Doug Ashbury
Northern News Services

NNSL (May 28/99) - Tying secondary diamond industry with the Diavik comprehensive study report is an "inappropriate" knot, according to the company's new president, Stephen Prest.

The GNWT wants the federal government to require Diavik to make a supply of rough diamonds available to Northern cutting and polishing firms.

Department of Indian Affairs and Northern Development said it would only mention secondary diamond industry but not address it in the comprehensive study report.

"Media reports have circulated to the effect that the GNWT will be seeking the support of the government of Canada to recommend through the comprehensive study report that the approval of the Diavik project be linked to secondary economic activities," Prest wrote in a May 25 letter to DIAND Minister Jane Stewart.

"Diavik is of the opinion that linkage of this sort is inappropriate for a number of reasons.

"Firstly, the unincorporated joint venture structure of the Diavik project precludes Diavik Diamond Mines from entering into these types of obligations on behalf of the joint venture participants (Rio Tinto and Aber)."

Prest said Diavik has operated over the past four years on the assumption that the project was being assessed on its own merits.

He further stated, "During the past week, DIAND has made available draft sections of the Diavik project CSR for preliminary review. In this draft document, DIAND concludes that substantial benefits would accrue in the NWT through the establishment of secondary value added diamond industries and that this form of economic diversification is a worthy social and economic goal.

"Fortunately, there is already ample supply of Canadian diamonds available on the world market to meet the demands of the NWT-based secondary diamond industry for the foreseeable future absent whatever additional supplies might be forthcoming should Diavik or other diamond mining projects proceed into production."

When Environment Minister Christine Stewart makes her decision on whether or not to give the proposed Diavik diamond mine the go-ahead, it is the 300-page comprehensive study that the decision will largely be based on. The report is based on the project's environmental review process.

Joe Handley, Resources, Wildlife and Economic Development deputy minister, was not immediately available for comment. But he said recently that environmental review has to consider the effects the project will have on jobs in the North. RWED has received about 10 diamond- cutting and polishing plant proposals.

For its part, BHP Diamonds has agreed to make available about 7,000 carats a month of rough diamonds to Northern cutting and polishing plants. That amount, about 10 per cent by value, is enough for three, possibly four plants.