Diamond mines in Canada at risk – by Matthew McClearn (Canadian Business Magazine – May 04, 2012)

Founded in 1928, Canadian Business is the longest-publishing business magazine in Canada.

Diamonds are symbols of permanence. Some—thought to have arrived on meteorites—may be 10 billion years old, more ancient than the planet itself. The fortunes of diamond mines, by contrast, can be protean. That’s worrisome for the Northwest Territories, home to Canada’s two largest diamond mines, Ekati and Diavik. Since November, their majority owners (multinational mining giants BHP Billiton and Rio Tinto, respectively) both have commenced reviews of their diamond operations, effectively putting both mines up for sale. Some analysts speculate these reviews could result in individual mine sales or initial public offerings of entire diamond divisions.
Canada’s diamond industry has also reached a crossroads, for related reasons. It’s been more than two decades since geologists Chuck Fipke and Stewart Blusson discovered diamond-rich kimberlites in the N.W.T., sparking the biggest staking rush in Canadian history. Their Ekati mine, developed in partnership with BHP, opened in 1998. Rio’s Diavik followed in 2003. It’s tough to understate these mines’ impact on an industry characterized for most of the 20th century by monopolistic practices. By the early 2000s, Canada had become the world’s third-largest diamond-producing nation, behind Botswana and Russia. Our mines helped break the famed De Beers cartel.
It couldn’t last forever, though. In 2007, two men pondered the industry’s future. Tom Hoefer, then manager of public affairs at Diavik, warned at a conference that the industry needed to ramp up exploration. Canada’s mines were all old discoveries, and it was taking ever longer to bring new ones into service. Meanwhile Dennis Bevington, MP for the Western Arctic, issued a report noting the diamond industry had come to account for half of all economic activity in the N.W.T. Ekati and Diavik were harvesting ore at rates exceeding original targets. As good as that may have been for profitability, he warned, it had ominous implications for sustainability.
Both observations proved prescient. Canada’s diamond production peaked that year above 16 million carats. It’s been falling ever since, dipping below 10 million carats last year. At Ekati, old pits are being closed, and their successors are smaller. Talk of extending its life by as many as 20 years has faded; closure is now expected in 2018. Production at Diavik is expected to jump this year, but it too has limited life left. Rio puts it at “10-plus” years. Canada’s newer mines, such as De Beers’ Snap Lake, or those in development (like Gahcho Kué, a joint venture between De Beers and Mountain Province Diamonds currently in environmental assessment) aren’t large enough to fill the void.
For the rest of this article, please go to the Canadian Business Magazine website: http://www.canadianbusiness.com/article/81046–diamond-mines-in-canada-at-risk

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