Doug Ashbury
Northern News Services

NNSL (Jun 18/99) - Diavik Diamond Mines maintains it will only consider selling rough diamonds to Northern manufacturers if it makes "good business sense," according to company president Stephen Prest.

The GNWT wants the federal government to put rules in place requiring Diavik Diamond Mines to supply rough diamonds to Northern-based manufacturers. Unable to get a rough diamond guarantee from Diavik Diamond Mines, the GNWT postponed socio-economic agreement talks with the company Tuesday.

Resources, Wildlife and Economic Development Minister Stephen Kakfwi will take the GNWT's position to Rio Tinto chairman Robert Wilson and Aber Resources president and CEO Kenneth Hanna.

"Regarding the value-added issue, both of the participants in the Diavik project (Rio Tinto and Aber Resources) have already committed to sorting in a Northern community to the extent required for production splitting and royalty valuation purposes," Prest said, in a letter to federal and territorial government officials.

"Diavik Diamond Mines has also indicated that it is willing to consider sales of a proportion of its 60 per cent production share to potential customers based in the NWT where this makes good business sense," he said.

Prest adds that it is premature to make specific sales commitments in the near term as production and marketing plans are "evolving."

Diavik remains opens to discussion, he adds.

Aber president and CEO Kenneth Hanna was declined comment.

Tom Hoefer, with Diavik Diamond Mines's community and government affairs department, said the GNWT is free to discuss its position with Rio Tinto and Aber.

But he does not expect Rio Tinto's position will be much different from that of Diavik Diamond Mines.

Hoefer also said a decision to sell rough diamonds to Northern producers would be "premature" because the company, if it gets approval to build the mine, won't be marketing rough diamonds for three years.

Diavik Diamond Mines is negotiating several other agreements, including five impact benefit agreements with aboriginal organizations, and "they have to be consistent with each other," he said.

Diavik Diamond Mines has "always said we are committed to the North," Hoefer said. He pointed to the vast number of community consultation meetings, money for scholarships and Northern hiring as examples.

Except for the rough diamond issue, Hoefer said: "I don't get that sense that any other issues (related to the socio-economic agreement talks) are as contentious as this."

Earlier this week, Premier Jim Antoine said he did not want a repeat of the BHP Diamond's situation.

Antoine said the GNWT had to force BHP to supply rough to Northern producers after permits were issued.

Under an agreement with the GNWT, about 7,000 carats a month from BHP's Ekati mine will go to Northern manufacturers. That's enough for three, possibly four cutting and polishing plants.