With the worldwide production of diamonds on the decline, mining efforts in Canada’s northern regions are continuing at full speed. The premier Canadian diamond mine is the Diavik mine, located a mere 130 miles south of the Arctic Circle. The mine is a joint venture of Rio Tinto and Harry Winston Diamond. Diavik production in 2007 totaled 11.9 million carats, which is about a tenth of worldwide production. Operations include a 650-foot excavation pit, preliminary work on a second pit, and funds committed to underground operations that will keep the mine productive past 2020. Diavik Mine’s Kimberlite pipes have proven to be even more diamond rich than initially estimated so the owners continue to invest in future production.
Some of the other Canadian diamond mines are having economic troubles due to an unusually warm winter causing shortages of fuel, equipment and supplies. These problems were compounded by the rising Canadian dollar, which increased the cost of diamond production relative to diamond sales that are based on the dollar. Even though diamond prices have increased, the production costs have increased even more, resulting in economic challenges for De Beers’ Snap Lake project. With construction costs, three times original estimates, De Beers recently took a billion dollar write down in stated value of its Canadian diamond mining operations.
De Beer’ Victor mine in Northern Ontario is planned to begin production later this year but it is facing the same financial pressures as the Snap Lake mine. The economic troubles were intensified by the Ontario government increasing the value tax on diamond production from 5 percent to 13 percent, resulting in an 8 percent increased burden on mining operating margins.
Early in the permitting process, De Beers’ Gahcho Kue project east of Yellowknife is projected to have economics that are more favorable. As a result, development efforts are being accelerated to recoup quicker the investments.
Tahera Diamond’s small Jericho mine opened in 2006 in Canada’s Nunavut territory with the financial support of Tiffany & Co. The warm winter limited the use of the ice road necessary to supply the mines and Tahera was unable to meet financial obligations in January and halted mining operations. The mining company is now seeking potential buyers for the company.
While not part of Canada, Greenland shares the same geological craton (stable part of the earth’s crust) which has produced the major diamond productions in Canada. Hudson Resources, an exploration company, is conducting bulk-sampling operations in West Greenland to determine the diamond content of the ore.