Thorunn Howatt
Northern News Services

Yellowknife (Nov 20/02) - The North's third diamond mine is looking more remote. De Beers wants to control where its Northern gems go. But it's a system the GNWT can't live with.

De Beers' international diamond marketing stranglehold remains secure after an organization called the European Commission (EC), in a preliminary decision, approved changes to the diamond giant's international rough diamond distribution system earlier this month.

De Beers Canada applied for permitting in favour of Snap Lake, the NWT's third diamond mine and De Beers' first Canadian mine. But the company has delayed its project twice now, blaming the hold-ups on the NWT's regulatory processes. The sticking point has been a disagreement between the territorial government and De Beers over rough diamonds. De Beers doesn't want to guarantee any NWT gems to come home to be polished in the Canadian North.

The Brussels-based European Commission, an arm of the European Union, is one of the world's anti-trust authorities. The United States, has accused De Beers of monopoly practices.

De Beers controls about 65 per cent of the world's diamond production of roughly US $8 billion annually. That gives it power to influence rough diamond prices. The European Commission should announce its final decision in December.

The point of contention was De Beers' marketing system. The company chooses only a limited number - about 120 exclusive customers - as distributors for its gems. And it gives its buyers difficult terms.

De Beers has agreed to loosen its sales conditions but it still chooses who it will sell to. It has a standard in diamond-producing companies.

When De Beers' gems are mined, they are all sent to the company's trading arm in London then mixed together.

And it doesn't want Canada to break the trend. In the company's Canadian proposal, an international mix of gems would come back to the NWT.