YELLOWKNIFE - Starting in 2008, De Beers guarantees it will provide rough diamonds from its Snap Lake mine to Yellowknife cutting and polishing factories.

Jeannine Pilon, Canada's first woman round brilliant diamond polisher, works at Arslanian Cutting House. Brendan Bell said the deal inked by the government with De Beers should create more jobs like hers in the city. - Stephanie McDonald/NNSL photo Snap Lake Facts: The mine is about 220 kilometres northeast of Yellowknife. Capital cost to build the mine is $636 million During planning for Snap Lake, De Beers estimated annual production at 1.5 million carats, worth about $187 per carat De Beers is also developing the Gahcho Kue mine, in partnership with Mountain Province Diamonds. Gahcho Kue is expected to produce about three million carats of diamonds a year

The agreement between the territorial government and the global mining giant follows similar agreements between the territorial government and the Ekati and Diavik mines.

The De Beers deal specifies it will make 10 per cent of the rough diamonds by value available to Northern cutters and polishers. Based on current estimates, production at Snap Lake will average $280 million worth of gems annually over the life of the mine.

The difference between this agreement and the other two is that it is a contract and therefore provides more certainty, said Industry, Tourism and Investment Minister Brendan Bell.

In the previous two cases, there was little more than an exchange of letters between the government and BHP Billiton and Rio Tinto, part owners of Ekati and Diavik respectively.

"This step supports the government of the NWT's objective of promoting sustainable local industry and its use of branding to increase consumer demand for diamond jewelry," said Cathie Bolstad, manager of public and corporate affairs of De Beers NWT projects.

NWT manufacturers interested in processing and distributing these diamonds will have to fulfill the Diamond Trading Company's (DTC) client selection criteria. DTC is the marketing arm of De Beers.

The exact conditions won't be announced until next month in Toronto, but Bolstad said the DTC typically looks at three things: a company's ability to add value to the diamonds, financial standing, and adherence to ethical business practices.

Each contract lasts for three years, at which time it will have to be renewed.

Bell said he is confident that the local industry can make use of the 10 per cent of rough diamonds pledged through the deal.

"We need the biggest and most valuable diamonds left here," Bell said.

Neither the GNWT nor De Beers was able to comment on whether any guarantees in terms of size, price or quality had been enshrined in the agreement - something manufacturers called on the government to do last year after Bell admitted that was something the previous two deals had failed to do.

"We want our factories to make money, employ NWT residents and pay taxes," he said. "The more rough we can bring through, the more able we will be able to do this."

De Beers has committed to providing training in diamond sorting for NWT residents as part of the deal.

"Production at Snap Lake is quite small compared to the other two diamond mines in the NWT," said Bolstad. Therefore, she anticipated only one or two positions will be created from this agreement with the mine.

Training will involve a combination of classroom and hands-on work.

The minister said the true benefits of job creation would be seen at the cutting houses.

"Local factories will be able to ramp up production," Bell said, adding he also hopes diamond sorting, currently done exclusively overseas, will be able to move to the NWT when workers here are trained.

There are three cutting houses in Yellowknife, including the Polar Bear Diamond Factory, Laurelton Diamonds, and Arslanian Cutting Works, which together employ about 110 cutters and polishers.

Bob Bies, director of Arslanian, said the agreement is a positive step. He has been vocal in the past about flaws in the previous two deals.

"I am very happy De Beers is coming to the plate," he said. "We'd like to be considered as a Northern customer of De Beers."

Diamond manufacturing in the NWT is estimated to be worth about $9 million, according to the Department of Industry, Tourism and Investment. It also estimates diamond manufacturing could be worth $20 million if all of the city's factories were operating at peak capacity.