Thorunn Howatt
Northern News Services

Yellowknife (Oct 28/02) - Diamonds have become big business in the North. We will soon be producing nearly a fifth of the world's volume of diamonds by value.

Right now the almost four million carats a year are coming from BHP Billiton's Ekati Mine in the Northwest Territories.

Nearby Ekati, construction on the Diavik diamond mine began in early 2000. It is set to be operational the first half of 2003. Permitting processes for De Beers' proposed diamond mine at Snap Lake are well underway.

The high quality of Northern diamonds means Canada will soon replace South Africa as the third largest producer by value, behind Botswana and Russia.

At full production, Northern mines will produce 12 to 15 per cent of the world's diamonds by value. Now the race is on for Nunavut's first diamond mine.

In a Natural Resources Canada survey of mineral exploration expenditures in Canadian regions, 1999 exploration in Nunavut totalled about $34 million. In 2000 the exploration dollars were up to $63 million and last year $60.2 million.

A good prospect for the first start-up is the Jericho kimberlite diamond-bearing pipe, 30 kilometres northeast of the Lupin gold mine near the NWT border.

The big news in the diamond world this year is the Coronation Gulf staking rush. The race to claim land for diamond exploration started when Ashton Mining of Canada Ltd., announced it found diamonds close to Kugluktuk. Since then, gem finds on the High Arctic's Victoria Island and as far east as Baffin Island have been reported.

Twin Mining Corporation said it will have a diamond mine on Baffin Island, 120 kilometres west of Nanisivik, in the next three years.

Between the Northwest Territories and Nunavut, De Beers alone spent $30 million last year hunting for diamonds.

In 2001, the Ekati diamond mine produced about 3.791 million carats with an average value over $247 Cdn per carat. During its first 10 years of production, Diavik is forecast to produce 7.579 million carats per year at $99 Cdn per carat.

When it comes on board, De Beers is estimating Snap Lake's production at an average of 2.87 million carats annually over the life of the mine at $156 Cdn per carat.

Much of the work at Ekati Mine is contracted to Northerners. Catering companies are providing housekeeping and food services to the mine. Ekati's newest pit -- Misery -- is completely mined by outside company Nuna Logistics.

Three cutting and polishing facilities located in Yellowknife are estimated to contribute more than $9 million every year to the NWT's gross domestic product.

The diamond-processing business should only get bigger. Total value of resources still in the ground at Ekati, Diavik and Snap Lake is estimated to be in the range of $27.14 billion.

The federal government will receive $5.2 billion in taxes and royalties over the life of Ekati, Diavik and Snap Lake.

The government of the Northwest Territories estimates its share to be about $299 million.