Canada Exploits Gem of an Industry in Fragile Far NorthCanada's first and the world's newest diamond mine, Ekati, is operational, three more are in various stages of the regulatory approval process and encouraging diamond deposits were discovered on Baffin Island in June.
Late last month the government announced C$4.1 million (US$2.8 million) in funding for 22 new projects that will provide geological data to support more gold and diamond mining exploration in Canada's north.
Natural Resources Minister Ralph Goodale announced the first group of projects being funded under the C$15 million, (US$10.2 million) three year Targeted Geoscience Initiative (TGI).
Projects include identifying rock formations with potential for diamond and gold deposits, providing innovative geological models to support and stimulate mineral exploration, and putting geological data online.
With additional investment from other federal sources and Canada's provincial and territorial governments, nearly C$40 million (US$27.1 million) will be spent over three years on geoscience activities.
In the same week, the last legal objection to construction of Canada's second diamond mine was withdrawn after Diavik Diamond Mines and the Canadian Arctic Resources Committee (CARC) agreed to an out of court settlement.
Under pressure from CARC, a citizens' organization incorporated under federal law, Diavik agreed to pay for a study of the cumulative environmental effects of diamond mining in Lac De Gras, Northwest Territories (NWT), about 300 kilometers (186 miles) northwest of Yellowknife. The study will establish thresholds on how much development the land situated in the Mackenzie Valley can support.
The Northwest Territories is a region larger than Germany, France, Britain and Denmark combined, with a population of less than 40,000 aboriginal and non-aboriginal residents. The territory has a 60 year history of mining for gold, silver, lead, zinc, uranium, tungsten and radium.
Diavik, a subsidiary of the United Kingdom's Rio Tinto, must still obtain a water licence from the NWT Water Board. The company, along with its partner in the project, Toronto's Aber Resources, wants to open the C$1.2 billion (US$800 million) open pit mine in 2002. British Columbia based Winspear Resources Ltd is seeking permits to begin digging an underground mine in nearby Camsell Lake later the same year.
Both projects are located in the Mackenzie Valley, near Canada's first and the world's newest diamond mine, the Ekati mine, owned by Broken Hill Proprietary Co. of Australia. Should they both come to fruition, Canada could account for 12.5 percent of world revenue in rough diamonds, according to Canadian government estimates. Only Botswana, Russia and South Africa produce more.
Northwest of the Ekati mine, De Beers, the world's largest diamond producer and marketer, has a project in advanced exploration, near Kennady Lake. Anxious to ensure a foothold in Canada's diamond mining boom, it launched a takeover bid for Winspear Resources two weeks ago.
Canada's diamond rush began in 1991 with the discovery of rich deposits near Lac De Gras. Since then, claims have been staked to an area equal to that of France. Farther east, Twin Mining Corporation reports encouraging diamond counts at its Jackson Inlet property on Baffin Island and its Torngat prospect on the east side of Ungava Bay in northern Quebec.
Canada's entry into diamond production is well timed, particularly when other avenues of trade are being closed. Last week the United Nations banned trade in diamonds from Sierra Leone because revenues are used to finance civil war in that country. Western governments are pushing for the same measures to be applied to diamonds from Angola and the Congo.
Not everyone is satisfied with Canada's progress though.
CARC research director Kevin O'Reilly says the environmental assessment rules that govern opening a mine might be tough, but the Canadian government lacks the backbone to enforce them.
"Many people want a proper analysis of the cumulative effects of these projects on an ecologically fragile area," he said. "They are being developed in areas of unsettled land claims by First Nations groups," he added.
Diavik's plans involve building a series of dikes before draining a portion of the lake to create an open pit mine. When mining is completed in 16 to 22 years, Diavik plans to prepare the areas within the dikes as fish habitat before water is slowly returned.
"We still don't know if Diavik could have gone underground instead, which would have left less of a footprint," said O'Reilly.
Many believed the possibility of less intrusive methods of mining had been dismissed to maximize profits, said O'Reilly. "We are not a narrow environmental group, but there are issues of caribou and grizzly bear habitat that should have been dealt with, not to mention the issue of water quality."
The Mackenzie Valley Environmental Impact Review Board (MVEIRB), which conducted the environmental assessment of the Diavik project, recommended that such issues warranted further investigation by a panel review.
However, Environment Minister David Anderson concluded last November that no further review was necessary and gave Diavik the government's blessing. He conceded that a regional cumulative effects management framework should be drawn up to address the MVEIRB's concerns and mitigate environmental harm caused by the mine.
That did not satisfy O'Reilly, so CARC filed the lawsuit against Diavik, which was settled out of court last month.
"He [Anderson] is telling them that analysis will come later," said O'Reilly. "If that later analysis proves the mine will have serious effects that can not be mitigated, will he then shut it down? I doubt it."
O'Reilly pointed out CARC does not wish the minister to shut the Diavik project down. "We are not a narrow environmental group, and we recognize the need for economic development for the people of the North."
O'Reilly said the Alberta Heritage Fund, set up with revenues from that province's oil boom to diversify its economy, should be copied in Canada's north so that the economic benefits stay in the north.
"There seems to be a new diamond discovery in Canada every other month," said O'Reilly. "They don't seem quite so rare anymore."
O'Reilly's observation hints at a bigger question looming for diamond producers. According to Aber Resources' projections, the Diavik mine alone will be responsible for five percent of total world production within five years. With other new Canadian mines set to exploit promising deposits, will the price of diamonds hold firm?