, as more than fivehundred guests madetheir way to attendNAFA’s MoscowFashion event. Oncethrough the doors of atrendy Gallery "+7.095.art", the dramatically litante room, prepared theaudience for a wonder-ful fusion of Baroquemeets Urban Chic withthirty elaborate chan-dlers lighting up a stain-less steel catwalk, withimages of Russia’s win-ter illuminating the backwall with each exit.

The exciting locationand staging was a per-fect foil for the combina-tion of haute couturemeeting fur design fromCanada, the UnitedStates, Korea, Italy,Greece and of courseRussia. The diverse col-

lections from names such as 6267, Bunakova and Hokhloff, Zac Posen,Izzy Camilleri and special exits for international stars such as RobertoCavalli, Julien Macdonald, and Gianfranco Ferre exemplified the verybest in current couture design. Names such as Vtoroy Mekhovoy, Lena,FurLand, Furs from Mary, N.Picariello, Avanti, Marco Varni, Cosmopel,Natty, Braschi, Mala Mati, Zuki and Jindo proved that great fur fashiondesign is available in every country in the world.

Fashion trends shown were diverse. Certainly Black NAFA dominated thecollections of many designers such as the recipients of this year’s BlackNAFA Top Lots, Avanti Furs and Marco Varni. Other individual collectionsdid highlight Mutation colors of NAFA mink including Natty, Mala Mati, andFurs from Mary who showed a range including NAFA Pastel, White andSapphire. Other designers showcased Men’s wear, Vtoroy Mekhovoyand Lena with their excellent use of NAFA Northern Wild Fur in jackets ofLynx and Coyote. Zuki’s reversible sheared Beaver coats studded withcrystals and embroidery were the quintessential examples of Canada’soldest export, while Braschi’s Lynx Cat coats were a shimmering exam-

ple of luxury. The whimsyof FurLand’s exciting furhat and accessory collec-tion were balanced byN.Picariello’s very femi-nine and totally trendyCanadian Sable jacketswith the embroidered bro-cade inserts, whileCosmopel’s very sexy col-lection of Black NAFAjackets with metallicleather trim proved to be ahit with those who lovedrama.

A NAFA fashion eventshowcases the diversityand beauty of the manyNAFA furs that are avail-able through NorthAmerican Fur Auctions.The family of NAFAbrands including: BlackNAFA, NAFA Mink, NAFA Fox and NAFA Northern Wild fur represents thebest in quality of this unique and precious collection. It is this quality andthese labels that unites the designers of international stature together withthe world’s best manufacturers, producing some of the most exciting furfashion available for women around the world.


06

NAFA's Torches Light The Way In

MoscowMoscow

North American Fur Association

November 8, 2006

The St. Petersburg G-8 Summit saw the first bilateral meeting betweenPrime Minister Harper and President Putin, where the two leaders issuedjoint statements on the Canada-Russia relationship and energy coopera-tion.

Canada and the Russian Federation enjoy a rich and diverse bilateralrelationship. Today we reaffirm our commitment to reinforce key areas ofjoint endeavour. Energy cooperation is addressed in a separateStatement.We reaffirm our strong intent to work together on security and counter-ter-rorism through our established bilateral dialogue and close collaborationin multilateral fora. We shall continue to participate actively in efforts tostrengthen international consensus and to contribute to the global cam-paign against terrorism. In particular, we shall maintain and strengthenour cooperation in relation to Afghanistan and our mutual efforts to com-bat narco-trafficking in the region.

We are committed to building further our cooperation under the GlobalPartnership Against the Spread of Weapons and Materials of MassDestruction. The Global Partnership has become a large-scale interna-tional initiative, which has contributed to the enhancement of internation-al security and safety. The Partnership already demonstrates tangibleresults, and cooperation between our two countries has led to significantprogress in all priority areas. We are particularly pleased with the excel-lent bilateral collaboration and spirit of partnership that has developedthrough working together on this program.

Recent years have provided our business people with impressive newopportunities for enhanced trade and investment exchange, which is con-tributing to the prosperity of our citizens. In order to add further momen-tum to this positive trend, we intend to encourage increased business tobusiness dialogue, including through the structures of ourIntergovernmental Economic Commission.

We are neighbours in the vastness of the North and we share a deepcommitment to the welfare of our Arctic communities. As partners in theArctic Council and through our bilateral dialogue and cooperation, weshall continue to work together toward sound and sustainable Northerndevelopment, balancing environmental protection with economic pros-perity. We recognize that democracy, open societies and efficient marketeconomies are powerful and positive forces for growth and developmentin our countries and in the world. We intend also to continue our con-structive dialogue in this area and to share experiences on governancemodels which can contribute to ongoing improvement in the lives of ourcitizens.We shall also widen the practice of consultations and exchange of opin-

ions on all the issues of mutual interest, to encourage development of tiesand exchanges in the sphere of culture, science, education, tourism,sports, civil society and between individuals.

Canada and Russia have many interests in common in the developmentof their national energy sectors and in supporting well-functioning interna-tional energy markets. Our two countries are major producers andexporters of energy, and play an important role in enhancing global ener-gy security.

We welcome the important and timely discussion of global energy secu-rity at the G-8 Summit in Saint-Petersburg. Together, G8 countries canunderscore the key principles that need to underpin our national energypolicies and will help us meet today’s global energy, environment anddevelopment challenges.

