by Doug Ashbury
Northern News Services

NNSL (Jan 14/98) - Economic Development Minister Stephen Kakfwi is convinced the NWT's diamonds must be sorted and evaluated as close to home as possible.

"Maximum valuation should be done in Canada, before the diamonds are shipped abroad," he said. "Valuation of only five or 10 per cent of the diamonds is not enough."

Kakfwi and his deputy minister, Joe Handley, GNWT diamond director Martin Irving and NWT Chamber of Commerce president David Connelly just returned from a week-long trip to London and Antwerp.

It was Kakfwi's first diamond trip. He said he wanted to hear from experts, dealers and the private sector as to why maximum diamond sorting and evaluation can't be done in the North -- if we make it attractive.

"The diamond people will go where there is minimum tax," he said.

While in Europe, Northerners met with dealers of rough diamonds who cut, polish and sell diamonds -- as well as representatives of the De Beers' Central Selling Organization, which controls most of the world's diamond market, and Argyle Diamonds, an Australian-based producer.

For the federal government to allow diamonds to leave the country without maximum evaluation is "incredulous," Kakfwi said.

At the recent GeoScience Forum in Yellowknife, a senior federal bureaucrat told Northerners that, under Canadian mining rules, Ottawa can only require companies to sort and evaluate for royalty purposes.

If the federal government believes minimal sorting and evaluation would be in Canada's best interest, then it is taking a "naive leap of faith," Kakfwi said.

"I've heard from people involved and I'm still of the view we have to do maximum evaluation off-site (in a community away from the mine)."

But Kakfwi said he does not believe the GNWT should be a buyer of rough diamonds. Instead, it should create opportunities for the private sector by promoting the sale of rough diamonds in the territories. That means a tax-friendly environment, he added.

"(From) everything we've heard, if government buys and possesses diamonds, everybody will try and rip the government off."

Kakfwi hopes to meet with BHP, the developers of the NWT's first diamond mine, in the next few weeks, to further discuss diamond sorting and evaluation and the sale of rough diamonds.

He said the sale of rough diamonds in the North is not a "contentious" issue.

If there is a consistent supply of rough diamonds, buyers of rough diamonds will come to the North.

Yellowknife South MLA Seamus Henry said if there are to be no value-added benefits, then "the finance minister's comment on bringing in a tax regime that would 'choke a mule' are starting to look more and more appropriate."

Henry was responding to BHP spokesman Graham Nicholls's comment that the company's position on sorting and evaluation is clearly outlined in the environmental impact statement, which says cleaning and final sorting will likely be done in Antwerp, Belgium.

Expertise in sorting and evaluation could be brought to the North to train Northerners, thereby "maximizing the benefits."