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When the phone rings these days in Toronto jeweller Shelly Purdy's studio, it's not unusual for the caller to be someone from Boston or London or as far away as Sydney, Australia, clamouring for a designer piece showcasing a Canadian diamond.

"It's incredible how people will go out of their way" to buy the Canadian stones, Ms. Purdy says.

Ms. Purdy, a goldsmith and jeweller for 11 years and a licensed retailer for diamonds from the Ekati diamond mine in the Northwest Territories, is part of an industry taking off more quickly than any but the brashest optimists expected.

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From a standing start in October, 1998, when Ekati opened, $1-billion (U.S.) of rough diamonds have been produced and sold from Canada's first, and at the moment only, diamond mine.

Vaulting from a non-entity to a major player, Canada is expected to produce 10 per cent of the world's diamond output by value by the end of 2004.

That's when a second diamond mine is expected to come on stream, according to a report by the Northwest Territories.

By the end of 2006, when a third diamond mine is expected to begin production, Canada's share of a global market that in 2000 was worth an estimated $7.5-billion a year at the rough production level -- and a staggering $57.6-billion in retail sales of diamond jewellery -- could hit 12 per cent.

Canada's debut on the diamond scene has taken place as the industry is in transition. Marketing and advertising, once the exclusive province of the legendary De Beers cartel, is being pushed down to manufacturers and retailers as De Beers looks for ways to drive global demand and maintain its profit even as its once near-total hold on distribution lessens.

Last year, De Beers went private and announced a new program that would see its customers pick up more of the tab for advertising and branding. De Beers also announced a joint venture with luxury goods giant LVMH Moët Hennessy-Louis Vuitton to set up a global diamond jewellery retail brand under the De Beers name. The first store under the new banner is expected to open in London before the end of the year.

That move helped make branding, once an unknown factor in the diamond world, a top priority. And Canadian diamonds, thanks to their quality and clear provenance -- no warlords or dire working conditions attached -- are proving a popular commodity.

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"We can't polish them fast enough," says Hilary Jones, director of Arslanian Cutting Works NWT Ltd.

Based in Yellowknife, Arslanian is one of three Yellowknife cutting factories that have rights to 10 per cent of diamond production from Ekati.

Arslanian is polishing stones for BHP Billiton Ltd. of Australia, which owns 80 per cent of the Ekati mine and is marketing stones under its own Aurias brand. Arslanian is also producing polished diamonds for two other major distributors, including New York-based Beny Sofer & Sons LLC, which is selling Ekati diamonds under the Canadia brand, pitching the stones as diamonds that are "as pure as your love."

Sirius Diamonds Ltd., with headquarters in Vancouver and a factory in Yellowknife, is renowned for its Polar Bear Diamond -- stones laser-engraved with a polar bear -- that were introduced in 1999. The approach led to a legal tussle with the territorial government, which uses a polar bear image as its trademark, that is still not fully resolved, says Sirius president Stephen Ben-Oliel.

But Mr. Ben-Oliel says he hopes the matter will be settled in the new year and Sirius will then sign on to the territory's diamond certification program.

In the meantime, Sirius is busy. This month, it signed an agreement with a 118-store retailer in Japan. About half of Sirius's sales, Mr. Ben-Oliel estimates, now come from the United States.

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Like others in the Canadian industry, Mr. Ben-Oliel is reluctant to draw any link between the strong and growing demand for Canadian diamonds and heightened consumer awareness about so-called blood or conflict diamonds -- gems typically from Africa used to buy weapons or otherwise fuel conflict in countries such as Angola or Sierra Leone.

Earlier this month, 52 countries, including Canada, adopted a certification program to help stop the sale of conflict diamonds. Under the agreement, known as the Kimberley Process after the town in South Africa where it began in 2000, diamonds must be accompanied by certificates that detail where rough diamonds came from. The program is to take effect in January. Officials say about 4 per cent of mined diamonds come from areas of conflict, although human rights groups say the total is likely higher.

When the Canadian industry this month unveiled a voluntary code of conduct designed to ensure that diamonds promoted as Canadian are indeed mined in Canada, those involved took pains to emphasize the code was about truth in advertising -- not about blood diamonds.

In what could be seen as typically Canadian style, the idea is to emphasize what's nice about Canadian gems -- and not what's bad about the rest.

"I just say this diamond, from source to sale, has a provenance guarantee like no other diamond in the world," Mr. Ben-Oliel says.

As branding gathers momentum in the diamond world, there is no clear-cut agreement on the best way to go about it. Unlike other luxury goods -- a watch, say, or a car or even luggage -- diamonds are small and to some degree anonymous. The well-trained eye can spot a fake or flaw, but most consumers can't.

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Experts say branding will come through special or unique cuts, value-added items such as certification or the cachet of a particular retailer.

When the Diavik Diamond Project -- only 30 kilometres from Ekati -- gears up for production, expected in the first half of 2003, it has no intention of branding its own diamonds.

Diavik will be relying on the clout, history and sterling reputation of New York jeweller Tiffany & Co.

Tiffany is a minority shareholder of Toronto-based Aber Diamond Corp., which through a subsidiary controls 40 per cent of Diavik. The majority 60-per-cent stake is owned by Diavik Diamond Mines Inc., a subsidiary of Rio Tinto PLC of London.

Tiffany has agreed to purchase a minimum of $50-million a year in diamonds from Aber when Diavik starts producing, and is currently building a $3-million sorting and cutting factory in Yellowknife.

"We are not going to spend time and money developing an Aber brand, when the best brands are already out there," says Matt Manson, vice-president of sales.

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Tiffany's foray into Yellowknife is another reflection of the growing appeal of Canadian diamonds. Ms. Jones, the Arslanian director, can see Tiffany's new plant going up from her office window.

She says she doesn't feel threatened. The entrance of a major player such as Tiffany only adds to the region's credibility, she says. Arslanian is bulking up, having recently signed an agreement to join Rosy Blue NV, an Antwerp-based diamond trading and manufacturing concern with operations in 14 countries.

Sirius, too, is teaming up with a larger player and has signed a letter of intent to sell a 49-per-cent interest to New York-based E. Schreiber Inc.

As the branding efforts intensify, there are concerns about the long-term effects of a booming diamond industry on the Far North and the people who live there. This month, the Canadian Arctic Resources Committee, a non-governmental organization with offices in Ottawa and Yellowknife, kicked off a four-year study of development that will focus on the Slave Geological Province. The region, stretching from Great Slave Lake in the Northwest Territories to the Arctic coast in Nunavut, is home to a gold mine, the Ekati diamond mine and Diavik, now under construction. Currently, there are more than 30 exploration projects under way in the region.

And amid all the talk of branding, certification and added value, there is -- at least publicly -- no hard sell.

"The thing about a diamond is that it is a symbol," says Paul Lombardi, vice-president of Henry Birks & Sons Inc.

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Birks is selling Canadian diamonds but takes a muted approach in promoting them, he says. "You have to be very careful about losing what a diamond means to people."

Where diamonds come from

World production (Total: $7,868,000)

$million (U.S.)

Botswana, $2,125

Russia, $1,595

South Africa, $1,111

Angola, $739

Congo, $585

Other, $471

Canada, $455

Namibia, $420

Australia, $367

Sources: American Museum of Natural History and Government of the Northwest Territories, 2000

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