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Diamonds – Mining, Lab-Grown and Conflict/Blood

Excerpt from “The History of Mining: The events, technology and people involved in the industry that forged the modern world” – by Michael Coulson

To order a copy of The History of Mining please click here: http://www.harriman-house.com/products/books/23161/business/Michael-Coulson/The-History-of-Mining/

SIR ERNEST OPPENHEIMER (1880-1957)

It is impossible when considering mining in the 20th century not to place the Oppenheimer family at the centre of the development of the South African industry, one that is pre-eminent in the production of precious metals. Sir Ernest Oppenheimer played a crucial role in establishing the Anglo American group and, as Chairman of De Beers, in organising the modern diamond-trading cartel, the Central Selling Organisation, now much reformed.

Sir Ernest was born in 1880 in Freidberg, Germany, where his father Edward was a cigar merchant. The Oppenheimers were a large German Jewish family with excellent connections, particularly in the diamond business in England. When he was 16 he went to England and started work as a clerk in the London office of diamond merchant A. Dunkelsbuhler, who was his cousin, and became a naturalised Briton.

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Blockade halts traffic to diamond mine – by Ron Grech (Timmins Daily Press – February 6, 2013)

The Daily Press is the city of Timmins broadsheet newspaper.

TIMMINS – A team of De Beers executives were scrambling late Tuesday afternoon to meet with a small number of protesters in Attawapiskat who had been blockading the winter road into the Victor diamond mine since Monday night.

While the mine was able to continue operating, company officials reported the blockade was preventing supplies from being brought to the mine.

“Currently the operations of the mine are not interrupted but the work on the road is interrupted – so the resupply to the mine is standing down until it is resolved,” Ashley Brown, senior communications specialist with De Beers, told The Daily Press.

Supply trucks stopped on the road by protesters were carrying “non-perishable consumables like fuel and oil and different mechanical parts, and tires and camp items and new equipment and that sort of stuff,” Brown added. “We use the winter road for those sort of things that are too heavy to economically fly into the mine.”

He said the company was sending an “executive team” to hold talks with the protesters in an effort to resolve the conflict. Brown said the protesters had provided no indication of how long they intended to maintain the blockade.

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Helping developing countries and the mining business – by Ian Smillie (Ottawa Citizen – January 25, 2013)

 http://www.ottawacitizen.com/index.html

Ian Smillie, Ottawa-based author of Blood on the Stone: Greed, Corruption and War in the Global Diamond Trade, chairs the Board of the Diamond Development Initiative.

Throughout 2012 Canadians were treated to an unedifying debate about whether and why the Canadian International Development Agency (CIDA) should co-finance development projects with Canadian mining companies abroad. The debate arose when CIDA contributed to projects in Africa and South America run by Canadian NGOs and co-financed by three different Canadian mining companies. The projects have vague connections with mining — mainly with mining-related education. But in truth they do not bear directly on any of the companies’ operations.

“Effective partnerships!” said then CIDA minister Bev Oda, a sentiment echoed by current CIDA Minister Julian Fantino. “Subsidies for mining companies!” said the critics, claiming that CIDA should not be funding activities that fall within the ambit of a company’s own corporate social responsibility. CIDA’s mandate, after all, is to end poverty, not to promote Canadian mining companies abroad.

The criticism of CIDA was shrill, however, and much of it was not very well grounded. One of the Canadian firms in question sold its Ghanaian interests to a Chinese firm in 2010, so whatever the critics might think CIDA is promoting there, it isn’t a Canadian company. Those in the “For” camp contributed to the confusion, saying that foreign direct investment is far superior to aid handouts, and that Canadian mining companies actually purvey considerable amounts of development in their own right. In a Toronto speech, Julian Fantino added to the turmoil, saying that “CIDA is committed to contributing to Canada’s long-term prosperity and security.”

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BHP Billiton JV partner sues over sale of Canadian diamond mine – by Henry Lazenby (MiningWeekly.com – January 17, 2013)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – A joint venture (JV) partner is suing BHP Billiton over its plan to sell its stake in the Ekati diamond mine and surrounding exploration properties, in Canada, to miner and luxury goods manufacturer Harry Winston Diamond.

C Fipke Holdings (Fipco) has started an action in the Ontario Superior Court of Justice against BHP Billiton Canada and certain of its affiliates, Harry Winston and its subsidiary Harry Winston Diamond Mines, as well as against Dr Stewart Blusson (Blusson) and Archon Minerals, alleging that the offers made by BHP Billiton to Fipco do not comply with Fipco’s pre-emptive rights under the JV agreements for the Ekati mine.

Harry Winston in November 2012 said it had agreed to buy from BHP Billiton an 80% interest in the Core Zone JV and a 58.8% interest in the Buffer Zone JV for about $500-million.

