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SOMBA K'E/YELLOWKNIFE - If it were possible to gauge feelings on Yellowknife's wavering secondary diamond industry by one of those cartoon danger scales, Mayor Gord Van Tighem's marker would be buzzing in the orange.

Arslanian employee Omisha Gulyann works with the automatic polishing machines. Omisha is just one of 37 Arslanian employees who's job hangs by a fraying thread – dependant on negotiations with the territorial government and a shaky economic market. - Lauren McKeon/NNSL photo

"I have an active concern. I haven't reached worry yet," said Van Tighem, when asked whether recent news of trouble at Arslanian Cutting Works had him worried over the death of the city's cutting and polishing industry.

As reported in Wednesday's Yellowknifer, last week's talks between brass at Arslanian and the territorial government broke down, prompting the company's key funder, New York-based Gary Barnett, to reconsider his investment.

If Arslanian and sister factory, next-door Polar Bear Diamond, shut down they will become the fifth and sixth to do so in Yellowknife in the last decade, leaving HRA Crossworks Manufacturing the sole plant left in town.

In February, Arslanian laid off five of its 50 workers and warned more cuts could be on the way - eight others have since been laid off - if the government didn't step in to negotiate changes to the territory's regulations regarding polishing plants and the buying and selling of rough diamonds.

For Arslanian, that means allowing the plant to sell diamond rough it doesn't have the capacity to process to another company that may have a shortage.

Currently, it must manufacture 100 per cent of its allocation in the NWT - a hard task in a shrunken market with little appetite for diamonds.

While things initially looked promising, with the GNWT agreeing to enter into discussions, those same talks broke off last Wednesday morning, ending with Bob McLeod, Industry, Tourism and Investment minister, calling Arslanian's demands "threats."

Van Tighem confirmed he has spoken to McLeod and "encouraged the minister to take some positive steps."

"I think this is the time that the government could reinvigorate their Northern diamond strategy that they started out very wisely several years ago and haven't been paying a lot of attention to," he said.

While Van Tighem said there isn't much the city could directly do to prop up the secondary diamond industry, he emphasized Yellowknife can work to promote industry involvement in programs like diamond tourism.

When asked if the territorial government is doing enough Van Tighem answered: "Well if (the GNWT) are in discussion then they're probably moving some way of trying to work within the parameters that they can work to."

He said if the current policy on selling diamond rough isn't working then, "its key at this stage that the government look back at what the original concepts were and see what ways they can work with secondary industries to ensure they can survive current challenges."

When Yellowknifer attempted to contact McLeod we were told the minister was out of town and unreachable while he was on holiday.

Drew Williams, acting communications coordinator for the cabinet, said McLeod has been in close contact with Arslanian up until the time he left for vacation.

As for whether or not the government will budge on letting Arslanian sell its rough: "The GNWT remains supportive of (the company) and committed to the secondary diamond industry and has committed to reviewing the diamond policy with members of the legislative assembly," said Williams.

Members of Arslanian, including Barnett, the company's owner, Ron Basal, and the factory's general manager, Bob Bies, have all agreed the government doesn't want the industry to fail.

Neither does the Yellowknife Chamber of Commerce. Indeed, as Ellie Sasseville, executive director of the chamber, pointed out any loss of business in Yellowknife is a loss.

"We're hoping talks resume and things ... work out. We want to see the secondary diamond industry flourish in Yellowknife," she said.