Gahcho Kue mine to help diamond industry sparkle
NWT operation will provide $6.7B to Canadian economy over 12 years
Canada’s position as a big player in the global diamond industry will be further crystallized Tuesday when it formally opens Gahcho Kue, estimated to be one of the 10 biggest diamond mines in the world.
The site will be the sixth diamond mine opened in Canada in the 18 years that the country has mined the precious stone. It sits about 280 kilometres northeast of Yellowknife in the Northwest Territories.
“It will be a very significant contributor to the NWT economy,” said Kim Truter, CEO of De Beers Canada, which co-owns the mine with Mountain Province Diamonds.
Truter said the operation will provide $6.7 billion to the Canadian economy over its estimated life span of 12 years and has generated $440 million to the territory’s economy so far.
Gahcho Kue is expected to produce about 4.5 million carats a year, which would make it one of the top 10 diamond mines by weight, according to research compiled by New York-based diamond analyst Paul Zimnisky.
Stornoway Diamond Corp. is also planning on opening a diamond mine in Quebec — which would be that province’s first — that it wants to bring to commercial production by the end of the year.
Canada’s diamond production is expanding at a time of growing volatility in the industry. Global sales of polished stones declined two per cent last year to US$24.7 billion as demand fell in emerging markets like India and China.
Lower prices and market instability meant a much bigger drop in the sales of rough diamonds, which dropped about 30 per cent to an estimated US$13.7 billion.
“Volatility is here to stay as global markets are likely to continue to fluctuate,” De Beers said in its 2016 market report.
The market conditions, combined with operational problems, forced De Beers to close its Snap Lake diamond mine in December last year at a loss of more than 400 jobs.
“It’s really, really important that these mining operations are competitive,” Truter said. “The problem with Snap Lake was it struggled to be competitive from day one.”
With Gahcho Kue only 80 kilometres southeast of Snap Lake, some have been able to find work at the new mine, which De Beers expects will need about 530 workers to operate.
Truter said the company has been working to share the benefits of Gahcho Kue with local First Nations and Metis, with impact benefit agreements signed with six groups in the area.
De Beers is also working to extend the life of its Victor mine in Ontario, but work on a potential expansion can’t move forward until it reaches an agreement with the Attawapiskat First Nation and other communities in the area.