SOMBA K'E/YELLOWKNIFE
Dominion Diamond Corporation announced on Monday that in an effort to cut costs, the Yellowknife corporate office would be relocated to Calgary.
The move, expected to be completed by the middle of 2017, will see 100 staff leave the city. In an e-mail to Yellowknifer, Dominion Diamond CEO Brendan Bell stated discussions are still ongoing to determine what will happen to staff left behind.
Dominion was unable to disclose how many people might be laid off, but Bell stated those not relocated will be provided a severance package.
"I'm profoundly disappointed that this decision has been taken," said NWT Chamber of Commerce president Richard Morland.
"In my mind the board has abandoned some of the values that they say they stand for ... in terms of creating a Northern, Canadian diamond company."
Morland is former president and chief operating officer for Ekati when it was owned by BHP Billiton. "It kind of gives a lie to this narrative that many ex-politicians have been trying to peddle that somehow a Canadian home-grown company is a better alternative to those nasty multinationals," he said.
The company intends to maintain an office in Yellowknife with "a number of key positions," Bell stated in an e-mail.
In a news release, the company stated that "most" of the workforce will continue to be employed in the NWT.
Bell stated more than 1,800 people are employed at the Ekati mine, including permanent and temporary employees and contractors.
He estimated 65 per cent of those are Northern, and 38 per cent are aboriginal.
"We are committed to continuing to operate successfully and provide employment opportunities for Northerners," stated Bell.
"The highest proportion of the company's Northern aboriginal staff are employed at the mine site, and will continue to be employed there."
It's been a tough few months for Dominion: the company reported in September it had expensed $22 million in mine standby costs as a result of a fire in its Ekati Mine processing plant in June, and reported a loss, before income taxes, of US$73.8 million between February and July.
Processing at the plant resumed in September, and the company began a progressive rehiring of staff laid off after the fire.
Dominion estimates the move will save the company approximately $19 million annually, with about 25 per cent of the savings being realized through a decrease in the cost of office space, and the other 75 per cent from labour. In a news release, Bell stated these reductions would actually ensure future employment in the North, in the long term.
"Although this was not an easy decision, it is necessary to support the long-term strength and viability of our operations. The Ekati Mine is a pillar of the NWT economy, and this cost reduction effort will allow us to continue to provide Northern employment opportunities and benefits well into the future," he stated.
Morland is skeptical however.
"Yeah, well $19 million dollars is a handy chunk of money, that's for sure," he said.
"I'm certain there are other ways of reducing costs. But the board in recent times has acquired at least a couple of members who I would classify as representatives of activist-type shareholders, and activist shareholders by their nature don't really care about local communities as much as they care about the bottom line."
That bottom line, says executive director of the Yellowknife Chamber of Commerce Deneen Everett, is something that's going to effect the rest of the community.
"It's disappointing news. I do believe that it will have an impact on Yellowknife's economy," she said.
"I think importantly we need to start having a discussion, the chamber, our political leaders and our community, about what we can do to ensure that Yellowknife is a more desirable place to do business ... so that we don't see other businesses leave Yellowknife to go to lower cost jurisdictions such as Calgary."
Morland agrees, adding there will be "quite a ripple effect" when not just 100 employees but their families leave town.
"It means that there'll be less money circulating in the local economy," he said.
"The GNWT is going to have less revenue because there will be less payroll tax, there will be less personal tax payed in the Northwest Territories, so that means less money for programs that they may wish to support."
Which means a lot of people, he says, have a lot of explaining to do.
"Brendan ... and the board members better get their tails up to the North and explain themselves very clearly," said Morland.
"The GNWT has a role to play in this, and when they say they're open for business, they need to put their money where their mouth is, and provide incentives."
