Guy Quenneville
Northern News Services
Published Thursday, December 17, 2008

SOMBA K'E/YELLOWKNIFE - Facing a global economic crisis and a weakened demand for diamonds, De Beers Canada will shut down the Snap Lake diamond mine for 10 weeks in 2009 in an effort to conserve cash, according to Cathie Bolstad, spokesperson for De Beers Canada.

The first shutdown will take place over six weeks in the summer, between July 15 and August 26; the second will fall over four weeks in December.

On Tuesday night, human resource representatives with De Beers sat down with 100 outgoing shift workers to outline ways employees can cope with the financial impact of the shutdowns. On Wednesday another 260 employees beginning the two-week Christmas rotation were informed.

"This is going to affect everybody," said Bolstad of De Beer's approximately 430 employees at Snap Lake, excluding contract workers, who number around 220. "It's going to affect our Yellowknife office. It's going to affect our miners."

Employees have been given three options.

The first, which De Beers is calling the Shutdown Savings Plan, allows employees to opt into an employee-funded savings plan through payroll deduction. Each worker's annual salary will take into account the unworked time during shutdown and be applied over the same number of paycheques as a normal year.

Meanwhile, De Beers will sit down with each employee and apply unused vacation time for 2008 and vacation time for 2009, plus vacation pay, against the five weeks they will not be working in 2009 to determine exactly how many days they will be on leave. Snap Lake employees work on a two-week rotational basis.

"This plan enables employees to self-fund the days during the unpaid shutdown period for which they will not have vacation coverage," said Bolstad.

The second option is for employees to be temporarily laid off and possibly become eligible to collect employment insurance.

"But there's a waiting period," said Bolstad.

The third option is for the employee to do nothing, essentially remaining a De Beers' employee and return to work after the scheduled shutdown.

Following the first employee information session Tuesday, 96 out of 100 employees opted for option one.

"If you're an employee who, at the end of all that, has two days unpaid leave, it's quite unlikely you're going to choose a layoff," she said.

De Beers is undertaking the shutdowns to reduce its spending on accommodations, meals, air transportation and power during the current financial crisis, said Bolstad.

"The major (diamond) cutting centres have been impacted and I think it's really driven by liquidity issues," she said. "As a result of that, we're seeing - for us, as the miner - reduced requirement for diamonds in the short term. But the long term is looking very good. We're making sure we manage this so that when things turn around we're ready to ramp up."

Contractors, who were notified of the shutdowns yesterday, will have to make their own arrangements with their employees, added Bolstad.

"It's a reminder that, yes, diamond mining sounds very glitzy but it's a business like any other. Bottom line is you have to have a product that people want to buy and you have to be able to sell it at a profit," said Mike Vaydik, executive director of the NWT Nunavut Chamber of Mines. "It's definitely not good news, but I think what we're seeing is that the smart companies are taking immediate action to react to the world credit crunch."

Last month, De Beers announced that 105 Snap Lake contract workers with Kete Whii Procon - nine of whom come from Yellowknife - would be laid off by the end of this month.

Bolstad said the shutdowns are a means of avoiding cutting De Beers positions at Snap Lake.

"Our goal is to minimize the impact on our employees and to avoid layoffs, if possible, while facing a tough economic storm," she said.