Under the purchase agreement, BHP Billiton offered its interests in the JVs to Fipco, Blusson and Archon, the minority JV parties. Fipco, which holds a 10% interest in each of the Core Zone and Buffer Zone JVs, also alleges in its statement of claim that, among other things, Harry Winston’s debt financing arrangements for the acquisition have interfered with Fipco’s ability to arrange its own financing.

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Harry Winston to focus on mining after deal with Swatch – by Pav Jordan, Bertrand Marotte (Globe and Mail – January 15, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

TORONTO and MONTREAL – Harry Winston Diamond Corp. is selling its storied luxury retail unit to Switzerland’s Swatch Group Ltd., leaving the company to focus squarely on the business of mining after eight years as a high-end jeweller.

Months after the company said interested parties were circling its diamond jewellery and watch business, Harry Winston said on Monday that it’s selling the operation to Swatch for $750-million (U.S.), giving it a healthy cash injection as it eyes an industry ripe for consolidation.

Including $250 million in assumed net debt, the deal has an enterprise value of $1-billion, worth nearly three times what Harry Winston paid for the assets.

For Swatch, the world’s number one maker of finished watches, the deal fills a gap in the high-end jewellery business after the collapse of a partnership with Tiffany & Co. in 2011. “It’s a match made in heaven,” said Jon Cox, head of Swiss research with Kepler Capital Markets in Geneva.

Once the deal closes, Harry Winston is to be renamed Dominion Diamond Corp., its latest move in recent months to push deeper into diamond mining after agreeing in November to buy a controlling stake in Ekati, Canada’s oldest diamond development, from BHP Billiton Ltd.

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The real story behind Attawapiskat’s problems – by Thomas Walkom (Toronto Star – January 9, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Making sense of Attawapiskat is not easy. The James Bay native community is synonymous with poverty. But it sits next to a diamond mine. Its chief, Theresa Spence, has become famous across Canada because of the hunger strike she is waging on an island in the Ottawa River.

She insists she’ll only consume liquids until Prime Minister Stephen Harper meets with her (which he has agreed to do). But what does Spence want from that meeting? This is less clear. She talks vaguely of a new relationship between aboriginal first nations and the federal government.

We now know, thanks to a detailed audit of Attawapiskat’s finances commissioned by Ottawa, that the first nation’s bookkeeping leaves much to be desired.

Auditors from Deloitte and Touche concluded that roughly 80 per cent of the detailed spending transactions they investigated came with little or no paperwork, making it unclear how the monies were spent.

Yet oddly enough, another auditing firm — this one based in Timmins — has regularly been okaying the band’s annual financial statements, all of which are available on the Attawapiskat website.

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Poor managing on reserves hurts the young the most – by Christina Blizzard (Toronto Sun – January 8, 2013)

http://www.torontosun.com/

TORONTO – Just when you thought it was safe to stick your toe back into the murky waters of government accountability, along comes Finance Minister Dwight Duncan, all a-Twitter about the leak of an audit report on Attawapiskat.

“Tough love the rallying cry of the cowards who ‘leak’ these ‘audits’. Too much tough not enough love for our aboriginal bothers and sisters,” Duncan tweeted Monday.

Give me a break. Try too much pot calling the kettle black. As a politician, Duncan was part of a government that regularly leaked documents in order to get out their spin. But when the Tories do it, it’s cowardice? It sure explains why this province is in such dire economic straits.

If he really believes it’s acceptable for the band council in Attawapiskat to spend more than $100 million without adequate documentation, then is it any wonder this province is broke?

A scathing audit report by the accounting firm Deloitte found in random audits of transactions from April 1, 2005, and Nov. 30, 2011, 81% of the files didn’t have adequate documentation.

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Israel recruiting ultra-Orthodox for the diamond industry – by Ari Rabinovitch and Tova Cohen (Reuters/Toronto Star – January 6, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

RAMAT GAN, ISRAEL —Diamond manufacturing is a dwindling trade in Israel. The country has one of the world’s hottest diamond exchanges, but polishers and cutters of the precious stones have been replaced by cheaper workers in newer hubs like India and China.

Israel wants to bring them back. To do so, it plans on recruiting a legion of ultra-Orthodox Jews, who because of their dedication to prayer and study, have been unable or unwilling to join the work force, putting a heavy weight on the economy.

The job of a diamond polisher, however, is unique, said Bumi Traub, president of the Israel Diamond Manufacturers Association. It need not disrupt their pious lifestyle.

“The profession is fitting. You deal with the rock, and if you need to go pray, no one will bother you,” he said. The door to Traub’s office requires a fingerprint scan. Security is tight in the four-building exchange where annual turnover of trading reaches $25 billion (U.S.) each year.