In taking joint action to enhance global energy security and to addressenvironmental challenges, we will focus on diversification of energysources, encouraging investment in the energy sector, in addition to ener-gy efficiency, scientific and technological cooperation, renewables andalternative sources of energy.

We will fully respect market principles and ensure that open, clear andpredictable policy and regulatory frameworks are in place. We will alsoensure that transparent tax, legal, regulatory and commercial conditionsare in place to remove barriers to trade and encourage mutual invest-ments in the energy industry.

We welcome close cooperation between Canadian and Russian energyindustry players and will work to facilitate these relationships, with a viewto promoting international trade, particularly in the area of liquefied natu-ral gas (LNG). We believe that such growth and development of the LNGmarket will play an important role in enhancing global energy security.

Canada and Russia look forward to the possibility of enhanced civilnuclear cooperation and, in this regard, completing arrangements that willhelp facilitate mutually beneficial trade in uranium.

We intend to develop our cooperative dialogue on energy security boththrough enhancing our bilateral relationship and through existing multilat-eral fora, with the goal of implementing agreements reached at the G8Summit in Saint Petersburg.

07


Joint Policy Statement by Prime Minister Stephen

Harper and President of the Russian Federation

Vladimir Putin on Canada�Russia relations

Canada and Russia at the G-8 Summit

Joint Statement by Prime Minister of Canada Stephen

Harper and President of the Russian Federation

Vladimir Putin on Canada�Russia energy cooperation

A number of important changes to the legislation affecting expatriate per-sonnel in Russia have been introduced and became effective as ofJanuary 15, 2007. The new Federal Law No 109-FZ "On the MigrationRecord of Foreign Citizens and Stateless Persons in the RussianFederation" (the "Law on Migration Record") and the amendments to theFederal Law No 115-FZ "On the Legal Status of Foreign Citizens in theRussian Federation (the "Amendments"). A number of pieces of subordi-nate legislation which develop the provisions reflected in the above lawshave also recently been adopted.

REGISTRATION OF FOREIGNERS UPON ARRIVAL

The Law on the Migration Record was designed to replace the previouspractice of the registration of foreign citizens arriving in Russia. It soughtto do this by establishing a new administrative and legal mechanism forthe collection and recording of information on such foreign citizens arriv-ing in the country. This mechanism took the form of a simple notificationupon their arrival. However, a lack of there being sufficient and clear sub-ordinate legislation, forms, and a detailed ruling, has resulted in the pro-cedure becoming unclear and this has caused embarrassment amongthe various bodies trying to apply it - including the immigration authorities.

In particular, the Law on Migration Record states that the responsibility tonotify the appropriate authorities of the arrival/departure of a foreigner willrest with the inviting party. The requirement for all foreigners to be regis-tered within 3 working days of their arrival (except for holders of a perma-nent residence permit "vid na zhitelstvo" who must register within 7 work-ing days) will not change. The inviting party can be a hotel, landlord oremployer, and these should receive a set of documents from a foreign cit-izen and then notify the territorial department of the Federal MigrationService (the "FMS") in person or by registered mail with the post office.The difficulty is that not all post offices have the required forms for suchnotices and in addition, the personnel working there may not be wellacquainted with the procedure. Immigration officials have said that theywill review the first notices sent by the post offices and then organize addi-tional training sessions to eliminate typical mistakes. In addition, someterritorial departments of the FMS have stated that they will not make arecord of a foreign citizens arrival if the notices are sent via post; thisexpressly contradicts the immigration legislation

OTHER AMENDMENTS TO THE LEGAL STATUS OF FOREIGN CITI-ZENS

A Positive Consequence for citizens of the CIS. The Amendments thatcame into force on January 15, 2007 simplified the rules for foreign citi-zens who are entitled to enter Russia without a visa (these are primarilycitizens of the majority of CIS countries). Of special note is that such categories can obtain work permits in a sim-plified manner, while at the same time employers do not need to obtainprior permission to attract and use foreign labor. In addition, the immigra-tion bodies will have 10 working days to consider a request from a foreigncitizen who falls into the above category. Where he/she has provided therequired documents (similar to those documents specified in the existinglists), the state must, within the required time, either issue a work permitor provide grounds for a refusal (which may then be appealed).The length of stay for such categories of foreign citizens is 90 days,unless that is they have an employment agreement which covers a longerperiod, though not exceeding one year. Implications for Citizens of Other Foreign Countries. It appears theabovementioned amendments have not had a positive affect on the sta-tus of foreigners coming into Russian under a visa. On the contrary, arti-cle 13 of the Amendments was changed so that now holders of tempo-rary residence permits will require work permits - previously they wereexempt from such an obligation.

In addition, control will be enhanced over the compliance of the purposeof a foreign citizen’s visit to Russia and his/her documents. In particular,each holder of a work permit is obliged to come to Russia based upon awork visa. Such a visa needs to be arranged by an employer if the latteris duly registered with the appropriate internal affairs bodies. We notethat representative offices and branches still face difficulties in gettingsuch a registration. Work visas for their employees can be arrangedthrough an accrediting body (e.g. the State Registration Chamber), andthis is not expressly provided by the legislation. Therefore, there remainsan irregularity in this regard.

