Colorado

companies

are finding

success with

ventures in

the former

Soviet Union

In the fall of 1990, Joe Kowalik stood at the edge of the Muruntau open gold pit in central Uzbekistan, staring in awe at the piles of dirt before him. The senior geologist at Newmont Gold Co. suspected they contained low-grade ore that could be commercially feasible using a process called heap leaching.

His hunch proved right. Seven years after Kowalik's initial visit, the first by a foreigner, Newmont manages one of the most successful joint ventures in the former Soviet Union. This year, the $225 million project is expected to produce 415,000 ounces of gold from Muruntau, despite the current slump in gold prices. Newmont forecasts that during the project's 17-year lifespan, 200 million tons of low-grade ore will be processed, netting 4.8 million ounces of gold - and millions of dollars in profit.

"What I really did was plant a seed," said Kowalik, now Newmont's director of exploration for Central Asia. "But it's as they say, the early bird gets the worm."

Kowalik

Newmont is just one of a number of Colorado-based companies doing business in the former Soviet Union. Others include:

·Golden-based Superconducting Core Technologies Inc. and Englewood-based U S West Inc., are both involved in telecommunications projects in former Soviet republics or Soviet Bloc countries.

· Lockheed Martin Astronautics, which has a Denver-area plant, is working with the Russians on a rocket-engine project that is part of a U.S. effort to help Russia convert its military to commercial undertakings.

· Holme Roberts & Owen is a Denver law firm that has offices in Kiev and Moscow where it serves business clients.

· The National Renewable Energy Laboratory, a government contractor in Golden, is working with various U.S. companies to

Firms adapt to Asia

help them capitalize on potential business opportunities in the former Soviet Union.

While the number of Colorado investments in the region are still relatively small - totalling about $500 million - the experiences of these companies offer a lesson on what works and what doesn't work in. Business in this part of the world.

Colorado executives operating in the former Soviet Union said several critical elements are necessary to ensure a project's success. Western companies need to: adapt to cultural differences; withstand frequently changing internal legislation; be prepared to go over budget; provide training to workers from the former Soviet republics; and have the patience to see a project through to the end.

But most importantly, American companies must develop the trust of their local partners.

"You need loyalty," said Margaret McLean, an attorney at Holme Roberts & Owen, which set up two offices in the former Soviet Union. "That can't be bought with money."

If trust hasn't been established between foreigners and local partners, cultural differences may become major problems that affect productivity, said John Brownlie, general manager of Newmont's joint venture, which is located in Zarafshan, a dusty city of 25,000 found in the middle of Uzbekistan's Kyzylkum desert.

Brownlie said that in 1995 - not long after Newmont finished construction of its Zarafshan ore processing plant - management realized a problem in communications had developed between the foreigners working at the mine and the nationals. The misunderstandings and cultural differences had become barriers to running a smooth operation.

Newmont had entered into the joint venture with Uzbekistan's geology ministry, Zarafshan-based Navoi Mining and the Mettalurgieal Combinat in 1991, not long after the breakup of the Soviet Union. While most workers were Uzbek nationals, top management initially was comprised primarily of expatriates.

But since many of the national managers spoke at least some English, Newmont officials knew the issues transcended language. To determine just where the problems existed, Newmont brought in an outside consulting firm, Boulder-based Tucker International.

"We wanted to find out what the cultural issues were, where the trust was, where the breakdown in trust was, where the understanding was and wasn't," said Brownlie.

One revelation to Newmont managers was how the nationals perceived a business plan. Most U.S. companies see a business plan as a fluid document, which can be changed when necessary. Not so for the nationals.

Under the Soviet system, a plan was something set in stone because it came down from the top. Any shortfalls meant managers or directors would be punished or demoted.

The nationals have since become more flexible in meeting targets, said Anatoliy Bartholomiyev, Brownlie's assistant.

Nationals also learned to break down barriers related to rank.

"In our (Soviet) system, relationships between people was based on a certain hierarchy," said Bartholomiyev, in a phone interview from Uzbekistan. "But in your country, the individual, rather than his rank, is the main thing. People are more equal."

Consequently, even line workers have become more comfortable interacting with managers and less afraid to give suggestions, he said.

Also, the nationals learned it's important to react quickly to questions posed by management. That wasn't the norm under the Soviets.

"We now see that the saying 'time is money' is true," said Bartholomiyev, who is from Ukraine and was invited by the Uzbek government to work on the joint venture.

But Bartholomiyev maintains the foreigners also learned an important lesson: Don't underestimate the educational level of the people in the former Soviet Union.

"I think it's the fault of your propaganda, but (Newmont's) people weren't prepared for how much we know. Yes, we have economic problems resulting from the breakup of the Soviet Union. But we are smart. Our specialists are highly trained," he said.

. . .