“Diamond Empowerment” is a series of articles, each one a case study, providing an objective overview of the contribution – both realized and still only potential – that the diamond mining industry makes to sustainable development in the countries where it is present.
The sixth article in the series looks at Canada, and more specifically at the Northwest Territories, where the discovery of diamonds in 1991 changed the area’s future, as it did the trajectory of the diamond industry in general.
A MOTHERLODE UNDER THE CANADIAN PERMAFROST
(Photo credit: Natural Diamond Council)
At its peak, the diamond industry’s direct contribution to the NWT’s GDP reached as high as 30 percent, although if one factors in associated procurement contracts for diamond mining companies and associated bodies, it has reached as high as 48 percent.
FEBRUARY 14, 2025
On November 7, 1991, a 66-word press release signaled a major shift in the diamond industry. Released by a little known exploration company, called Dia Met Minerals, it reported the discovery of 89 small diamonds, some of them gem quality. They had been retrieved from a 59-kilogram sample of earth, which earlier had been extracted near Lac de Gras, a remote lake located 300 kilometers northeast of Yellowknife, the capital of Canada’s vast Northwest Territories (NWT).
In 1991, although most the world’s polished diamonds were being consumed in North America, almost none of the rough stones from which they were derived were being mined there. The few diamond deposits that were known about on the continent prior to 1991, in places such as Arkansas, Colorado and Wyoming, were all alluvial and not economically viable. What made the Dia Met Minerals annoucement so significant was that this was the first time that diamonds had been been discovered in North America in a primary deposit, meaning within the kimberlite pipe from which they originally had emerged, millions of years previously, from deep below the earth’s surface.
For Dia Met’s owners, Chuck Fipke and Stu Blusson, it was the realization of a long-held belief that massive diamond resources were waiting to be discovered below the NWT’s frozen tundra. Both doggedly determined geologists, they had met in 1969, when Blusson, who also was a helicopter pilot, rescued Fipke from a mountainside, where he been stranded in a snowstorm.
In 1982, and now friends and business partners, Fipke and Blusson began systematically tracking kimberlite indicator minerals, starting at Blackwater Lake, 490 kilometers west of Yellowknife. Their working assumption was that these minerals, which are known to be present alongside diamonds, had been transported over time far from their source kimberlite by an ancient glacier.
Over 10 summers and along a trail of more than 600 kilometers, Fipke and Blusson deduced that Lac de Gras, was the likely source of the indicator minerals. Also involved in the project was Hugo Dummett, a former South African who was to become one of the world’s most respected economic geologists. In the early 1990s he was Vice President of Minerals Discovery at BHP Billiton, and would later convince his employer to partner with Dia Met, to bringing on line Canada’s first diamond mine, Ekati, which is still in operation today.
A map of Canada, with the Northwest Territories inset below it. The capital city of Yellowknife lies to the south, and to the west and northwest of it are its four diamond mines – Ekati, Diavik, Gahcho Kué and Snap Lake, the first three of which are still operational. (Maps courtesy of FreeVectorFlags.com)
A joint venture agreement between BHP, Dia Met, Fipke and Blusson was signed in August 1990. BHP would eventually purchase Dia Met in 2001, raising its stake in Ekati from 51 percent to 80 percent.
Fipke and Blusson’s discovery was to set off the largest staking rush in North American history, and indeed the largest since the Klondike Gold Rush in 1886. That was when an estimated 100,000 prospectors flocked to the Yukon region in northwestern Canada in search of the precious metal.
A vast but sparsely populated territory
Unlike Canada’s 10 provinces that exercise constitutional powers and are governed independently, the Northwest Territories fall partially under the authority of the country’s federal government, although over time devolution has pushed power away from Ottawa towards the territorial authorities. It is an expansive area of forests and tundra about the size of South Africa or Colombia, reaching way up into the Arctic Circle. Its snow season begins in late October and extends to late April, with temperatures during the coldest part of winter ranging between -20°C and -40° C.
Throughout most of the 20th Century, the NWT constituted more than one-third of the Canada’s total landmass, but the creation in 1999 of the territory of Nunavut, out of the region’s eastern portion, reduced its area by more than half.
