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Companies make a mark on Yellowknife economy

Payroll could top $13 million in 2003

Andrew Raven
Northern News Services

Yellowknife (Oct 01/03) - Despite several long-term challenges, the diamond polishing industry has become a significant player in Yellowknife's economy with about 200 workers at four plants.

Sirius and Canadian Dene Diamonds (a partnership of the Deton Cho Corp. and Schacter and Namdar, an Israeli company that is one of the world's largest polishers) employ about 50 people at full capacity and dole out nearly $5 million in pay per year.

Arslanian Cutting Works and Laurelton (a fully-owned subsidiary of diamond giant Tiffany and Co.) will employ about 125 polishers by the end of the year, but would not release payroll information.

Assuming they pay roughly the same salaries as Sirius and Canadian Dene Diamonds, the four polishing house have a potential payroll of about $13 million in 2003, about equal to Con Mine's payroll.

"This is an important industry for Yellowknife," said Mayor Gord Van Tighem.

"I really congratulate the GNWT for putting their foot down. It's important that the diamonds don't just fly over Yellowknife."

Van Tighem was also encouraged by the fact that a secondary diamond industry is developing in Yellowknife, which includes a shop in the western end of the city that sells polishing equipment.

The diamond industry has also played in a key role in Yellowknife's overseas marketing.

In Japan, the city has an ad campaign featuring Princess Aurora, a fictional character with a diamond in her tiara.

"We've tried to associate Yellowknife with diamonds and the aurora," said Van Tighem, noting the city has patented the name "Diamond Capital of the North America."

"(Diamonds) are a huge part of our economic diversification plan."

While polishing has become an integral part of Yellowknife's economy, many in the industry wonder whether or not it has reached its peak.

"I don't think it will ever be a huge industry," said Neil McFadden, Deton Cho's CEO.

McFadden estimates that at its peak, diamond polishing could employ up to 400 people.

"This is a hard place to make money polishing diamonds here," he said. "But it could still be an important employer in the community."

There are questions as to whether or not the industry will live up to government expectations.

Under the terms of an agreement with the territorial government, BHP Billiton agreed to provide northern polishers with up to eight per cent of the rough diamonds mined at Ekati.

Last year, Yellowknife polishers purchased just 2.8 per cent of available rough diamonds, followed by 3.8 per cent this year, said Denise Burlingame, a spokesperson for BHP.

"The rest were sold elsewhere," she said.

A number of Yellowknife polishers have discovered the road to economic prosperity isn't always paved in diamonds.

In 2002, Deton Cho Diamonds closed its polishing plant in Ndilo and laid off 35 workers. At the time, company officials cited high worker turnover and an extended learning curve for new polishers as the reasons for its demise.

In July of this year, the company re-opened under the name Canadian Dene Diamonds, but ran into problems when a number of workers left to work at rival Laurelton Diamonds.

Despite media reports to the contrary, McFadden said the mass exodus was expected.

"We've been planning for this for a while," he said, noting the company is shutting down for the Jewish New Year, not a shortage of qualified labour.

He said the factory will re-open with new workers in about three weeks.

Sirius Diamonds, the only Canadian-owned polisher in Yellowknife, has also experienced difficulty turning a profit.

"We're keeping our heads above water," said manager Peter Finnemore.

"But I came up here to get this factory off the ground and we're determined to make this work."