Doug Ashbury
Northern News Services

NNSL (Sep 22/99) - Switching to underground mining would have cut Diavik's diamond production by almost half and dramatically reduce revenue, according to a recent federal government Diavik project report.

"Diavik (Diamond Mines) estimated that the mineable ore reserves would decrease from 26 million tonnes to 14 million tonnes with an underground alternative. This would result in a decrease in diamond production from 102 million carats to 60 million carats and a loss of $3.5 billion," the responsible authorities (departments of Indian Affairs and Northern Development, Fisheries and Oceans and Natural Resources) said.

The loss of diamond recovery would result from the need to leave up to 100 metres of rock in place for safety reasons.

The resources Diavik considers either unavailable or uneconomic by all underground mining include the crown pillar -- an area or rock left in place -- the entire resource of A154N and A21 kimberlite pipes and areas of A418, A154S pipes.

In the report, released earlier this month, the responsible authorities also said going with an underground option would reduce mine life to 14 years from 20 and raise mine development to three years from two.

The authorities agreed with Diavik Diamond Mines' assertion that an underground alternative is not an economically feasible one.

The report includes responses to public comments on the Diavik diamonds project comprehensive study report required under the Canadian Environmental Assessment Act.

Diavik spokesperson Tom Hoefer said underground mining versus open pit was an issue environmental groups had raised.

"There was a special technical session on the issue," he said.

Overall, Hoefer said the report provides "confidence," not only for the company but also for the public, in the work that has been done so far. No issues were raised in the public comment that had not been addressed in the comprehensive study process.

The report also revealed federal funding of approximately $1 million.

Funding was provided to various organizations to assist with the environmental review process.

Aboriginal organizations received $726,620. The money went to Dogrib Treaty 11 Council, Deninu K'ue First Nation, Kitikmeot Inuit Association, Lutsel K'e Dene First Nation, North Slave Metis Alliance and Yellowknives Dene First Nation.

Canadian Parks and Wilderness Society, NWT chapter, and the Status of Women Council of the NWT received $42,648.

A $228,500 joint- proposal by Canadian Arctic Resources Committee, NWT Wildlife Federation, CPWS, and Ecology North was rejected. The federal government offered the group $46,000 which was refused.

At a cost of $150,000, a project secretariat was developed and DIAND hired an independent project manager in connection with the Diavik review.

On secondary diamond, the authorities "maintain that the value-added issue is outside the scope of the comprehensive study report" yet, in a contradictory statement, they "continue to fully support the development of a value-added diamond industry."

The territorial government and Diavik Diamond Mines dealt with secondary diamond industry -- a main area was supply of rough diamonds for NWT-based manufacturers -- through the recent memorandum of understanding. The MOU will likely be part of, or linked to, the pending socio-economic agreement.