The breathtaking glory of the aurora borealis, lighting up the night sky over Kennady Lake and De Beers Gahcho Kué diamond mine. (Photo credit: Natural Diamond Council)
But its population is small. Numbering about 45,000 in 2024, First Nations make up more than one-third of that number and include indigenous groups such as the Dene and the Métis. The Dene belong to several tribes, which are all part of the Athabaskan language family. The Métis are people of mixed First Nation and European ancestry, who were granted legal recognition as indigenous peoples by the Canadian government in 2003. The Inuit, the Arctic people of Canada, make up further 10 percent of the population and the remaining residents are mainly of European descent.
The elected NWT Legislative Assembly’s members reflects the distinct ethnic mix of the territorial population. With no system of political parties, it chooses a speaker, a government leader, known locally as the premier, and an executive council whose members are appointed to various ministerial portfolios. All legislation passed by the assembly is technically subject to the assent of the commissioner, who is appointed by Canada’s federal government in Ottawa. There are also seven indigenous governments, which represent multiple communities across the territory.
The economy of the NWT traditionally has depended on the exploitation of natural resources, and mining is the principal nonrenewable resource industry. Gold has been extracted near Yellowknife since the late 1930s, and other minerals mined include radioactive ores, lead, zinc, silver, copper, tungsten and cadmium. Many of those deposits are now depleted. Because of the size of the territory and the difficult weather conditions, it is a sector that is perrenially hampered by high production costs and logistic challenges.
The discovery of diamonds at Lac de Gras in 1991 was considered a godsend, setting off a prospecting boom that led to the discovery of several other commercially significant diamond-bearing properties.
The big three
BHP started collecting environmental data for its NWT diamond project with Dia Met in 1993, and submitted an environmental impact statement to a federally-appointed assessment review panel two years later. The Canadian government gave the green light for development at the Lac de Gras site in November 1996.
Construction began in 1997, and the project was renamed the Ekati Diamond Mine in 1998. It officially opened on October 14 that same year, although open pit operations had begun in August. By 2000, it was already producing 2.77 million carats per annum, and this would rise to 6.85 million carats by 2004.
An aerial view of the Diavik diamond mine during the winter. (Photo credit: Rio Tinto)
Ekati marked the entry of BHP into the diamond industry. But the conglomerate would soon be joined in Canada by another major Anglo-Australian natural resouce giant, Rio Tinto. The latter, however, was already involved in the diamond industry, as the major shareholder in the Argyle diamond mine in Western Australia.
Rio Tinto’s foray into the fledgling Canadian diamond sector had began in 1991, through its local exploration arm, Kennecott Canada, which joined the project at Lac de Gras that had been initiated by a Yellowknife-headquartered junior mining opertion called Aber Diamond Corporation. By 1995, they had identified four diamond bearing kimberlite pipes.
A formal joint venture agreement was signed by Aber and Rio Tinto, under whose terms Rio Tinto would manage and operate the mine through a wholly-owned subsidiary, Diavik Diamond Mines. Once production began, the diamonds would be shared between Rio Tinto and Aber, with the former receiving 60 percent of revenue.
Diavik’s environmental baseline study was completed in 1997, and a comprehensive environmental agreement was signed with five aboriginal organizations and indigenous governments in the area, together with additional agreements that ensured that local citizens would benefit from the mine’s presence on their land. They all became a part of the license to operate and permission to construct the mine, which was granted in September 2000.
Production at the Diavik Mine began in January 2003, and by 2024 it had produced about 144 million carats.
De Beers had been present in Canada since 1961, when it undertook its first prospecting operation in the country. In 1997, it concluded a joint venture agreement in the NWT with Mountain Province Diamonds, two years after the junior mining company had discovered a kimberlite pipe at Kennady Lake, about 280 kilometers northeast of Yellowknife. Some 19 years later it would become the Gahcho Kué diamond mine. In 2000, De Beers purchased Winspear Diamonds, which in 1997 had discovered a diamond deposit at Snap Lake, about 85 kilometers from Kennady Lake.
In 2008 Snap Lake opened as Canada’s first all-underground diamond mine, and on September 20, 2016, De Beers began production at Gahcho Kué, which today is considered the world’s largest new diamond mine, with an average annual production of 4.5 million carats.
Snap Lake ceased production in December 2015 and was put into what De Beers called a “care and maintenance” program. The decision to shut down the site completely was taken in 2023, and in 2024 a revegetation and reclamation plan for the site was approved by government authorities.