About a third of rough diamonds produced in the world each year pass through the Jewish state and diamonds account for more than one-fifth of the country’s industrial exports. It was a natural sector to develop when Israel was founded 64 years ago, since the small stones have been choice merchandise for generations of Jews who had to quickly flee from riots and persecution.

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Simplistic arguments from Theresa Spence, Idle No More could have tragic consequences for natives – by John Ivison (National Post – January 3, 2013)

 The National Post is Canada’s second largest national paper.

“De Beers is investing $1-billion in the Victor mine near Attawapiskat. It agreed to pay
the band about $30-million over the 12-year life span of the mine. A further $325-million
in contracts has been funnelled through companies owned by the band, to supply catering,
helicopters, dynamite and the like. One wonders how Attawapiskat Resources Inc. has only
made profits of $100,000 on that level of revenue, but that’s for another day.” (John Ivison)

I made the observation on Twitter the other day that certain native leaders seem intent on conflict, and that they want the “hapless” Theresa Spence, the hunger-striking Attawapiskat First Nation chief, to become a martyr.

The reaction was venomous. One of the more considered respondents, Gerald Taiaiake Alfred, called me a “racist p—k” and threatened to kick my “immigrant ass” back to Scotland. And he’s a political science professor at the University of Victoria.

It brought home the power of what psychologist Jonathan Haidt calls “the righteous mind” — the righteous certainty that those who see things differently are wrong, while being completely blind to our own biases.

The prospect of rational debate on this subject is slipping away — and may be lost entirely if Ms. Spence dies. Canada is facing a tumultuous moment in its history with its native people, such as we haven’t seen since the Oka crisis.

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Quebec miners in holding pattern as province finalizes royalty, exploration rules – by Nicolas Van Praet (National Post – November 26, 2012)

The National Post is Canada’s second largest national paper.

MONTREAL — Companies mining in Quebec are expected to ship $9.6-billion worth of minerals this year, double the amount exported only five years ago. But the boom taking hold is being complicated by political uncertainty and competing visions over just how far taxpayers should go in backing companies digging valuable resources in their midst.

Quebec’s Chambers of Commerce Federation says several companies have told its officials they are currently suspending new natural resource and mining investments in the province until the Parti Québécois government finalizes a royalties regime and further clarifies exploration rules. But even established companies tapping existing mines are experiencing growing pains and finding it’s next to impossible to build definitive societal consensus for their projects.

Two particular events illustrate the difficulty miners are having in keeping Quebecers on side.

On Monday, Osisko Mining Corp., the Montreal-based firm operating Canada’s largest open-pit gold mine in Malartic near Val D’Or, confirmed that the head of the independent citizens committee monitoring the mine through to its eventual closure quit. Bernard Gauthier’s resignation came after another member of the seven-person committee said over the weekend the entire group was poised to quit on Wednesday to protest the alleged heavy-handedness of the company in their affairs.

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An Industry Struggles to Keep Its Luster – by John Tagliabue (New York Times – November 6, 2012)

http://www.nytimes.com/

ANTWERP, Belgium — Step off the train here and you cannot miss the signs on the stores: Diamond World, Diamond Gallery, Diamond Creations or simply, Diamonds. Of late, there are the banners and posters reading simply, “Antwerp Loves Diamonds.”
Though this Belgian port has had a love affair with diamonds for centuries, of late it seems to be losing some of its passion. For years now, much of the lucrative but labor-intensive business of cutting and polishing stones has been drifting to low-wage centers in the developing world, like Mumbai, Dubai and Shanghai.

More ominously, in recent years, diamond traders have been accused of a range of violations, including tax fraud, money laundering and cheating on customs payments when buying and selling stones.

Local business leaders recognize the threat. This year, they embarked on what local newspapers described as a “charm offensive.” In a 160-page program, titled Project 2020, the World Diamond Center, a trade-promotion group, outlined plans to draw business back to Antwerp by simplifying and accelerating trading via online systems. That, the industry hopes, will win back some of the polishing business lost to Asian countries with new technology, like fully automated diamond polishers, and generally burnish the image of the diamond business in the public’s jaded eye.

“This is our strength,” said Ari Epstein, 36, a lawyer who is chief executive of the World Diamond Center and the son of a diamond trader, whose father emigrated from a village in Romania in the 1960s. “We have the critical mass so that every diamond finds a buyer and seller.”

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Quebec shows tougher approach toward mining sector with access road deal – The Canadian Press/CTV News (November 15, 2012)

http://www.ctvnews.ca/

QUEBEC — Quebec’s new government is living up to its pledge to take a tougher stance with mining companies after offloading some responsibility for the construction of a controversial access road.

Finance Minister Nicolas Marceau announced Thursday that Quebec has renegotiated a deal that will see Stornoway Diamond Corp. (TSX:SWY) assume a bigger share of the costs to build a route to its proposed mine.

