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Now that that pit has reached its bottom, miners are digging a network of tunnels to extract what remains of the carrot-shaped deposit of kimberlite that they have been pulling from the ground for nearly a decade. (JOHN LEHMANN/JOHN LEHMANN/GLOBE AND MAIL)
Now that that pit has reached its bottom, miners are digging a network of tunnels to extract what remains of the carrot-shaped deposit of kimberlite that they have been pulling from the ground for nearly a decade. (JOHN LEHMANN/JOHN LEHMANN/GLOBE AND MAIL)

Mining

The North scrapes bottom Add to ...

Ninety metres below a gaping hole in the subarctic Barren Lands, a huge square tunnel ends at a wall of dark rock. Overhead, water drips from Lac de Gras, the epicentre of Canada's diamond boom.

The dripping is a reminder that the lake's shores were moved to make way for an open-pit mine. Now that that pit has reached its bottom, miners are down here digging a network of tunnels to extract what remains of the carrot-shaped deposit of kimberlite that they have been pulling from the ground for nearly a decade. In the light of their lamps, the rock looks black as coal.

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Hidden inside are the diamonds that have shaped the fate of the Northwest Territories for the past 20 years. Between Diavik and other diamond mines, the wealth at Lac de Gras, about 300 kilometres north of Yellowknife, accounts for nearly a quarter of the territorial economy. Diamonds have pumped billions into local businesses and bank accounts, and have been a catalyst for remarkable social change, including dramatic increases in graduation rates in some aboriginal communities as economic success is passed from generation to generation.

View more photos from the mine

But the fact that miners are working 90 metres underground, and not still scraping away the surface, points to the end of the boom. A place already rocked by the global downturn now faces the reality that its payday resource is running out.

One former government official warns that a looming lack of jobs may create a "lost generation"; another refers to the coming years as Exodus 4, the latest painful chapter for a territory that has witnessed severe busts before.

It is a bitterly dramatic transformation for a place that not long ago held abundant promise. People flocked north for plentiful, high-paying jobs and a pristine landscape that invited outdoor play.

Now people are leaving, businesses are looking for work elsewhere, and both executives and leaders warn that the NWT could find itself severely pinched in the years to come. A push to create a diamond-polishing industry has largely failed, with only a few remaining polishers left in Yellowknife. Efforts to boost tourism have similarly floundered.

Many have lost hope that the Mackenzie Valley natural gas pipeline, which was seen as the territory's ticket to self-sufficiency, will be built any time soon.

As for the dwindling diamonds, both Diavik and BHP Billiton's Ekati, the other big mine, officially will stay open for another decade. But executives privately worry that operations will be scaled back as early as 2016.

"I would draw the analogy to harvesting an animal," says Bob Gannicott, the chairman and chief executive officer of Harry Winston Diamond Corp., the luxury retailer that owns a 40-per-cent stake of Diavik. (The 60 per cent owned by mining giant Rio Tinto PLC.) "We've already had the T-bone steak and we've already had the prime rib roast of this particular animal. We now have to move on to the hamburger and the chuck steak."

The diamonds dry up

The NWT has stared down death before. In the late 1980s, when Yellowknife's founding gold mines were closing, the diamond rush suddenly swept in, more than filling the void.

"The North has been good to a lot of people," says Erik Marsden, who runs the ice roads that serve the diamond mines, and is Diavik's longest-serving employee, with 14 years under his belt. "There's always something that comes over the horizon and takes the place of something else."

Few people have the negative perspective of Mr. Gannicott, who has spent three decades in the North and was a key force in the discovery of Diavik. Despite Harry Winston's New York face, Mr. Gannicott spends significant time in Yellowknife, where he keeps a home.

Watch videos about the mine on Diavik Diamond Mines Inc.'s website

"We're past high noon here now," he says, as he sits overlooking a ski plane runway that has grown strangely quiet in the past year. Like many here, he knows that several small NWT mines are under development. Avalon Resources Ltd. is pursuing a rare-earth minerals deposit. De Beers, which runs the smaller Snap Lake diamond mine, has also revived its effort to build a second mine, called Gahcho Kue. And exploration could soon begin in the Arctic offshore, where BP PLC and Exxon Mobil Corp. have committed to $2-billion in spending.

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