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Guy De Beers, owners the Snap Lake diamond mine pictured here, have struck an agreement with the Ontario government to have 10 per cent by value of its diamonds from its Victor Mine to be processed at a cutting and polishing plant in Sudbury, Ont. - Quenneville/NNSL photo

SOMBA K'E/YELLOWKNIFE - A new diamond processing plant is set to open in the city of Sudbury, Ont. as Yellowknife's own diamond cutting and polishing industry continues to struggle.

"Now we become brothers and sisters," said Sudbury Mayor John Rodriguez, referring to Sudbury and Yellowknife.

"I've always argued - you mine the products here, this is where you finish them."

The Crossworks Manufacturing diamond facility will create 50 new jobs, Ontario Premier Dalton McGuinty announced Monday. A written agreement between De Beers and the government of Ontario calls for 10 per cent of the value of all diamonds - an estimated $25 million - from the De Beers' mine in the James Bay lowlands to be processed in Sudbury, said Rodriguez. The Victor Mine opened in January 2008.

Crossworks also has a diamond polishing plant in Yellowknife, where 11 people are employed. The plant opened in December.

Meanwhile, Arslanian Cutting and Polishing Works, which runs Yellowknife's two other remaining cutting and polishing plants, continues to face closure and has laid off more than 13 of its 50 workers since February. In Sudbury, last year's diamonds from the Victor Mine are waiting for processing, and the plant is set to open within three months, Rodriguez said.

The NWT has three mines but similar arrangements with diamond companies, said Bob McLeod, minister of Industry, Tourism and Investment. They'll provide up to 10 per cent of the diamonds, he said.

"It's up to the secondary producers as to whether they'll buy them or not," he said. "Ontario learned from us."

If Arslanian and its sister factory close, they will become the fifth and sixth cutting and polishing plants on "Diamond Row" to do so in less than a decade. Laurelton Diamonds announced its closure in January, laying off 25 employees.

McLeod expects the economic downturn will also affect the Sudbury plant.

So does Yellowknife Mayor Gord Van Tighem.

"They learned from us ... and they'll run into the same challenges we have - right now, selling diamonds," he said.

The mayor is not surprised by the development in Sudbury, but said he's more concerned about the viability of Yellowknife's cutting and polishing plants.

"It's not unanticipated," he said yesterday. "It's part of an expanding Canadian diamond industry."

He wants to see the GNWT ensure there are still jobs when "things pick up again."

If Sudbury's plant is successful, Van Tighem said it might indicate business could improve for Yellowknife's processing facilities.

"If somebody's making the economic decision to build a cutting and polishing plan elsewhere in Canada, there must be a market."

He said he's not worried about Yellowknife diamond workers moving to Ontario.

"They've developed a real lifestyle within the community," he said.

"Even if they were to go to different jobs, there's still potential they'd come back."

Rodriguez is anticipating economic spin-offs with new businesses opening to provide goods and services to the diamond companies, as well as increased co-operation with training college students.

"It projects us in a whole new direction," he said. He anticipates the plant could be processing $100 million worth of diamonds in the next two years.

McLeod said his department is working with local diamond cutting and polishing plants to keep them operating.

"It's a difficult period," he said. "Secondary industries continue to operate - so that's good news."

- with files from Lauren McKeon