Thorunn Howatt
Northern News Services

Yellowknife (July 03/02) - The amount of rough diamonds staying in the North for finishing is increasing. Falling world diamond prices aren't hurting the Northern diamond polishing industry.

However, "having enough trained people -- fully trained productive workers -- is an issue," said Martin Irving, diamond director for the NWT government.

About four years ago Ekati agreed to sell a supply of 10 per cent of its diamond production to NWT cutting and polishing houses in order that the territory could build an industry. Right now Yellowknife has three diamond cutting houses.

There is an "understanding" between the government of the NWT and BHP Billiton, the mine's owner. "There is not a contract, there is not a written agreement, there is not a piece of legislation or regulation," said Irving. The three companies are not taking 10 per cent. "It is probably five to seven per cent."

Making adjustments

Yellowknife's diamond polishing companies are making adjustments with the markets -- learning more about what type of gems customers want to buy. For instance, the Canadian market buys diamonds that are about 20 to 40 points -- there are 100 points in a carat -- and of lower clarity. And, as well, after Sept. 11, people were buying diamonds differently.

So, for diamond marketers, it's a matter of matching rough diamonds with the polished end product.

"And it's a learning curve," said Irving, and Northern diamond marketers seem to be getting better at judging the customers.

Another NWT advantage is the Government of the Northwest Territories' loan guarantees to all three polishing houses. It costs a lot of money to buy rough diamonds. That's cash that's not always close at hand for diamond polishers.

"It was part of the financial package we provided," said Irving.

So despite the drop in diamond prices, the NWT industry is still increasing.

Diamond jewellery prices fell as much as 60 per cent last year according to Chaim Even-Zohar, publisher of Tel Aviv industry newsletter Diamond Intelligence Briefs. He spoke last week at a Vancouver diamond conference and explained that the sagging market wasn't just a product of a weaker American economy.

Diamond prices plummeted when diamond giant De Beers released its grip on the worldwide market according to Evan-Zohar. De Beers controls about 60 per cent of the world diamond market through supply agreements with its own mines and those of partners in Russia and Canada.