Jess McDiarmid
Northern News Services
Published Wednesday, January 16, 2008

YELLOWKNIFE - Pull into Yellowknife and jump on a plane. Fly out to the diamond mines at Ekati or Diavik, checking out the winter roads along the way.

Spend an afternoon touring the mine before heading back to the capital where you can go to a cutting and polishing factory and see rough diamonds transformed into precious gems, earrings, rings.

Then hit up a downtown jewellery store to buy Northwest Territories diamonds in the city in which they were processed - at the lowest prices in Canada.

This is the vision of Peter Neugebauer, director of economic development for the city. While the city trademarked the title "Diamond capital of North America" years ago, the diamond tourism story isn't complete, he says. And it won't be until people can buy diamonds cheaper here than anywhere else in Canada.

"Pricing is really part of it and folks in the industry cringe when I say that but to me it's so obvious. How many guys do you know who have gone to Cuba and brought back a box of cigars, because that's what you do when you're there?" says Neugebauer. "We're cranking out just north of here what's about 15 per cent of the world's diamonds."

Yellowknife has a reputation as a diamond mining city now, says Neugebauer. But without agreements bringing mines and processors on board, it can put up all the signs and banners it wants but it won't be enough.

"What you really need to do is go back upstream where the decisions are really made and you have to go into these agreements with the mines, you have to convince them that diamond tourism is a good thing and they should be telling their story."

In an industry where more than US $59 billion changes hands worldwide each year, even small increases in visitors and their expenditures would have huge economic benefits for Yellowknife and the Northwest Territories.

A 2004 report on diamond tourism estimated that the territory could increase the 59,000 visitors each year by one per cent if diamonds and tourism were marketed effectively.

"The Perfect Setting: Diamond Tourism in the Northwest Territories" also projected 15 per cent of those visitors could be convinced to spend an extra $500 on diamond products or experiences, such as tours, meaning about $5.38 million in additional expenditures in the first year alone. That would contribute $1.142-million to the territorial GDP and create an estimated 27 jobs.

It's not up to the city to push through any agreements with mines but rather that of the territorial government, according to Neugebauer. But the territory doesn't seem interested in getting into debates with companies about tourism, which leaves the city to do what it can, he says.

"There's two ways to approach diamond tourism. One is to bang your head against the wall and try to get people out to the diamond mines or in the tours of plants," he says. "Or the other side of the coin is to support activities like the Northern visitors' centre display and to try convince local jewellers to get together and develop some programs."

The Northern Frontiers Visitors Centre has a new diamond-heavy display in the works, supported by the federal, territorial and municipal governments along with the mines and other local businesses. The display, which has a $700,000 price tag, is expected to be complete by March.

Richard Zieba, director of tourism and parks in the GNWT's Department of Industry, Tourism and Investment, says it's unlikely mine tours will ever happen.

"The diamond mines have consistently indicated that they do not want to bring visitors into the mines," says Zieba.

There are concerns about security of diamonds and proprietary information, safety and liability and the time and effort conducting tours would take. He says plants aren't set up for tours and it's not the place of the government to try influence the price at which diamonds are sold.

"It would be a form of market influence that is not appropriate for government," says Zieba.

The point of view of his division, he says, is that while there are benefits to be gleaned from diamond tourism, that's not going to draw people to the territory alone. The division is promoting package deals for tourists where the diamond experience would be included along with other draws such as the Northern Lights.

Officials in the diamond industry also say some of the tourism ideas aren't feasible.

Bob Bies is the director of Arslanian Cutting Works NWT Ltd., a 56-employee company that processes diamonds from rough form to the gem you see adorning a finger or ear.

Bringing tourists through its factories on Highway 3 just isn't possible, says Bies.

"We're just not set up to do that," he says. "In order to do that, the government would have had to have a vision before this was all happening ... It's just not feasible for us. It's a security risk and it's also a safety issue."

Buildings would need to be designed differently, likely with a glass partition separating the public from processing, says Bies.

"But we're not designed that way. We're designed to produce diamonds for manufacturing purposes. Tourism was not given any consideration when they designed these buildings."

Arslanian processes about 3,500 carats of rough diamonds a month, which is then shipped to Polar Ice in Montreal. The company couldn't provide discounts to local merchants, says Bies.

In the diamond industry, the high profit margins lie with the mines and the retailers, while in-between operators are "like farmers," Bies says.

"Our profit margins are probably five to six per cent," he says. "We deal in high volume, that's how we survive. When you're dealing with that small of profit margins, for us to be able to reduce the price is not even in the question, it's just not possible."

Bies says he understands people's frustration that more can't be done. If the infrastructure and buildings were in place, he says tours would be "a great thing."

"But it's just not there, the infrastructure is not there," he says.

Tom Hoefer, manager of public affairs at Diavik, says that with the location of the diamond mines, bringing tourists there would be neither safe nor practical.

"It's asking a lot to try and turn an operating mine that's 300 kilometres away in the tundra into a tourism destination," says Hoefer.

Diavik put in a visitors' centre at its office in downtown Yellowknife in an effort to educate people on what the mine does and is a supporter - both financial and with expertise and materials - of the diamond display going in at the visitors' centre.

It also provided unprecedented access for the History Channel's TV series Ice Road Truckers last year, which catapulted Yellowknife to international recognition, though it has since withdrawn that support.

Hoefer says the city could capitalize more on its mining roots and do more to "theme" the city as a mining hotspot.

"You go to places like Whitehorse where they had a goldrush in 1898 and they've managed to keep that message alive and well and have capitalized a great deal on it for the tourism trade," says Hoefer. "There's a lot of stuff out there that could be used a lot better, we just haven't taken advantage of it."

In hindsight, says Neugebauer, the city could have done better at capitalizing on the diamond industry at its beginnings in the 1990s.

"The city never claimed to be an affected party," he says. "If you had it to do all over again, you'd be in there like a dirty shirt."

But despite the challenges in promoting Yellowknife as a diamond tourism hotspot, Neugebauer says he thinks things are building momentum. The territorial government has a certification program for Arctic diamonds that's gaining recognition and is working with the two mines currently in development. That, combined with the "Diamond capital of North America" logo and the new visitors' centre display, are positive steps, he says.

"Even if people right now are a little disappointed with what they can do and can't do, we've created a buzz about it," says Neugebauer. "It's a long way from being perfect but it's probably a lot more positive than it's been in a few years."