Canadian Diamonds-Why You Should Buy Them Now
The last Northern gold rush occurred in the late-19th century
in the Yukon when tens of thousands of prospectors made their
way to Dawson City to find their fortunes. Since then, miners
and oil workers have continued to seek wealth in the North. In
the past decade, history has repeated itself with the discovery
of diamonds in Canada's North.
Diamond exploration in Canada began in the 1960s, but major
discoveries of diamond-bearing kimberlite ore did not occur
until the 1990s. With the discovery of diamonds in the Northwest
Territories and Nunavut in 1991, Canada has risen to become one
of the top three diamond producers in the world in terms of
value, behind Botswana and Russia. Currently, Canada produces
15% of the world's diamonds. According to Statistics Canada,
13.8 million carats of diamonds worth approximately $2.8 billion
have been mined in Canada between 1998 and 2002. To put it in
perspective, each day Canada produces one 1.5 kilogram bag of
diamonds worth $1.5 million. It is hoped that the diamond mines
will provide income for decades to come.
In 1991, the first diamonds were found at Point Lake near Lac de
Gras in the Northwest Territories, some 300 kilometers northeast
of Yellowknife. Soon after the initial find, two diamond mines
were opened in this region, the Ekati and Diavik mines. Diavik
is approximately 100 kilometres southeast of Ekati. A third
diamond mine, Jericho-3, began production in 2005, in Nunavut. A
fourth diamond mine, Snap Lake-4 in the Northwest Territories,
should begin production in 2007.
The Jericho-3 mine is located near the north end of Contwoyto
Lake in West Kitikmeot, Nunavut Territory (NT). It is operated
by the Tahera Diamond Corporation, which has been exploring for
diamonds in Nunavut for the past seven years. Operations will
commence with an open pit mine, and despite the harsh climate,
it is planned to operate year-round. It is currently projected
that the mine and processing plant will have an 8-year life and
employ a total of approximately 125 to 175 employees and
contractors.
The majority of shares in the Ekati mine (80%) are owned by the
Australian mining conglomerate BHP Billton. The remaining 20%
are owned by prospectors Charles Fipke and Stewart Blusson. The
Ekati Diamond Mine is the only diamond mine owned by BHP
Billiton and produces nearly four per cent of current world
diamond production by weight and six per cent by value. The mine
is expected to be viable for 20 years.
The Diavik mine, located about 300 km (180 miles) north of
Yellowknife, is owned by Britain's Rio Tinto PLC (60 per cent)
and Toronto-based Aber Diamond Corp. (40 per cent). It employs
700 workers and produces 8,000,000 carats annually for total
sales of $100,000,000 Cdn. The area was first surveyed in 1992,
construction began in 2001, and diamond production started in
2003. It provides approximately 5% of world diamond production.
The mine is also expected to remain in operation for 20 years.
The Snap Lake mine, owned by DeBeers and operated by DeBeers and
AMEC consultants, is starting this year and is expected to
remain in production for 20 more years. This mine is located
under a lake and will be the first entirely underground diamond
mine in Canada. DeBeers also owns the Victor mine, an open-pit
diamond mine in a remote area in the James Bay Lowlands of
Northern Ontario, approximately 90 km west of the coastal
community of Attawapiskat.
Canada's diamond industry has a world reputation for both
quality and integrity. In recent years, there have been ethical
problems with African diamonds, which can originate in unstable
countries such as Sierra Leone and Angola where diamond sales
fund terrorism, war and weapons sales. Canadian diamonds are
traceable, as each one is etched on the girdle with a serial
number as well as a microscopic Canadian logo such as a maple
leaf or a polar bear as a trademark. The pictorial logos vary
with the companies selling the diamonds.
Canadian diamonds, especially those from the Ekati mine, are
high quality and extremely white. They're also fashionable,
which was demonstrated when the Canadian teen singer Avril
Lavigne attended the 2003 MTV Awards in New York wearing
Canadian diamonds worth $50,000.
The mines provide high-income jobs with an average salary of
$63,000, many of them permanent, not just the temporary
make-work projects for which the Aboriginal communities of the
Canadian north are well known. Almost 40% of the jobs are done
by aboriginals. For instance, one diamond-cutting operation in
the Northwest Territories is majority-owned by the Yellowknife
Dene First Nation.
Some of the more specialized jobs, such as diamond cutting, are
done by professionals from Armenia, Israel, China and Vietnam
who earn salaries of more than $100,000. Many of the diamonds
are cut and polished in facilities in Vancouver, Winnipeg,
Toronto, Montreal and Matane, Quebec. Between 1998 and 2001,
employment in the diamond mining industry in the North increased
from 90 to 700 workers, with estimates of more than 2,000 jobs
currently. Another 2,000 jobs are created in support industries
for the mines and their workers. Diamond mining produces more
than just diamond sales. It also funds many other activities
such as construction, road-building, Arctic and sub-Arctic
surveying and engineering projects.
Diamond fever in Canada's north shows no signs of abating, and
an article in the Toronto Globe and Mail in February 2004
reported that prospecting companies have laid claim to more than
70 million acres in the Northwest Territories and Nunavut. The
newspaper said the most dramatic increase in diamond prospecting
is in Nunavut, where the number of prospecting permits grew to
1,518 in 2004 from just 190 in 2003.
Starting on Dec. 1, 2003, companies were given one month to
apply for prospecting permits, resulting in long,
round-the-clock lines at offices in Yellowknife and Iqaluit.
There is a charge of 10 cents an acre to register a claim, $1.50
to $2 an acre to stake a claim. With 70 million acres involved,
the cost of these claims is expected to generate up to
$140,000,000 in government revenue even before the mines open.
Prospectors desperate to finish filing their claims have even
been known to drop claim stakes from helicopters in
poorly-accessible areas.
An economic boom is occurring in the north as tradesmen move
into the area to fill jobs in the mines. This has raised the
cost of living in the north, which was high to begin with due to
the cost of transporting food and other necessities to isolated
northern communities. In such places as Yellowknife, a basement
apartment can rent for as high as $1,500 a month.
In 1998, Yellowknife Mayor Dave Lowell said that the diamond
rush might have saved his town from economic decline. "Quite
simply, it is our future," Lowell said. "We'd be going into
quite a recession if it wasn't for the diamond mine."