Between 2008 and 2019, De Beers also operated another Canadian mine. It was the Victor Mine in northern Ontario, and it produced more than 8.2 million carats before being shut down, and an environmental reclamation program successfully concluded.
An aerial view of the Diavik diamond mine during the summer. (Photo credit: Rio Tinto)
The challenge of mining near the Arctic Circle
The environmental challenges that faced the companies building the Canadian diamond industry were almost unprecendented. Most mining ventures until then, and certainly those involving primary deposits, had been undertaken in warm-weather climates in Africa and Australia. The exception, of course, was the Russian diamond industry, which like Canada operated in a sub-Arctic region.
By the time that the Canadian project got underway, Russian geologists and mining engineers had accumulated a wealth of knowledge and experience about solutions for working in conditions where the permafrost can reach hundreds of meters below the earth’s surface, and where wear and tear on equipment is massive, changing the economic viability of any operation. But the little of this knowledge was available during the early period of the Canadian diamond industry, which coincided with the final days of the Soviet Union and the still-present Iron Curtain separating West from East.
Furthermore, it is unlikely that any other diamond industry had been developed from scratch in as stringent a regulatory environment as that of Canada. Any project undertaken required extensive impact studies, and needed to traverse a bureaucratic minefield, which is a lengthy process that costs tens of millions of Canadian dollars. And, as mentioned, environmental agreements also required negotiating with indigenous leaders and elected bodies, who were keen not only to share in the revenues being generated, but also to ensure that that their traditional lands, ways of life and their natural environment were being protected.
Most of the NWT’s viable kimberlites were discovered in close proximity to lakes, which were frozen over for much the year. Work at the Gahcho Kué mine, located at Kennady Lake, which is only 1 percent of the size of Lac de Gras, required that De Beers Canada re-route the water, remove the fish, and refill it once mining is finished. The northeast basin of Kennady Lake would remain, separated from the rest of the water body by a small dyke.
Traveling the ice road between the Ekati and Diavik mines. (Photo credit: Rio Tinto)
Logistics were a particular problem, because there are no roads running north of Yellowknife that operate year round. Airstrips were built at some of the mines, but they were unable to handle the total movement of heavy machinery, equipment, fuel and supplies.
The solution to the problem is building world’s longest ice road, which connects Yellowknife to the diamond mines. Up to 475 kilometers in length, it traverses 64 frozen lakes. The road is operational only eight to ten weeks annually, from mid-January to March, and it has to be rebuilt each year.
Work on the road starts soon after Christmas, when the ice is one meter thick, meaning it can support a truck fully loaded with more 40 metric tons of fuel. Full trucks traveling north have a strict speed limit of 25 kilometers per hour, and empty trucks heading south can use the express lane, where speeds up to 70 kilometers per hour are allowed.
Mergers, acquisitions and COVID
During its first decade as a diamond-producing region, the NWT was the only place worldwide in which three of the world’s largest natural resource companies – Anglo American, through its De Beers subsidiary, Rio Tinto and BHP – were all dominant players. But that has changed during the second decade, largely due to the Dominion Diamond Group.
Originally known as the Aber Diamond Corporation, the junior mining company that discovered the Diavik kimberlites, in 2004 it purchased a 51 percent stake in the legendary Harry Winston jewelry brand, which it then increased to 100 percent in 2006. It also changed its name to the Harry Winston Diamond Corporation, with divisions in luxury retail and diamond mining, and it was listed on the New York Stock Exchange in 2007.
In 2013, the company sold the luxury retail brand to the Swiss Swatch Group, for 750 million U.S. dollars and Swatch’s assumption of up to 250 million U.S. dollars in debt. Now exclusively a mining operation, it changed its name to the Dominion Diamond Group. Holding a 40 percent share in the Diavik mine, that same year it also purchased Ekati from BHP, in a cash deal worth 500 million U.S. dollars.
Above-ground mining and underground mining at the Ekati mine. (Photo credit: Burgundy Diamond Mines)
In 2017, Dominion delisted from the stock market, becoming part of the Washington Companies, a U.S. conglomerate with shipping and manufacturing interests. The deal was worth 1.2 billion U.S dollars, and it was funded with a $550 million U.S. bond from creditors.