Penalties for Violation of the Immigration Rules. On November 5, 2006the Federal law No189-FZ introduced amendments to the RF Code onAdministrative Offences (to reinforce any liability in the violation of the pro-cedure for attracting foreign citizens and stateless persons to engage inlabour activity in the Russian Federation) (the "Amendments to theAdministrative Code").

In particular, the Amendments to the Administrative Code from January15, 2007, introduced the following fines for any violation of immigrationlegislation:

(i) a fine of up to 5,000 rubles (approximately 192$), with possible depor-tation, if a foreign citizen had given a false reason for his/her visit tohis/her real purpose of stay in Russia;(ii) a fine of up to 500,000 rubles (approximately 19,230$) in relation to theinviting party-legal entity if the latter had failed to perform its obligationsfor the immigration record. We note that in the event of the rules beingviolated with respect to two or more foreign citizens, that administrativecosts shall be paid for each of the individuals separately; (iii) a fine of up to 800,000 rubles (approximately 30,000$) and possiblesuspension of the activity for up to 90 days, for any legal entity for hiringforeign employees without work permits and for failing to notify the terri-torial department of the Federal Immigration Service or tax body uponsuch hiring. The hiring of an employee means permission for an employ-ee to perform works or services or other use of foreign labour. The sameprinciple of individual liability as described above shall apply.

We hope that the recent amendments that apply to citizens enteringRussia without a visa will shortly be clarified by more detailed instructions,and that these in turn will help foreign citizens to avoid any administrativeliability for violation of rules that in practice were difficult to adhere to.

This article is prepared by Macleod Dixon ELP to provide information onrecent legal developments and topical issues in Russian legislation. Dueto the general nature of the article, it should not be relied upon as legaladvice. Macleod Dixon ELP would be pleased to provide additionaldetails or advice upon request. For further information please do not hes-itate to contact Maria Kadlets.

Contact:Macleod Dixon E.L.P.Paveletskaya pl., 2/3, 2nd floorMoscow 115054, Russian FederationPhone: + 7 (495) 931-9905Fax: + 7 (495) [email protected]


08

New legislation affecting status of

foreigners in Russia

On January 25, 2007, the Moscow chapter of CERBA held its 6th AnnualCharity Auction, with assistance of Vladislav Tretiak Foundation andCanadian International Development Agency (CIDA).

From its inception, the Charity Auction has been enormously successful,and it has been CERBA’s most recognized and celebrated event. Thevery first Charity Auction, in 2002, raised over 5,000 USD for the RonaldMcDonald House charity in Moscow. In 2003, the Moscow Times ran ahalf-page article, which included photographs, which detailed CERBA’sexploits. That year, we collected 22, 000 USD, all of which went toMorozovski Children’s Hospital in Moscow. The 2004 auction gathered32,000 USD which was shared between the Social Shelter for Childrenand Teenagers "Doveriye" and Children’s Hospital #2 in Saratov. The fol-lowing year was even more successful - CERBA raised 38, 000 USD,which was used to provide the much needed medical and playgroundequipment for the Saratov Children’s Hospital #2 and the MezenOrphanage in Archangelsk Oblast. It was, however, the last year’sAnnual Charity Auction which broke all previous records and set the newstandard for all future CERBA auctions. In 2006, we collected 60,994USD, which were distributed to several worthy causes: Indigenous SaamiCommunity in Kildin in Murmansk Oblast, Saratov regional youth organi-zation of the disabled Special Olympic Committee, Saratov Children’sHospital #2, Ronald McDonald House Charities, and an orphanage inSaratov.

We are thrilled to report that this year CERBA was more success-ful than ever before - the high expectations set last year were notonly met; they were considerably exceeded! We raised 77,200USD beating all our previous fundraising records!

The proceeds will be used for helping Saratov Children’s Institutions[including Orphanage # 2], Saint-Petersburg Amputee Ice HockeyFederation, and All-Russia Society of People with Hearing Impairments,Saratov Branch. This is truly an exceptional achievement that will go along way to help these worthy causes. CERBA is tremendously gratefuland commends the generosity of Canadians in Russia as well as theRussian businessmen and government representatives who worked withtheir Canadian partners to make the 2007 Charity Auction a great suc-cess!

The Baltschug Kempinski Hotel kindly sponsored the venue for theAuction, which hosted around 175 businessmen, civil servants, and cul-tural and social activists. Although the cause was noble and solemn, thenight passed in pleasant and cheerful atmosphere of friendship and inter-national cooperation. Presence of His Excellency Ralph Lysyshyn, theCanadian ambassador to Russia, numerous officials from the Canadianembassy, and Vladislav Tretiak, the acclaimed Soviet hockey legend, andcurrent State Duma Deputy and president of the Russian HockeyFederation, contributed to the Auction’s popularity amongst Canadian

and Russian public alike.

The official addressed were made by Mr. Lysyshyn and Mr. Tretiak, aswell as Nathan Hunt of CERBA Moscow and Vera Terekhova of Tretiak’sFoundation. The representatives of the beneficiaries also took the wordat the end of the night explaining their specific needs and expressingheartfelt gratitude for the support their received. The recipients were rep-resented by Elena Perepelitsyna (Director of Saratov Orphanage #2),Alexander Chernov (Society of People with Hearing Impairments) andGennady Trunin (VP of Amputee Ice Hockey Federation).

