Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. This article was published in the February, 2011 issue.
Sudbury diamond polisher sparkles
Would you believe that one of the largest diamond cutting and polishing facilities in North America is in Sudbury? While consumers view the stunning array of diamonds in the jewelry display cases, Crossworks Manufacturing Ltd., a cutting and polishing manufacturer headquartered in Vancouver, is busy working behind the scenes.
This unassuming, low-profile Sudbury facility prefers to fly under the radar because of the nature of its business and the millions of dollars of product with which it deals. Thirty of its 32 employees in Sudbury came from Vietnam and have a minimum of 10 years experience, further emphasizing the value of the product and the importance of accuracy.
Crossworks’ two Canadian cutting and polishing factories survived the global financial crisis that left other diamond manufacturers bankrupt. It now has the only cutting and polishing game in the country.
“We’re a lean, mean fighting machine,” said Dylan Dix, Crossworks’ marketing director. “We built all this during one of the worst downturns since the Great Depression.”
The company opened its Yellowknife facility in the Northwest Territories in 2008 in response to the commissioning of De Beers Canada’s Snap Lake Mine.
A few months later, it received the contract for the Victor Mine diamonds in Attawapiskat, resulting in the startup of the Sudbury facility in August 2009.
During the recession, its Sudbury operation doubled its initial space in less than a year to accommodate automated polishing equipment.
As well, its facility touts some of the world’s leading technology for cutting diamonds.
Named after the process of crossworking in which the first eight primary facets (faces) are placed on a diamond, the 50-year company is part of the HRA group of companies with its roots stemming from the SunDiamond Group in Antwerp, Belgium.
HRA has been in Canada since 1982, but opened its first manufacturing facility in 2000 in Vancouver, B.C.
Crossworks’ ability to survive and grow is partly due to the fact that it cuts and polishes made-in- Ontario diamonds, a prominent selling feature that is gaining popularity.
The diamonds from Northern Ontario’s Victor Mine are exceptionally high-quality gemstones. Marketed as a Canadian treasure, Dix describes them as diamonds of the finest quality and most sought after in the world.
He likens the diamonds to cattle that only produce cream.
There may not be many carats per tonne, but the quality of the carats being mined is “phenomenal.”
Dix compared the average run-of-mine (a sixweek production cycle) between the De Beers’ Snap Lake Mine diamonds and the ones from Victor Mine: Snap Lake is roughly $100 per carat, while Victor diamonds are about $400 per carat or more – “an anomaly amongst mines.”
Another advantage is that Crossworks receives a guaranteed 10 per cent of the diamonds due to a negotiated social economic agreement between the Ontario government; the Ministry of Northern Development of Mines and Forestry (MNDMF); De Beers Canada; and the Diamond Trading Company (DTC), the marketing and distribution arm of De Beers.
The agreement was struck as a move to create a value-added industry for the province. “Technically, we are the only company in the world to get exclusively Victor rough (diamonds),” Dix said.
The reason is that De Beers’ business model is such that its rough diamonds, from all of its mines located throughout the globe, are brought to England for production sorting and aggregation. Production sorting is the classification of the various sizes, shapes, colours and clarities of rough diamonds into one of 12,000 categories used by the DTC.
The diamonds are then aggregated and split into appropriate types and quantities to be sold to clients. The clients are called sightholders, of which Crossworks is one of 78.
An extensive three-step inspection process occurs with provincial government representatives to ensure that the 10 per cent rough diamonds are authentic Victor-mined Ontario diamonds.
Together with diamond valuers from England, they go to the mine site every six to seven weeks to valuate the run-of-mine for royalty purposes for the Ontario government.
Those diamonds are sealed and sent to England, which then go through a rigorous physical and computerized process to separate the 10 per cent by value.
The diamonds are weighed, recorded, parceled, and sealed, with assigned seal numbers.
“I go to England to ensure that we did get that 10 per cent,” said Ron Gashinski, a chief gemmologist with the Ministry of Northern Development, Mines and Forestry. “We compare the 90 per cent that De Beers keeps with the 10 per cent we keep and make sure it is proportional.”
The second stage involves Crossworks reviewing the 10 per cent set aside by the government.
The seals are opened, diamonds reviewed and then sealed again.
Upon approval, the diamonds are paid for and then shipped to the Sudbury facility.
They cannot be opened until a government official is present.
“We look at all the seals, all the numbers… it goes back to the chain of custody which is crucial for the Ontario government’s certificate of origin,” Gashinski explained.
This builds on the Kimberley Process, which closely tracks the origin of the diamonds to ensure the pedigree.
This means that if a Victor diamond was purchased in a local jewelry store, the stone can be tracked within a six-week period from the time it was mined.
While the governments of Canada and England are responsible for issuing a Kimberley Certificate from Canada to England as well as from England back to Canada, the provincial government officials affirm the weight and value of the diamonds.
By the end of 2010, at least $50 million worth of diamonds had been cut and polished at the Sudbury facility.
In order to build local capacity, two Sudbury trainees are learning the trade.
“We can get people up to speed relatively quickly in six months,” Dix said. “Realistically, it takes two to four years to really get into the full capabilities and operate close to the level of our experienced polishers.”
Part of the plan is to develop and train qualified people, bringing between two and four new trainees on board every quarter.
Although Crossworks prefers to train people with a blank slate, it has also been working with Georgian College, which has an established jewelry and metals program.
“Some of the work we’re doing in places like Georgian College could benefit our operation in polishing and developing the next generation of jewellers, which is part of the future of our business in Canada,” Dix said.
Behind the scenes, Crossworks distributes to more than 25 stores in Ontario, and works with a number of chain jewelry retailers in the United States that carry a Canadian program.
One of its newer patented cuts is its perfectly cut square with slightly cut corners.
It exhibits a hearts and arrows pattern, designed to maximize refracted light.
These innovative cuts are some of the selling features that have made it possible for the manufacturer to compete against companies operating in China and India, where production costs are low.
Other marketing strategies involved a specially designed necklace containing 75 carats of rough diamonds from the Victor Mine worth $1 million.
It was promoted and worn by actor Allie MacDonald, star of SCORE: A Hockey Musical, during the opening of the Toronto Film Festival, bringing to the fore the raw, natural beauty of Ontario diamonds.