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Uncertainty looms over Ekati
Workers worried about future as BHP Billiton reviews its diamonds business

Thandie Vela
Northern News Services
Published Wednesday, December 7, 2011

Uncertainty over the future of the Ekati Diamond Mine continues to prevail after last week's announcement by proponent BHP Billiton that the mining giant is reviewing its diamonds business.

NNSL photo/graphic

An aerial view of the Ekati Diamond Mine, located about 310 km northeast of Yellowknife, from August 2010. - courtesy of BHP Billiton

The strategic review includes consideration of the sale of Ekati, BHP said--a possibility that came as a surprise to many stakeholders, including the diamond mine's 1400 employees.

"Our membership is very concerned about what this means and what impact it will have on their employment," said Todd Parsons, president of the Union of Northern Workers (UNW), which has about 350 members employed at Ekati. "BHP and the UNW have a very good working relationship and we have for many years, so we're hopeful that the employer will continue providing up to date information as they go through their review process."

With total expenditure on goods and services for Ekati exceeding $4.2 billion since operations began in 1998, almost 80 per cent of which is spent in the North, the Yellowknife Chamber of Commerce is closely watching the review process, but not concerned.

"They're not talking about closing down; they're not talking about downsizing," chamber president Larry Jacquard said. "It's a normal business practice for all organizations to revise if they are maximizing efficency and focusing their energy in the right areas."

NWT and Nunavut Chamber of Mines executive director Tom Hoefer agreed.

"We don't see this as something to be concerned about," Hoefer said. "The company is having a look at whether the diamonds business still fits within their bigger business, and that's good corporate practice to have a look at yourself every so often."

BHP's diamonds business is comprised of Ekati, and the Chidliak diamond exploration project on Baffin Island. While Ekati has produced an average of more than three million carats of rough diamonds per year over the last three years, the mine makes up a small fraction of the multi-commodity business's assets, which include petroleum, coal, base metal and potash holdings, and major iron ore assets in western Australia.

The Melbourne, Australia-based company has emphasized that it will only pursue options that preserve Ekati's safety and environmental standards and protect the benefits the mine has created for local communities, and with the rising price of diamonds and Ekati's resource potential, there are several capable companies that might be attracted to taking over the mine, Hoefer said.

"Ultimately, it is a world-class operation," Hoefer said. "There are well over 150 kimberlite pipes on their property, and quite a number of them do contain diamonds, so there's good potential as well for the life of the mine to be extended."

The life of the mine has been estimated to extend into the next seven years, and the Wek'eezhii Land and Water Board, which manages the development area hosting Ekati, is confident that the conditions of the water licences and land use permits will be upheld whether BHP continues to operate the mine or passes it on to another company.

"How (Ekati) operates in the future shouldn't be affected by who is doing the operation from a regulatory perspective," executive director Mark Cliffe-Phillips said. "The boards do have processes for the transfer of water licenses and land use permits, and all the commitments that are currently made by BHP would have to be committed to by any new company that does potentially come in."

Currently, a total reclamation security of $124-million is being held to cover environmental liabilities for the eventual closure and reclamation of the mine. If the mine is sold, the security would not be returned until adequate security is submitted and accepted from the new buyer.

BHP expects to have the review of its diamonds portfolio completed by the end of January 2012.

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