Several musical numbers by the young and very gifted musicians of theInternational Vladimir Spivakov Foundation added a lovely touch to thisenjoyable evening.

The 77,200 USD were raised from four sources: sponsorships, dona-tions, sale of tickets for raffle lottery and online auction and sales. Thetheme of this year’s Auction was items of cultural interest for Canadiansand Russians. The fine collection of auction lots included Dinner withAmbassador Lysyshyn, 2 World Hockey Championship tickets in the boxof Russian Hockey Federation President Vladislav Tretiak, Kolkunovocottage village Weekend Stay, Excursion to the State Duma andExcursion to the Bolshoy Kremlin Palace, Russian Paintings,Autographed goalie stick, Encyclopedia of Siberia and the Russian North,Official Russian Olympic Jacket, NAFA furs, Dinner with Vladislav Tretiak,Crystal chess set from the City of Saratov, luxurious hotel stays andexquisite dinners, and many others. The grand prize of the raffle lotterywas two Austrian Airlines tickets to any European Destination.

CERBA would like to thank ourgenerous sponsors:

Beverage sponsors:

Information sponsor:

Thus, the 6th Annual Charity Auction was an outstanding success, whichexceeded even our highest expectations, and CERBA would like toexpress its profound gratitude to those who made it possible - our mem-bers and friends in Moscow and in Canada! We are looking forward tocollaborating with all of you in our future endeavors to support those inneed and share our success and fortune with the community.

09


CERBA 6th Annual Charity Auction

Building on the inaugural Russian pulp and paper delegation toPaperweek in February 2006 and the success of the September 2006mission to Russia, CERBA’s partners Bumprom (Russian Pulp andPaper Association) in Moscow and the NorthWest Russia ForestIndustry Confederation in St. Petersburg returned to Montreal thisFebruary with new Russian companies interested in developing theirties with the Canadian pulp and paper industry.

CASCADES AND BORALEXWhether straight from the airport or after a pleasant weekend in win-try Montreal, members of the Russian delegation were joined by EDCveterans of the Sep 2006 mission to Russia, including DenisL’Heureux and Rod Lever, newly appointed Chief Rep of EDC inMoscow, for the first visit of the program, a visit to Cascades TissueGroup HQ in Candiac, on the South Shore of Montreal. Greeted bySuzanne Blanchet, President and CEO, Cascades Tissue Group,Thomas Roberts, VP Business Development and Board MemberMartin Pelletier, another veteran of the fall Mission, the delegationreceived a presentation on Cascades, a special tour of the tissue milland returned for a presentation on renewable energy producerBoralex by CEO Patrick Lemaire, which sparked a flurry of questionsfrom the delegation, and prepared the terrain for presentations at thenext day’s energy session during the Canada-Russia Forest ProductsConference.

WELCOME RECEPTIONBack in Montreal the Quebec Ministry of Economic Developmenthosted a welcome reception for the Russian delegation in the Inter-Continental Hotel’s historic caves. Dmitry Bystrov, Acting Head of theRussian Trade Mission in Ottawa also extended his greetings to thedelegation.

ENERGY AND CERTIFICATIONThe Canada-Russia Forest Products Conference took place at thePalais des congres de Montreal on Feb 6, and was organized with thesupport of DFAIT, EDC, the Quebec Ministry of EconomicDevelopment (MDEIE), the Canadian Forestry Service, the Pulp andPaper Technical Association of Canada, CIDA, and SandwellEngineering.

Chaired by DFAIT’s Michael Reshitnyk, the conference focused main-ly on forest certification and energy. On behalf of the Forest ProductAssociation of Canada (FPAC), Kathy Abusow presented a detailedoverview of the main forest certification and chain of custody certifica-tion used in Canada and across the world, while Jim Farrell, Head ofthe Canadian Forestry Service spoke about forest certification inCanada and ongoing bilateral cooperation with Russia in the forestrysector, in fire and disease management, certification and inventory.

The morning session also saw an analysis of the new RussianForestry Code by Vladimir Chuiko, CEO, Bumprom, ValeryRoshchupkin, Head of the Russian Forestry Agency and AndreiKushlin of the World Bank, as well as short overview of the EBRD andits activities in the Russian forestry sector by Canadian BoardMember, Andre Juneau.

The lunch sponsored by Sandwell Engineering featured a breathtak-ing keynote address by Frank Graves, entitled 5 years in Russia,which drew on his experience as a Canadian working as a seniorexecutive in Russia’s largest pulp and paper company Ilim Pulp, lead-ing up to the recently announced joint venture with InternationalPaper. Any Canadian companies planning to enter the Russian mar-ket would be well advised to give him a call.

The afternoon Energy session was opened by Scott Travers, ChairPAPTAC and President Minas Pulp and Power and featured presen-

tations on Bio-Energy in Russia by Denis Sokolov, CEO NWRFIC aswell on Kruger Energy by Jean Roy and a case-study integratingpower generation options into an existing mill by Chris English andYury Bobrov. These were complemented by presentations of develop-ing projects by Igor Khvalin, Chair, Krona Management (Vologda),Alexander Andreevsky, General Director, Avantazh PPM (Khanti-Mansi), and Karen Samvelyan, General Director, Syktyvkar TissueGroup (Komi Republic).