But the company required regular income to meet its multi-million-dollar debt payments. So when the COVID pandemic struck in 2020, the lockdowns enforced along its supply chain left it with 180 million U.S. worth of diamond inventory it couldn’t sell. It was forced to seek court protection from creditors.
On February 3, 2021, Dominion announced that it has completed the sale of the Ekati Mine and associated assets to Arctic Canadian Diamond Company, whose parent company is Burgundy Diamond Mines. In November the same year, Rio Tinto acquired Dominion’s 40 percent share in Diavik, and so became the sole owner of the mine.
With stability restored, a crisis had been averted, and two of the NWT largest employers were safely back in business.
Paying back to the NWT
In 2023, Canadian rough diamond production totaled 16.0 million carats, down from 17.7 million carats in 2022, and considerably below its peak years of 2017 and 2018, when had had topped 23.2 million carats in both.
Kimberley Process statistics show that the country is today the world’s third largest producer of rough diamonds by both value and volume. According to Natural Resources Canada, the federal Department of the Canadian government responsible for all natural resources, current exports are valued at more than 2.1 billion Canadian dollars per annum, with all operating mines being located in the NWT.
A De Beers Canada expert doing water testing near the Gahcho Kué mine in the NWT. (Photo credit: Natural Diamond Council)
In terms of the overall Canadian economy, the diamond sector is relatively small. But in the NWT its impact is most significant. Information published in 2023 by the Government of the Northwest Territories showed that between 1996 and 2022, diamond mining created 33,613 person-years of employment in the territories, with 16,769 person-years going to indigenous people.
Furthermore, reported the NWT government, during that same 28-year period indigenous businesses in the territory obtained more than 8 billion Canadian dollars in procurement contracts.
Official data also shows that the NWT government collected 37 million Canadian dollars in royalties from diamond mining companies in 2021 and 2022, and since 2015 indigenous governments have collected more than 48 million Canadian dollars through resource revenue sharing agreements.
The percentage of employment of members of indigenous communities varies by mine, but on average they represent approximately between 20 percent and 30 percent of the workforce, with efforts being made to increase the figure through targeted recruitment and training programs.
Indigenous employment in the diamond mining sector is generally higher than that in other sectors. In retail and tourism, for example, indigenous employment in the NWT ranges between 5 percent and 15 percent.
The proactive social and developmental role of the diamond mining sector has become for some a valuable tool in the marketing of polished diamonds sourced in the NWT. One such initiative is the Canadamark, a diamond certification program that promises “all Canadamark diamonds are responsibly mined in Canada’s Northwest Territories with respect for the sustainability of the natural environment and people living in the community.” Originally established by the Dominion Diamond Group, it is managed today by Burgundy Diamond Mines.
For its part, the Natural Diamond Council, the diamond producer-funded body created to promote consumer purchases of natural diamonds, launched last summer an extensive marketing campaign featuring its celebrity Global Ambassador, the English actress Lily James. Comprising an array of video and image assets, the campaign took consumers on a discovery trip through diamond-mining regions of the NWT. It featured among other elements discussions with members of the Yellowknives Dene First Nation community, where they explained how, through employment and other benefits, the diamond industry has supported their traditional way of life. The campaign specifically featured women active in the mining operations, and industry-enabled educators working to shape the future generations.
At its peak, the diamond industry’s direct contribution to the NWT’s GDP reached as high as 30 percent, although if one factors in associated procurement contracts for diamond mining companies and associated bodies, it has reached as high as 48 percent. But with known and viable resources slowly being depleted, and the average price of rough diamonds having decreased, this figure has fallen.
But the diamond industry’s indirect contribution to the NWT development – through wealth creation, physical infrastructure development, indigenous community support, and the imparting of leadership and management skills – is considerably more significant. It will continue to impact the Canadian territory long after the last rough diamonds have been extracted from beneath its surface.
As part of the Natural Diamond Council’s 2024 campaign emphasizing the positive role of the natural diamond mining sector in the development of Canada’s Northwest Territory, a video clip above featuring Lily James, NDC’s Global Ambassador, was released. In it, she visits indigenous communities near De Beers’ Gahcho Kué mine, and in particular looks at the opportunities being provided to women in the region. (Video credit: Natural Diamond Council)