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SOMBA K'E/YELLOWKNIFE - Tiffany and Co.'s Laurelton Diamonds polishing plant, located near the Yellowknife Airport, laid off 25 employees on Wednesday.

The plant will close its doors on Feb. 19 due to the high cost of operations and "the lack of opportunity for rough diamond supply," according to a press release issued Wednesday.

Laurelton Diamonds announced Wednesday morning it will be closing down its polishing plant on diamond row out by the airport and laying off 25 employees. - Andrew Livingstone/NNSL photo

Linda Buckley, spokesperson for Tiffany and Co., said 13 of the 38 employees who worked at the polishing plant, which opened in 2003, will be given employment opportunities at other facilities owned by Laurelton outside of Yellowknife.

Buckley said the company was expecting to have more access to rough diamonds when it opened the plant.

"At that point in there were possibilities of other diamond discoveries and the opportunities of an NWT diamond producer to potentially have access to additional supply," she said.

"What turned out to be a lack of additional supply opportunity just didn't make continuing the facility viable."

Laurelton received its rough diamonds through contracts with Rio Tinto and BHP Billiton, operators of the Diavik and Ekatimines, respectively.

Buckley said the closure will not have any effect on Tiffany and Co.'s contracts with the mine companies.

"The rough diamonds we get will be produced at other facilities," she said.

The closure of the Laurelton plant is the fourth in 10 years on "diamond row."

Stephen Ben-Oliel, former owner of Sirius Diamonds, a Yellowknife-based diamond manufacturing plant that went into receivership in 2005, said the opportunities to make money weren't there due to a lack of quality diamonds available to him.

"Fifty-five per cent of the diamonds left in my box were 20 pointers," he said. "There is no 20 pointers cut in the developed world. Only 10 per cent of the diamonds we were left with were the diamonds we could make money on. We were left one two-carat diamond per $1-million cycle.

Ben-Oliel said he's made money all his career cutting diamonds until he headed North where he said the territorial government is letting the multi-national diamond companies walk all over them for their own financial gain.

"I'm cutting diamonds in Vancouver and making lots of money," he said. "I made money every year in my diamond career before I went North and I'm making it back now. For the mines to turn around and say you cannot viably cut diamonds in the North is ludicrous."

When contacted, Lou Covello, president of NWT and Nunavut Chamber of Mines, had not seen the press release issued by Laurelton Diamonds, and said he would not provide any comment until he knew more about the situation.

BHP Billiton spokesperson Deana Twissell also had no details on the plant closure and would not comment on the situation.

Figures released Wednesday show a drop in diamond production at Ekati mine. Production plummeted by 30 per cent in the fourth quarter of 2008 compared to the same three-month period in 2007. BHP stated the production decrease was caused by a change in ore source when underground mines replaced open pit mines. Located about 300 km northeast of Yellowknife, Ekati opened in 1998, and is the first Canadian mine to produce diamonds.