EDC ReceptionAfter a solid day of presentations, conference participants were treat-ed to a cocktail reception offered by EDC, attended by Carl Marcotteincoming VP Ressources, which afforded opportunities to approachspeakers, network and discuss everything from harvesting equipmentto OSB plants.

KRUGER DAYThanks to the support of Jouko Leppanen, Vice President - BusinessDevelopment, the Russian delegation was able to visit three separateinstallations in the space of a day: the Crabtree Tissue Mill (nearJoliette, QC), the Krupack Turcot Yards paperboard mill in Montreal,and the nearby Krupack Box factory in LaSalle, and was warmlygreeted by mill managers. These visits reinforced the message fromMonday’s visit to Candiac, these Canadian papermakers are masterrecyclers!

A fine dinner at Gibby’s in Old Montreal allowed ties to develop evenfurther as representatives from Kruger and Sandwell acceptedCERBA’s invitation to join the Russian delegation for the final eveningof the program.

CENTRE INTEGRE EN PATES ET PAPIER (CIPP)On the final day of the program, the delegation was greeted by PatriceMangin, General Director of the CIPP, a new integrated pulp andpaper research and training institute in Trois-Rivieres inaugurated oneweek earlier by the Quebec Minister of Natural Resources, equippedwith the latest research equipment as well as a full paper machinesupplied by GL&V. Vladimir Chuiko, Chair of BUMPROM was invitedto sign the Golden Book on behalf of the Russian delegation, andwrote "Herein lies the future of the Canadian Pulp and Paper indus-try " Director General of Syktyvkar Tissue Group Karen Samvelyanwas no less impressed with the visit and vowed to send his son totrain at the CIPP, where fully 50% of the student body is internationalwhich offers a full-range of specialized diplomas from college to doc-toral level delivered by the Trois-Rivieres CEGEP and Universite duQuebec a Trois-Rivieres.

CONCLUDING THOUGHTSThe demonstration of the complementary nature of our forest productindustries is stronger than ever. Kudos to the trail blazers, and anopen invitation to others able to capture the imagination of their own-ers and shareholders to develop the opportunities of this high-growthmarket, with a strong and very familiar natural endowment: the bore-al.

A special thanks to all those who helped make this year’s programpossible, including Margarita Sandal, at the Canadian ConsulateGeneral in St. Petersburg, Irina Litvinova at the Canadian Embassy inMoscow, Jo-Ann Roux in Montreal, as well as the EDC team inOttawa, Elena Settles and the CERBA team in Moscow and IgorsStepanovs in Montreal.

CERBA Quarterly News (spring 2007 )

10

Russian Delegation to Paperweek 2007Montreal, February 5�9

The Russianemploymentmarket has tra-ditionally pro-vided industrywatchers withe x t r e m e s .2007 is set tocontinue thepattern of thepast four years,it’s hardly newsthat it’s gettingtougher to find

good people, it’s still a headache to get reason-able people and the supply of entry level candi-dates is highly dependent upon the attractive-ness of your industry and the discipline. It’s notdifficult for a major, blue-chip multinational tosource, attract and retain the very best andbrightest fresh graduates but to get reliabletrainee hypermarket department managers is athankless and never-ending task. The Recruitment Industry � A

year of growth

There is an increasing array of new recruitmentfirms entering the Russian recruitment market.Russia has never been well catered for inbranded recruitment suppliers and companiesthat are household names in Central, WesternEurope or the USA are little know or not presenthere. 2007 will see more new entrants andthose who entered in 2006 will continue to forgetheir market share, eager to catch up for 15 orso years that the recruitment market has beenactive. The staple international "high streetagency" names like Kelly Services, Manpowerand Adecco focus on the blue collar / clericaland junior roles.

The quality, volume mid-level managementmarket is far more sparsely populated by brand-ed providers, there appears to be less kudosattached to being a volume managementrecruitment or search and selection firmalthough this represents by far the largest areaof demand from employers. This is the core ter-ritory of Antal and a host of smaller domesticproviders. Successful and experiencedrecruiters are ultimately drawn towards theworld of top-level search, far more competitiveand far fewer positions to fill. With a small num-ber of exceptions, companies tend to be smallniche "boutiques".The Russian Employment Market

� International Comparison �

Local peculiarities

With many of the smaller and medium sizedrecruitment firms privately owned and not forth-coming with accurate turnover figures it is noteasy to calculate the size of the Russian recruit-ment market, our estimate is a minimum ofUS$0.5billion per annum. This revenue is stillheavily fragmented across the full range of firmsfrom the small handful of major names employ-ing 100+ staff in multi-site networks, the mid-

sized firms with 25 - 50 staff and literally hun-dreds of independent consultants, sole traders,spin-offs and foundling and "lifestyle" recruit-ment firms. The industry has yet to see a lot ofserious merger and acquisition activity, 2006saw one big deal between two big names fallthrough, 2007 will probably see some moreinterest. The industry is probably ready forsome consolidation.

