NNSL (Mar 27/98) - NWT Finance Minister John Todd doesn't want to fight, but he is disappointed with BHP's public refusal to sell a portion of the rough diamonds to the GNWT.

"That's sad if they're taking that hard-line approach," said Todd (left). "That's unfortunate for Yellowknife."

In February, the GNWT said it wants to buy $50 million worth of rough diamonds a year, at the same price BHP would charge De Beers, the international diamond marketer. At the time, BHP spokesperson Graham Nicholls told the territorial government they would prefer not to sell diamonds to a government agency or to arms of government.

Nicholls reinforced this point this week, leaving little room for doubt about the company's intentions.

"We do not wish to get into a sales relationship with the GNWT or with other government agencies," Nicholls told Yellowknifer. We don't see that as being a necessary mechanism in order to encourage value-added industries in the North."

Nicholls said it is unlikely BHP will sell directly to a large number of Canadian manufacturers. "Certainly that does not preclude people in Canada and in the North from coming forward with business proposals, but we expect them to meet normal, conventional market terms, conditions and prices."

BHP's preference, because it is a producer, is to look to large blocks of sales, but it is not confined to that approach.

When asked to give a rough estimate about the sale potential, based on the current businesses engaged in cutting and polishing, Nicholls offered $20 million.

So far, six companies have come forward in Canada to purchase rough diamonds, the GNWT no included.

"I frankly don't understand this. Why wouldn't they sell? They haven't seen the agency we want to put in place," Todd said.

The GNWT will have to take a hard look at what the alternatives are now, but Todd noted it would be inappropriate to say what they're going a be.

"They made a public commitment they would sell diamonds to Canadians. I think they should be selling to Northern Canadians," he said.

Julia Mott, spokesperson for the Yellowknife Diamond Industry Task Force, said the GNWT's purchasing of diamonds is entirely a matter for Northern politicians, not the task force.

"What the task force wants is to increase the economic base of Yellowknife. Who buys the diamonds is almost irrelevant, as long as they're located here and jobs and opportunities are offered to Yellowknife," said Mott.

Mott said she doesn't think the GNWT will give up on the purchase of diamonds, suggesting other things will evolve over a period of time.

"I would be very happy to sell my product to firstly whoever would pay the price that I was looking for and secondly for whoever would offer some spin-off benefits to the community," she said.

But Mott added that she understands BHP's reluctance to sell to the GNWT with division coming up.

Task force co-chair and Yellowknife Mayor Dave Lovell agrees with Mott. "How it is done to me is not important. What is important is that it's done," he said.

Lovell, however, said he still supports the government's efforts to secure diamonds.