"It (sorting of diamond from BHP's Ekati mine) could be done in the Central Selling Organization's existing facilities, however, the CSO and producers might prefer or be persuaded to establish a new facility to do it in Canada," Marriott said.

"If so, there is no reason why this cannot be done in Yellowknife."

Marriott, who could not be reached by Yellowknife deadlines, is a director of Diamond Counsellor International, a government diamond valuation company.

The report is dated March 10, 1997. It deals with both large-scale sorting and evaluation for the open market, and the much more limited sorting for determining government royalties.

Marriott's report, while raising hopes for a secondary diamond industry in the North, also explores the impediments to setting up a sorting facility in Yellowknife.

Marriott also said that if NWT diamonds are sold on the open market -- outside the CSO, which controls most of the world's diamonds -- this would "almost certainly mean that the producer will have to open an office in Antwerp," and therefore limit any sorting done in Canada.

On Nov. 25, BHP announced it had opened a sales office in Antwerp. BHP also said it had signed a marketing consulting agreement with diamond dealer I.D.H. Diamonds NV of Antwerp.

He noted the existing major diamond-producing countries do have important sorting and valuing facilities, but only because their governments are often directly involved through joint ventures.

"A similar degree of government control does not exist in Canada," Marriott noted.

Another impediment could be the market itself -- the diamond trade is concentrated in existing diamond-cutting centres, mainly Antwerp.

A large diamond-sorting facility may be more expensive to set up in Yellowknife thanks to high labor costs and there is also a need to train Canadians as sorters, Marriott said.

"The jobs created by a sorting and valuing facility do not require particularly skilled labor. People to train for and to fill these jobs are available in Yellowknife."