Marceau expects the agreement on the 240-kilometre highway extension to the Renard diamond mine site will save Quebec taxpayers at least $124 million. “We’re not going to build gold-plated roads with huge cost overruns,” Marceau told a new conference.

“The signal we’re sending to mining companies is that we’re ready to make deals with you, but the terms must be reasonable for Quebec taxpayers.”

PQ officials had expressed concern that costs for the Route 167 project had exploded beyond the estimated budget of $260 million in 2009. By August, the price tag had soared to $472 million.

The new deal will drop the maximum cost down to $304 million, the government insists. The PQ has criticized the previous Liberal government’s northern-development plan — known as the Plan Nord — for being too generous to the mining sector.

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Stornoway strikes new deal with Quebec on diamond mine road – by Nicolas Van Praet (National Post – November 16, 2012)

The National Post is Canada’s second largest national paper.

MONTREAL – Stornoway Diamond Corp. has struck a new deal with the Quebec government on a controversial highway leading to its Renard diamond mine that will see it pay a bigger share of the total costs but ensures construction of the mine itself remains on target for 2013.

The renegotiated agreement is the first of several the Parti Québécois government is looking to revamp as it grapples with significant cost overruns on 20 major infrastructure projects inherited from the previous Liberal administration. The new deal saves Quebec taxpayers $124-million and marks the start of new effort to recoup public money that was bargained away to benefit the private sector, PQ ministers said.

“There are other cases where it will be harder to save money, but we’ll do as much as we can on all the projects,” Quebec Finance Minister Nicolas Marceau told reporters. “We will make sure that, in those deals, Quebecers are not paying too much.”

The Stornoway deal involves the Route 167 extension, a 243-kilometre all-season highway leading to the company’s Renard site. The road, championed publicly by former Premier Jean Charest as one of the centrepieces of his Plan Nord development project, had become a political lightning rod after costs ballooned from initial estimates of $260-million to more than $470-million.

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BHP Billiton breaks its diamond engagement – by Pav Jordan (Globe and Mail – November 14, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

BHP Billiton Ltd. is out of the diamond business, fed up with prolonged dull prices for gemstones and few opportunities to improve profit margins.

The world’s largest diversified miner said on Tuesday it sold its controlling stake in Ekati, Canada’s first ever diamond mine, to diamond retailer Harry Winston Diamond Corp. for $500-million (U.S.), well below what analysts expected. Billiton’s diamond-marketing operations are also included in the sale.

The deal follows an 18-month lull in diamond prices that began after a darkening global economic outlook left speculators holding gems collected in anticipation of a stronger recovery after the 2008-09 financial crisis. Harry Winston itself, which owns a 40-per-cent stake in the Diavik mine near Ekati, saw average diamond prices drop 10 per cent in the latest fiscal quarter, when profit was cut in half. Rio Tinto PLC owns the remainder of Diavik, and has said it may also seek a buyer for its share in the mine.

More than just a sale, the Ekati transaction marks the end of an era for Canadian diamond mining, ushered in when BHP completed the mine in 1998 just as consumer backlash grew against so-called blood diamonds produced in war zones in Africa where much of the world’s diamond wealth originates.

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Four greats to enter Canadian Mining Hall of Fame – by Northern Miner (October 29 – November 04, 2012)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

The Canadian Mining Hall of Fame will welcome four new inductees at its twenty-fifth annual induction dinner on Jan. 10, 2013, at the Fairmont Royal York Hotel in Toronto. The new inductees are Charles E. Fipke, Gerald W. Grandey, Pierre Lassonde and James C. O’Rourke. The Northern Miner is a sponsor of the Canadian Mining Hall of Fame. For tickets and more information, visit www.mininghalloffame.ca.

Geologists and prospectors had searched for diamond deposits in North America for more than a century with only teasing hints of success until discovering a cluster of kimberlites in the Northwest Territories that became Ekati, Canada’s first diamond mine. This groundbreaking discovery, synonymous with the name “Charles E. (Chuck) Fipke,” was the culmination of Fipke’s relentless pursuit of elusive diamond indicator minerals for hundreds of kilometres from the Mackenzie River Valley eastward to their source near Lac de Gras. Other key contributors in his quest were his associate, geologist Stewart Blusson, economic geologist Hugo Dummett and University of Cape Town professor John Gurney. The discovery’s epic success — achieved on a shoestring budget through innovative science — sparked a staking rush, inspired other discoveries and created a new industry for Canada.

Born in Edmonton, Alta., Fipke earned a B.Sc. degree in geology from the University of British Columbia (UBC) in 1970. His adventurous nature took him to Papua New Guinea, South Africa, Brazil and other exotic locales, where he worked for senior companies such as Kennecott and Cominco, and became intrigued with the use of heavy mineral geochemistry as an exploration tool.

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