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SOMBA K'E/YELLOWKNIFE
The territory's diamond mine operators are taking currently depressed diamond prices in stride, as market conditions have prompted at least one Northern mining company to halt production of diamonds and another to withhold rough diamonds from sale.

An aerial view of the Ekati Diamond Mine, located about 310 km northeast of Yellowknife. BHP Billiton, owner of the Ekati Diamond Mine, announced a strategic review of operations last November but the company remains focused on efficient operations as diamond prices fluctuate. - photo courtesy of BHP Billiton

Shear Diamonds Ltd., the Toronto-based company that has been processing diamonds from tailings left by the former operators of the Jericho Diamond Mine in Nunavut, announced last week it has suspended production of Jericho diamond stockpiles "as a result of continuing weak world diamond prices."

Harry Winston Diamond Corp., owner of a 40-per-cent stake in the Diavik Diamond Mine, has also announced it is withholding diamonds from the soft diamond market until stability returns.

The diamond company reported a 31-per-cent decrease in rough diamond sales for the second quarter ending July 31, to $61.5 million, compared to $89.6 million in the same quarter last year.

A decrease in volume of carats sold during the quarter and a 10-per-cent decrease in rough diamond prices contributed to the decline in sales, according to the quarterly report.

Rough diamond production at Diavik was 0.72 million carats - consistent with last year's production for the quarter, according to Harry Winston.

A Diavik representative was not available to confirm whether production is planned to slow at the mine located about 300 km northeast of Yellowknife, but Cathie Bolstad, De Beers Canada director of external and corporate affairs in Yellowknife, told Yellowknifer that production is continuing to ramp up at Snap Lake Mine, and the company's Gahcho Kue project is continuing to move through the permitting process as scheduled.

"While we can't speak for other diamond mining companies, we at De Beers are constantly working to deliver flexible mining and business plans that can react quickly and effectively to the variety of fluctuations the market sees during the life of a mine," Bolstad stated.

"As the world's leading diamond company, our current mining plans in Canada are based on the global De Beers strategy regarding short-term, medium-term and long-term outlooks."

Many factors in production

In addition to the fluctuating nature of diamond market prices - which are rated individually based on characteristics including clarity, colour, and size - the diamond mines also consider factors such as fixed costs, recruiting, changes to legislation and the foreign exchange rate in deciding the threshold where production might be slowed down based on any of these challenges, Bolstad added.

"Each is considered in the mining plan and strategies to mitigate these impacts are developed to help the mine maintain a successful operation," she stated.

"Should one start to impact the mine, plans are reviewed, revised where necessary and implemented. De Beers is committed to our Canadian assets for the long term and our strategies are built around delivering consistent, sustainable mine plans."

Earlier this year, Rio Tinto, 60-per-cent owner of Diavik, announced it is considering the sale of Diavik as part of a strategic review of its global diamonds business.

BHP Billiton, owner of the Ekati Diamond Mine, announced a similar review of operations last November.

It's not known if current diamond prices will result in a decrease in production at Ekati, but spokesperson Alexander Legaree told Yellowknifer, "We remain focused on continued efficient operations at Ekati Diamond Mine.

"Like any commodity, diamond prices fluctuate from time to time," Legaree added.

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