SOMBA K'E/YELLOWKNIFE - The Yellowknife diamond industry is showing signs of recovery.

Rio Tinto has cancelled its second shutdown for the Diavik Diamond Mine and De Beers Canada's own production shutdown for Snap Lake in December is still under consideration.

The two remaining diamond polishing plants in the city are also, in their own separate ways, proving that the global economic slowdown has let up to a degree.

The HRA Group of Companies, owner of the Crossworks Manufacturing polishing plant on 51 Avenue, said it is considering expanding the plant, which currently employs 11 people and underwent no staff cutbacks over the past year.

Meanwhile, at Arslanian Cutting Works on Yellowknife's Diamond Row, 14 employees were recently rehired, bringing total staff at the plant to 19.

"I think you'll see an expansion of our plant significantly in the next year," said Dylan Dix, HRA's worldwide marketing director, of Crossworks, which handles diamonds from Diavik and Snap Lake.

"We're in expansion mode. We're increasing our rough intake in the Northwest Territories."

But beyond that, Dix offered no other details.

"There's a lot of things that will happen there, but I'm not at liberty to say yet."

According to Dix, over the first five months of 2009, polished diamond imports to the United States totalled $4.4 billion, down by half from the same period the previous year. At the same time, diamond sales by HRA increased by five per cent.

"Our motto seems to work," he said. "We start small-ish and we make sure that we watch everything we produce. We're very cautious, but we also have developed a very good downstream distribution channel so that when we produce it, we know that we have a lot of it pre-sold."

After issuing permanent layoffs to 35 employees in June, Arslanian rehired five employees the next month, with tentative plans to rehire the remaining 30 workers come October or November.

While the plant has more recently managed to rehire 14 workers, additional rehiring likely won't happen until March or April, said general manager Bob Bies.

"It's just going to take longer than we anticipated," he said. "We need more of a recovery to help us ... Our sister plant in Montreal, they still have a lot of inventory. So as the economy improves, they'll be able to move a lot more of that, which will free up money for us. It's all (about) cash flow at this time."

More money will allow the plant to take on more rough diamonds, requiring additional workers, continued Bies.

"We cut high quality diamonds, and if you're going to have a cutting facility anywhere, you need a certain amount of through-put. We need that to give us the best chance of being able to be viable."

At its peak, Arslanian polished 4,000 diamonds a month, compared to its current rate of 1,000 a month.

"Right now, we're starting slowly, but it's not going to be really profitable until we get into higher numbers," said Bies.

"Diamond manufacturing and mining - you can't put them in the same category. The profit margins for a mine are extraordinary, where the profit margins for the factory are not so extraordinary. They're small. It's not easy, diamond manufacturing, and that's a good reason why there's not many manufacturers left."

That fact is not unnoticed by workers at Arslanian, some of whom have taken on part-time jobs in addition to their full-time work at Arslanian.

"I think they want to work here but they understand that there's no guarantees. I think they're trying to protect themselves as much as they can," said Bies.

"One guy's driving a cab now. One guy's working at the airport. Some other people that used to work here are working at the airport now."

The atmosphere at Arslanian is one of cautious optimism.

"If the economy suddenly goes and takes a little bit of a downturn, what impact will that have on us?" said Bies.

"No one knows that. We just have to keep on plugging away, being smart at it and not grow too quickly and see how things go."