Compared to other markets in Central Europe,continental Western Europe and particularly theUK, recruitment here is still in its relative infan-cy. The talent pool of candidates in any contem-porary discipline, like sales, marketing, HR,even accountancy and law is still much youngerthan comparative candidates in other geo-graphical markets. It is common to see CVs of"experienced" Finance Directors (CFOs)General Managers and other senior manage-ment level candidates with less than 10 yearsexperience. In fact there is an expectation ofleaving university and moving straight into amanagement role! Candidates can study anarray courses preparing the virgin job hunter inmanagement, but this leaves the questionunanswered: managing what exactly?Candidates can expect to have their responsi-bilities grown consistently, not necessarilybecause of their outstanding abilities, but moreprobably the lack of alternative experienced tal-ent. It’s often better to have somebody with rel-atively little experience doing the job thannobody at all, and although some will fail, theadage, if they’re good enough, they’re oldenough is very true and many of today’s entre-preneurs and top managers are the result oftaking advantage of opportunities that would nothave been available in a more developedemployment market.

A differential is opening up between the dynam-ics of recruiting the "very best" talent and fillingthe mid ranking roles. It is not always the bestpolicy to go for "best of industry" talent. The var-ious salary surveys are always geared towardsaverage salaries, but the expectations of the top10 - 15% may be wildly outside the salaryranges quoted. Supply and Demand is toblame. New entrant companies are willing topay over the market salaries, they’re willing tooffset this cost of buying "off the shelf" talent, itwould be far more costly to invest in training andallow the time to develop staff, it’s cheaper totake people already up and running even atinflated prices. Although it’s true that most peo-ple have their price, the market has calmed sig-nificantly. Employees now value stability, non-financial benefits such as management culture,training, environment, the employer brand andcareer development opportunities. Job hoppingis still a market feature, but usually from compa-nies that are poorly managed, that have notmaintained market salary / bonus levels or arenot offering a good non-financial package. 2007may just be the year when the provision of pen-

sions makes begins to make an impact, butthere is a lot of work to be done by the pensionproviders to sell the benefits of this to the gen-eral workforce. This is work in progress.

2007 will continue to see companies moving topaying their staff more transparently. It’s almostincredible to think that many years after the13% income tax was brought in some compa-nies still insist on paying their staff "under thetable". More and more job seekers are realizingthat a small official salary is not enough to get amortgage or other bank loan. The tax authori-ties are also becoming a lot more sophisticatedin weeding out tax evaders and more important-ly the employers who promote these schemes.

Traditionally salaries were quoted in US$, andmore recently Euros, although probably paid inRoubles. As the local currency has strength-ened against the Dollar from 32 to the around26, real purchasing power of many US$denominated salaries has been eroded.Although most people are still more comfortablenegotiating in US$, employment contracts arenow more and more often quoting a Rouble fig-ure. Most firms have, or are at least urgentlyconsidering converting labour agreements intoRoubles, and using typically a floating exhangerate somewhere between Central Bank rateand 28 - 30 RUR / US$. Strangely enoughunlike most of Europe, it’s still the norm to quotenet figures here rather than gross. Of coursequoting a net salary on a labour agreementleaves an employer exposed to the full impactof any future tax hike.

These are without doubt Utopian times. Mostcompanies are expanding and increase indemand for good talent far exceeds the supplyof good candidates. Salary inflation, althoughnot racing out of control, is certainly making thismarket one that favours the employee.Employers need to be increasingly creative tosecure and retain staff. Companies are nowrealising that it’s often better to take inexperi-enced but highly motivated talent, the "big 4"consulting firms and major FMCG companieshave really driven talent acquisition from thegood university and institutes. It’s however truethat whilst some are taking full advantage, pow-ering their careers forward and making the mostof playing the career game, many others fail tosee that this is one of the most exciting anddynamic employment markets in the world.Candidates are still attracted to working over-seas where the opportunities are fewer and therate of progression slower. They are also pre-pared to exit the employment market complete-ly to pursue MBAs or other qualifications.Putting a career on hold, even for a year in thisfast paced market has a huge opportunity costthat will take many years to recover from whenthe economy does cool down. Which, as in anyeconomy, it will do one day, but certainly not thisyear, or probably even next.


11

Employment in 2007 � Who wins and loses? Luc Jones, Partner � Technology & natural

Resources, Antal International Russia/CIS

On February 21, 2007 Kinross GoldCorporation announced its unaudited results forthe fourth quarter and year ended December31, 2006.

This past year has been outstanding for Kinrossand I am proud of the performance our employ-ees have delivered," said Tye Burt, Presidentand CEO of Kinross. "This quarter, and indeed2006, has seen record revenues, cash flow andearnings for the Company. The Kinross teamhas been completely focused in the drive tomeet and exceed our targets."

"Positive financial results were accompanied bythe significant increase in our gold reservesyear-over-year. This is due to additions fromexploration and soon will be supplementedthrough the planned acquisition of Bema Gold,"said Burt. "Kinross’ disciplined strategy is pay-ing off for investors."

Highlights- Gold equivalent production was 362,028ounces in the fourth quarter of 2006 and1,476,329 ounces for the full year, both abovetarget.

