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File photo of the Ekati diamond mine.

The mine that helped put Canada on the global diamond map could soon be for sale, put in play by the industry's shifting economics and an inexorable drop in production.

The Ekati mine in the Northwest Territories, which is nearing the end of its life in 2019, is under review by mining giant BHP Billiton Ltd. , which said Tuesday that it could quit the diamond mining business in Canada. BHP owns 80 per cent of Ekati, the country's first diamond mine, and 51 per cent of the Chidliak project on Baffin Island.

It's studying whether diamonds, which represent less than 2 per cent of its annual profit, should still be part of a business dominated by much larger industrial commodities such as iron ore, coal and base metals, and its foray into potash.

Its strategy is to invest in bigger, long-term assets as it ramps up production to meet growing demand for metals, largely from China.

The move is the latest in what is becoming a major shift in the diamond business, in terms of both ownership and demand. Earlier this month, the legendary Oppenheimer family sold its stake in DeBeers to Anglo American, while Russian giant Alrosa is said to be considering going public.

At the same time, global demand is rising, particularly in emerging economies such as China, where there are an estimated 12 million marriages a year, and the number of jewellery-worthy stones to slip on fingers is sliding. Diamond prices have topped pre-recession highs as demand outstrips supply.

Most rough diamonds from Ekati are sold to international diamond buyers through BHP's sales office in Antwerp, Belgium, as well as Canadian manufacturers based in the Northwest Territories.

Ekati, about 200 kilometres south of the Arctic Circle, helped make Canada a major player in the global gem business. With average annual production of more than three million carats of rough diamonds over the past three years, its sales account for about 10 per cent of global supply.

Canada has become a top player in the industry since the discovery of Ekati, and as consumers turned their back on so-called "blood diamonds" produced in war zones in regions such as Africa, where much of the world's diamonds are produced. Canada joined an international movement to block their sale and took a step further by certifying diamonds produced in the country as conflict-free. The Northwest Territories developed a first-of-its-kind certification program to monitor diamonds from mine to market.

But there are few new mine discoveries, BHP noted in its announcement.

"Ekati is a world-class operation and Chidliak is a promising exploration opportunity, but many years of extensive exploration suggest there are few options to develop new diamond mines that are consistent with this approach," BHP said.

The company said the review may not necessarily lead to a sale, but analysts say there are likely a handful of potential buyers of the diamond business, which they estimate is worth more than $1.7-billion (U.S.). Potential buyers could include Alrosa, which accounts for approximately 25 per cent of the world's rough diamond supply, as well as Anglo American and possibly Rio Tinto PLC, which runs the Diavik diamond mine, not far from Ekati.

Chuck Fipke, who discovered the resources at Ekati in 1991 along with fellow geologist Stewart Blusson – each of whom still hold a 10-per-cent stake in the mine – could also be interested in buying a larger stake, or possibly even the remainder of the mine operation.

"That would definitely be considered ... If Stu and I wanted to, we could raise that type of money," Mr. Fipke said.

Mr. Fipke, 65, said he's still exploring for diamonds in locations such as Angola, Morocco and Brazil. "I'm not exactly ready to retire at all."

While he thinks it's"probably an error" for BHP to sell its diamond division, he believes a new buyer could spend more money on exploration that would potentially further expand the mine's life.

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