Diamond dream lives on against odds under Canadian tundra
ON THE semi-frozen surface of Faraday Lake in Canada’s subarctic, two diamond rigs are drilling around the clock. It’s spring breakup north of the 63rd parallel, which means the Kennady Diamonds Inc. exploration team is running out of time.
“It’s starting to candle,” says geologist Martina Bezzola, scuffing her rubber boot over the fast-melting ice where vertical tunnels, or “candles,” have recently appeared. The thaw means the team has two weeks to extract kimberlite samples from beneath the lake before they’re banished to drilling onshore. “Basically it’s like sticking a needle into a haystack to determine what’s in the haystack.”
Twenty-five years after the first diamonds were found in Canada’s Northwest Territories, it’s still a game of hurry-upand-wait. For every thousand grassroots exploration projects, only one becomes a mine.
Snap Lake, one of three operating mines in the region, was shuttered by De Beers last year, a casualty of harsh geography and falling diamond prices. Government attempts to add production value with a cutting industry collapsed years ago; all that remains of “Diamond Row” in the territorial capital Yellowknife is a line of derelict buildings behind barbed wire.
And yet the dream lives on. At a time when global miners are shedding assets, De Beers is about to open the largest new diamond mine in the world, Gahcho Kue, 280 kilometres (175 miles) north- east of Yellowknife. A little further north, Rio Tinto Group last year found- and just sold-the largest gem- quality diamond ever recorded in North America at its Diavik mine, the 187- carat Foxfire. Dominion Diamond Corp. last week agreed to extend the life of the neighbouring Ekati mine beyond 2020.
“The return in diamonds is fantastic, but you need the patience of Job,’’ says Jonathan Comerford, chairman of Kennady Diamonds, on site at the Kelvin Camp on Faraday Lake to represent the interests of Irish billionaire Dermot Desmond.
Desmond owns almost a quarter of Toronto-based Kennady and 23 per cent of its former parent company, Mountain Province Diamonds Inc., which these days is focused on developing Gahcho Kue with De Beers. Canada has a couple of marks in its favour that keep the majors interested amid a grim market, says Kim Truter, chief executive officer of De Beers Canada.
Prices for rough stones have rebounded 10 per cent this year after plunging 44 per cent in the five years ending in January. The country is politically stable and has a long mining history, mitigating the snail’s pace at which projects proceed; Gahcho Kue took 21 years to bring into production. And Canada’s diamond deposits tend to be predictable, with high concentrations of bridal- quality gems.
Canada produces approximately 10 per cent of world diamond output by volume but about 15 per cent by value, said Truter, 51. “The price we receive for the diamonds in Canada is actually quite high compared to other regions of the world.”
So is the cost to produce them. Gahcho Kue’s billion- dollar price tag could have been 30 per cent less elsewhere in the world, Truter says.
In seven years of operation, Snap Lake never made money, crippled by the costly engineering challenge extracting diamonds from beneath a subarctic lake.
The best way to understand what it takes to mine diamonds in this part of the world is to view it from above.
The landscape, for hundreds of miles in all directions, is almost entirely binary: Snow- covered rock and too many lakes to count.
The temperature ranges from minus 50 degrees Celsius (- 58 Fahrenheit), to plus 35 in the summer. Scattered aboriginal communities inhabit the area, along with caribou and grizzlies.
Each winter, mine operators spend three months constructing a 350-kilometre ice road across this terrain.
Once the ice is thick enough to support the movement of heavy equipment, a convoy of trucks crawls along at one-kilometre intervals to avoid stressing the ice. This year, the road was open eight weeks before it started to melt. After that, the only way in is by air. — WP-Bloomberg