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SOMBA K'E/YELLOWKNIFE
The value of diamond production from the territory's three diamond mines increased by about $40 million in 2011, according to preliminary estimates from Natural Resources Canada.

An aerial view of the Diavik Diamond Mine, located 300 km northeast of Yellowknife. The value of diamond production from the Northwest Territories' three diamond mines increased by about $40 million in 2011, over 2010, according to preliminary estimates from Natural Resources Canada. - photo courtesy of Diavik Diamond Mines Inc.

In total, Snap Lake, Ekati, and Diavik -- the three diamond mines located between 200 and 300 km northeast of Yellowknife -- produced an estimated $2,069.63 million dollars in diamonds in 2011, about $40 million more than in 2010, and just over the territory's 2008 diamond production value of $2,056.656 million.

"We're coming out of the recession, too," said Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, noting the turnaround was seen happening last year.

Diamond production value of $2,029.468 million in 2010 was a significant increase over the 2009 estimate of $1,447.940 million.

The diamond mines have not recovered to 2008 production levels and have even decreased production, Hoefer said, but value has recovered due to increasing diamond prices.

"I think one of the realities is our mines are getting deeper, and our production numbers are going down as a result of that," Hoefer said. "But what's sort of helping us here is diamond price increases, which is what is being forecast of course for the future because there just isn't the big supply coming on stream."

Following a steep decline in diamond demand that accompanied the 2008-09 recession, demand was quick to pick up in 2010, according to the Conference Board of Canada, resulting in a "rapid increase in rough diamond prices.

"Global demand should continue to outpace supply in the near term, thanks largely to eager consumers in East and South Asia," the board stated in its most recent Territorial Outlook publication.

Diavik, the territory's largest diamond extractor, produced 6.7 million carats in 2011, and according to the conference board, is expected to ramp production up to 8.3 million carats this year.

Ekati -- the country's first diamond mine -- produced about 2.5 million carats in fiscal 2011, according to the board, with the territory's newest mine, Snap Lake, expected to produce about 1.4 million carats each year.

Gahcho Kue, possibly the territory's fourth diamond mine, located about 280 km northeast of Yellowknife, is expected to begin commercial production in 2016.

Diamond mining accounts for more than a quarter of the territory's total gross domestic output and Hoefer estimates at least 200 companies in the North are benefiting from the diamond mines.

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