Diavik's future sparkles brightly
WENDY STUECK
Sunday, July 20, 2003
Lac de Gras, NWT — With native elders on hand and under a clear blue sky, the $1.3-billion Diavik diamond mine was officially opened Saturday, adding more heft to Canada's growing diamond industry and capping a construction project that will see billions of dollars worth of gems mined from beneath the waters of Lac de Gras.
The mine's four ore bodies are relatively small by industry standards, but contain a higher-than-average percentage of high-quality gems — which could make Diavik a standout in a famously lucrative business.
"With the support of everyone here, we think we can make Diavik one of the safest, most productive and profitable mines in the world," Richard Clifford, chief executive officer of Rio Tinto PLC, said at the weekend ceremony.
British mining giant Rio Tinto owns 60 per cent of Diavik and Toronto-based Aber Diamond Corp. owns 40 per cent.
The two companies have been working together since 1992, when Aber struck a joint venture with a Rio Tinto subsidiary to help finance Aber's exploration work. Aber had staked claims in the Lac de Gras region a year earlier in 1991, hoping to duplicate the success of Canadian prospectors Chuck Fipke and Stewart Blusson, who that year discovered the deposits that would become Ekati, Canada's first diamond mine.
Ekati, which is controlled by Australian mining giant BHP Billiton, went into production in 1998.
Ekati and Diavik will account for about $1-billion worth, or an estimated 12 per cent, of global rough diamond production this year.
That will put Canada ahead of South Africa, at 11 per cent, and closing in on Russia, at 18 per cent. Botswana, with 29 per cent, is the world's biggest producer of rough diamonds.
The two Northwest Territories mines have created an economic boom in the region and posed a host of engineering, transportation and logistical challenges. Everything at Diavik, from bolts to the bananas in the company cafeteria, is flown in or shipped over a 350-kilometre ice road that is open for about 80 days every winter.
A project that started with a huddle of prospectors' tents now includes a massive processing plant, four three-storey wings of staff housing and a 1,600-metre airstrip.
At Diavik, one of the most complex challenges was getting at the diamonds, which were discovered in kimberlites, or diamond-bearing pipes, beneath the surface of Lac de Gras.
To mine the gems, Diavik is building dikes. The first, encircling two kimberlites on the site, was completed last summer. About six million tonnes of rock were hauled and crushed to build a dike that snakes across a portion of the lake and around a pit where drills haul ore to the surface.
A refrigeration system installed along the dike keeps a permafrost boundary around the structure frozen.
Some water from behind the dike was pumped into Lac de Gras; water that required treatment was treated at facilities on site. Plans call for the dike to be breached and the pits flooded once mining is complete.
Diavik has signed participation agreements with five aboriginal groups and has committed to 40-per-cent aboriginal employment. Currently, the mine says 38 per cent of its employees are aboriginal.
At the opening, Rio Tinto's Mr. Clifford said Diavik's participation agreements led to unprecedented training, employment and business opportunities during the project's construction phase.
"During construction, northern firms took up some $874-million in contracts," Mr. Clifford said. "Of that, some $604-million was taken up by aboriginal joint ventures or aboriginal-owned firms. Within the Rio Tinto group, this is an accomplishment that cannot be overstated."
But some community leaders say the companies could do more. Peter Liske, chief of the Yellowknives Dene First Nation, said at the event that although many aboriginals are working at the mine, few are in supervisory or skilled positions.
"I walked through the human resources department today and I didn't see any of my people," Mr. Liske said. "I walked through the machine shop, and I didn't see any of my people as welders or machinists or that kind of thing.
"Jobs and training are okay, but train our people to be in management."
Other exploration plays, including South African diamond giant De Beers' plan for the Snap Lake mine in the Northwest Territories, could provide more business to the diamond cutting and polishing sector that has sprung up in Yellowknife. New York-based Tiffany & Co. recently completed a $3-million factory in Yellowknife to process diamonds from Diavik. Aber has agreed to sell some of its share of Diavik's production to Tiffany.
Aber CEO Robert Gannicott said at the opening that Diavik is selling its high-quality stones to the renowned jewellery firm.
"The average value of what we mine at Diavik is $90 U.S. a carat," he said. "The average value of what we sell to Tiffany is $1,000 a carat."
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