- Revenue was $231.4 million in the fourth quar-ter, a 22 percent increase over the same periodlast year, and the average gold price realizedwas $615 per ounce of gold sold. Full-year rev-enue was a record $905.6 million, a 25 percentincrease over the same period last year, andthe average gold price realized was $604 perounce of gold sold.- Cost of sales per ounce was $317 in the fourthquarter on sales of 375,684 gold equivalentounces, and $319 for the full-year on sales of1,510,836 gold equivalent ounces.- Net earnings for the fourth quarter were $41.0million or $0.11 per share (diluted), compared toa net loss of $154.3 million or $0.45 per sharein the same period last year. Net earnings forthe full-year were a record $165.8 million or$0.47 per share (diluted), compared with a netloss of $216.0 million in the same period lastyear. Net earnings in the fourth quarter werereduced by $0.01 per share (diluted) as a resultof the impairment of certain long-term invest-ments, partially offset by a gain on asset sales.- Cash flow from operating activities was $91.2million in the fourth quarter and $292.0 millionfor the full-year compared to $23.8 million and$133.7 million for the comparable periods in2005. The cash position was $154.1 million atDecember 31, 2006 compared to $97.6 millionat December 31, 2005 and total debt was $89.9million at December 31, 2006 compared to$159.3 million at December 31, 2005. - Capital expenditures were $65.3 million in thefourth quarter and $202.9 million for the full-year. - Proven and Probable Mineral Reserves atDecember 31, 2006 increased by 3.1 millionounces of gold, net of 2006 production, to 27.9million ounces, a 13 percent increase over yearend 2005. These amounts do not include theeffects of the Bema acquisition.- Production for 2007 is expected to be approx-imately 1.5 million gold equivalent ounces at acost of sales per ounce in the range of $320 to$330. Beyond 2007, gold equivalent productionis expected to grow to 1.6 to 1.7 million ounces

in 2008 and 1.8 to 1.9 million ounces in 2009.These amounts do not include the effects of theBema acquisition.- The Bema Gold acquisition will close onFebruary 27, 2007, subject to customary clos-ing conditions.

About Kinross Gold CorporationKinross, a Canadian-based gold mining compa-ny, is the fourth largest primary gold producer inNorth America and the eighth largest in theworld. With eight mines in Canada, the UnitedStates, Brazil and Chile, Kinross employs morethan 4,000 people.

Kinross maintains a strong balance sheet and ano gold hedging policy. Kinross is focused on astrategic objective to maximize net asset valueand cash flow per share through a four-pointplan built on growth from core operations;expanding capacity for the future; attracting andretaining the best people in the industry; anddriving new opportunities through explorationand acquisition.

Kinross maintains listings on the Toronto StockExchange (symbol:K) and the New York StockExchange (symbol:KGC).


12

Kinross Gold achieves record Fourth Quarter and

Full�year resultsFull�year revenue increases to $906 million and earnings per share to $0.47, production ahead of target and operating

cash flow more than doubles

Export Development Canada (EDC)announced on February 27, 2007 that it hassigned a USD 50 million Line of Credit (LOC)with Bank UralSib (UralSib), one of Russia’sleading private banks.

EDC has entered into this LOC to facilitatethe purchase and financing of goods andservices from Canada into the Russian mar-ket. The financing facility is multi-sectoral andcan be used to finance for small and largetransactions.

"This facility is pre-negotiated," said RodLever, Chief Representative for EDC basedin Moscow. "What that means that EDC andUralsib have agreed on all terms and condi-tions, including legal issues beforehand.Transactions can therefore be turned aroundmuch quicker, and this can help Canadianfirms and their Russian partners to completetheir business in a more efficient manner."

"EDC’s positive working relationship withUralSib has led to excellent growth and sales

opportunities for Canadian exporters, particu-larly in the agricultural equipment sector."said Eric Siegel, President and CEO of EDC."Having already financed several transac-tions with UralSib over the years, this newline of credit will expand our relationship withone of Russia’s foremost commercial banks."

EDC business volumes in the Russian mar-ket have grown considerably in the past threeyears, from CAD 203 million in 2004, CAD502 million in 2005 to CAD 756 million in2006. EDC currently facilitates approximately70 per cent of Canada’s trade with Russia.

EDC has been most active in Russia withinthe agricultural equipment, telecommunica-tions, mining and forestry sectors, but hasalso identified oil & gas, infrastructure andtransportation as growth sectors.

About Bank UralSibBank Uralsib is a privately owned financialinstitution. The merged UralSib ranks 4thamong Russian banks by capital and 6th by

assets. UralSib’s retail banking network of528 offices in 81 different regions is the sec-ond largest in Russia and the most extensiveamongst privately owned Russian banks.UralSib provides a wide range of financialservices including commercial, retail, invest-ment and corporate banking as well as pri-vate banking, insurance, brokerage, custodyand asset management services. Corporatebusiness is a core activity of UralSib with theBank making available a full range of tradi-tional banking products. These servicesinclude treasury, banking, project and tradefinance, structured finance and investmentservices.

Contact: Rod Lever, Chief Representative,EDC Russia & CIS, Canadian Embassy, 23,Starokonyushenny Pereuluk, Moscow119002 Russian Federation, +7 495 1056095


13

EDC finances USD 50 million line of credit with

Russia's UralSib Bank

Canada Russia Business

Summit

Partners, Progress and

Prospects

March 26�27, 2007 Ottawa,

Canada.

