Yellowknife (Jun 02/06) - Faced with uncertainty due to local diamond supply issues, the president of Arslanian Cutting Works says a new deal with BHP Billiton has improved the prospects.

"This deal was crucial for the long-term viability for the industry," said Chahe Arslanian, who was forced to buy diamonds overseas to handle customer demands.

"Without this our situation could've been difficult. I don't want to say that without the deal we wouldn't exist but we could've been in danger."

Several months ago Arslanian, whose factories employ 62 people, had concerns that the rough diamonds it was getting from BHP Billiton's Ekati mine were not what up to Canadian market standards and that the price was too high.

"We raised these concerns with BHP and they approached us with goodwill, they listened and finally we were able to come to an agreement," added Arslanian.

Spokesperson for BHP Deanna Twissell says hammering out the new three-year deal was a matter of tweaking the previous Memorandum of Understanding the mineral giant had with Arslanian.

"What we've done is tailored (the MOU) because they expressed to us a need for a different allocation that better meets the needs of their customers," Twissell explained. "We were able to accommodate these things and we will provide similar arrangements with other polishers."

Such an arrangement, Arslanian believes, could revive Dene Diamonds, which was forced to close its operations due to similar issues over rough diamond supply and pricing it had with BHP.

When Yellowknifer contacted the Department of Industry, Tourism and Investment for comment on the new memorandum of understanding between Arslanian and BHP, the office appeared unaware of the deal.

"We can't say anything until we've got an official announcement," said Bell's executive assistant Pietro Debastiani. "We've encouraged parties to work together and Minister Bell encouraged all the value-added companies to work closer with industry."

Though BHP and Arslanian acknowledge ongoing support from the GNWT, Twissell downplayed the government's role in this recent deal.

"(The GNWT) had nothing whatsoever to do with this," she said. "While we do meet with (the GNWT) now and again, these latest rounds of discussions were already in the works as the MOUs were up for renewals."