Российско�Канадский

Деловой Саммит

под девизом "Партнёры,

Прогресс и Перспективы"

26�27 марта 2007 г., Оттава,

Канада

Platinum Sponsors:

Gold Sponsors:

Silver Sponsors:

KUDU Industries Inc. is very proud to announce a recent joint venturepartnership with CANAROSS of Russia. On December 7, 2006, theagreement was signed and KUDU Industries acquired a 50% share inCANAROSS. This event is two-fold. Firstly, it conveys the messagethat Canadian companies can successfully conduct business inRussia. Secondly, it demonstrates that foreign companies are not onlyinterested in exploring the Russian oil and gas reserves but also viewthe country as an attractive market for investment. KUDU Industries Inc. is a world class manufacturer of complete PCPsystems for a wide range of oil and gas field applications.Headquartered in Calgary, Canada, the company was founded byRobert and Ray Mills, dedicated Canadian engineers, in partnershipwith PCM Pompes S.A. of France. PCM was established by ReneMoineau, the inventor of the Progressing Cavity Pump.

In addition to PCP equipment, KUDU also manufactures an array ofpower units designed to ensure a continuous power supply for remoteproduction sites. KUDU power units provide both hydraulic and elec-tric power to single and multiple wells. These units are currently oper-ated in a variety of environments including northern Canada; theAustralian deserts and in the mountain districts of Colombia.

While committed to developing cutting-edge technology, KUDUremains focused on cost effective solutions that minimize labourexpenses along with power and metal consumption. KUDU alsoembraces on-going improvements to quality, reliability and safety ofits equipment through design simplicity and low maintenance require-ments. Additionally, KUDU’s expanded international operations haveenabled the company to be the leading supplier of PCP systems formany prominent markets including Venezuela, Australia, andColombia.

CANAROSS was founded in 1994 with an initial concept to manufac-ture sucker-rod scrapers. Throughout the years, CANAROSS contin-ued to remain the leading supplier of scrapers in Russia, primarily asa result of the company’s ongoing commitment to technology andinnovation.

In 1999, CANAROSS expanded its portfolio in Russia to include PCP

system design and technical services. Later that year, CANAROSSdeveloped and launched a CVN - a centralizer for PCP applications.Moreover, fully utilizing its manufacturing facilities enabled the compa-ny to set up a service centre, which featured a test bench and exten-sive inventories.

The Russian oil producers were now able to buy the necessary equip-ment locally; which resulted in unsurpassed delivery times, as therewere no more delays related to import contracts and foreign currencyexchange. At the present time, CANAROSS offers a variety of prod-ucts and services ranging from the supply of PCP equipment to instal-lation and maintenance. The CANAROSS team consists of Canadianand USA trained specialists. CANAROSS’ dedication to innovation,technology and continued improvement along with a customerfocused approach, has enabled it to become the leading PCP providerin the CIS market.

The company is registered in Russia, and headquartered in Perm.

Excerpts from an interview the Oil & Capital Magazine conducted withMr. Ray Mills and Mr. Alex Shushkovsky.

Oil &Capital: Mr. Mills, could you please explain what was thecrucial factor determining your joint venture with CANAROSS?

The prime reason behind a decision of this kind is an attractive mar-ket. However, that is not the only factor to consider when entering intoa long-term investment. We also had to consider factors such as polit-ical stability and economic security in Russia. In addition, it was veryimportant to have a reliable and experienced partner who already hasa well-established reputation.

In 1978, when I visited Russia for the very first time, the countryshowed no signs of market economy. Having said that, the changesthe country has undergone in the last few years can be called nothingbut a dramatic transformation. Now the signs are becoming clear thatit is a good time for long-term investments. As for a business partner,it was not difficult to make our choice. CANAROSS is a well knownname and following the first visit of our management team to Permthere was no doubt about who we would like to see as our partner.We were impressed with several attributes of the company includingthe high level of skill represented by the personnel at CANAROSS,deep knowledge of PCP technology, corporate culture and, last butnot least, great work environment.

Our personal contacts with Alexander Shushkovsky, the president ofCANAROSS, added value to the project and convinced us that theproject would be a success. Altogether, there was a very favorablecombination of factors that eventually led to signing the deal.


14

KUDU Industries Inc. Announces a Joint

Venture with CANAROSS of Russia

O&G: Mr. Shushkovsky, speaking about this project, what areyour expectations? Do you expect any specific changes in howCANAROSS operates?

It is very important for us to have such a recognized partner as KuduIndustries. And it is not only because of image. Our numerous meet-ings with the KUDU management team, including Ray Mills convincedus that we share the same vision and understanding of businessdevelopment.

I have to admit that I have known about KUDU Industries since 1993and I can confirm that the company not only achieved a well-estab-lished position in the global market but has also developed cutting-edge technology, which we hope to bring and develop locally in thenear future.

Most of the foreign companies currently active in Russia supply theirequipment from distant manufacturing facilities, which result in exten-sive lead times. At best they might have warehouse facilities inRussia. However, they maintain small inventory, which does not allowto effectively address the needs of all customers. This project pres-ents an opportunity for us to fulfill customer requests and provide thebest quality equipment and services in the shortest possible time. Andfirst and foremost, this agreement will be of benefit to the customer.Taking everything into account, CANAROSS has good reasons toexpect new customers and new orders. In addition, this joint venturewill call for a new corporate image, salary adjustments and a furtherdevelopment of the Russian technology.

15



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CEBRA would like to thank its sponsors for their commitment to making the

association a success.

cerba quarterly news (spring 2007) · 03 cerba quarterly news (spring 2007) presence would be...

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