Making huge strides

Inthe early 1990s, the gold mines of Yellowknife were aging and, with public sentiment around the environment running high, support for mining was waning. Yellowknife resident Tom Hoefer at that time was a geologist attempting to buck the tide: working for the then NWT Chamber of Mines, he was trying to reinvigorate interest in mining, promoting the benefits that it could bring. As luck would have it, midway during his term at the Chamber, diamonds were discovered near the remote, 60-km-long lake called Lac De Gras, 300 km northeast of Yellowknife. This discovery fueled a whole new life for mining in the region.

In 1997, Hoefer joined a handful of employees at the Yellowknife head office of Diavik Diamond Mines Inc., a new subsidiary of Rio Tinto plc., newly created to manage the evolving Diavik diamond project. Along with its partner Aber Resources (which has since evolved into Harry Winston Diamond Corp.), the Diavik team was assessing the feasibility of an ambitious plan: to build a mine around a handful of high-value kimberlite pipes discovered under the waters of Lac De Gras. Rio Tinto and Aber decided to take on the challenge; the mine was permitted, constructed, began production in 2003, and has since grown into the country’s largest diamond producer.

Diamonds have been a saviour for Yellowknife, according to Hoefer. Despite the construction of the first diamond mine at Ekati (which opened in 1998), the closure of the gold mines was creating a downturn in the city’s economy. However, with the approval of the Diavik project,”there was an almost tangible sigh of relief; investment in the community boomed.”

This June, CMJ interviewed Hoefer about the role that Diavik has played in the community. He initially points out some of the company’s accomplishments, such as the innovative, national award-winning dike engineering that allowed an open pit to be built on the former lake bottom, and winning the Ryan safety award for regional select mines three times in Diavik’s short, five-year history.

He talks of the huge strides Diavik has made in northern employment–67% of its 785 employees are local, northern residents and half of these are Aboriginal. Adding to the local workforce strength are 12 northern journeypersons (half of them Aboriginal) who have already graduated through Diavik, and many more apprentices who are in training. The company’s innovative Aboriginal Leadership Development Program is also helping prepare Aboriginal employees to move up the ranks.

Especially noteworthy, by encouraging and supporting new Aboriginal service and supply companies, Diavik has been key in launching the creation of a new Aboriginal mining supply sector that did not exist a decade ago. Hoefer believes this will be critical to sustaining mining in Canada’s north well into the future. “These new Aboriginal supply companies are built on solid economics, and they are now able to compete anywhere in the world. They are also interested in strengthening their capacity, in growing their companies, and in employing more local workers.” From 2000 to the end of 2007, Diavik had spent just under Cdn$3.5 billion on capital and operations, with 74% of this going to northern and Aboriginal businesses– unprecedented growth in such short order in Canada.

“Some of these companies have used Diavik as their launch pad, and they are growing and even diversifying their businesses to work at other mine sites,” says Hoefer. One example, Tlicho Logistics, which was created to supply site services at Diavik, has grown from three employees in 1999 to more than 350 today, buying out its original partner to become a 100% Aboriginal firm. “We can take some credit for providing opportunities, but the Aboriginal companies can be proud of the work they are doing to grow their businesses,” says Hoefer. “And they are not the only Aboriginal company succeeding at Diavik. There are also Ekati Services, which runs our camp; I&D Management Services, which mines our open pit; and Western Denesoline, which supplies explosives.”

One other thing: Diavik has mined a lot of fine diamonds. The mine originally projected a 16-to 22-year mine life producing upwards of 8 million carats of high-quality, sought-after diamonds per year. Since then it has ramped up production, reaching nearly 12 million carats in 2007–all this at no expense to the total mine life, which is now projected at up to 20 years. The open pit is preparing to transition to underground mining in 2009, to extract reserves from the lower parts of Diavik’s three kimberlite pipe orebodies.

Diavik has taken a hands-on approach to support important community projects. It began early during mine construction, when the company used small construction projects in local communities to train trades helpers. From this small beginning, which created around 250 trades helpers to help build Diavik, the company graduated to overseeing construction of a youth centre in Yellowknife, followed by a multi-million-dollar arena, and then a men’s transition home that will open this summer in Yellowknife. Most recently, Diavik has taken on project management of the much-needed, multi-million-dollar Territorial Dementia Facility.

The cluster of three producing diamond mines–BHP Billiton’s Ekati mine, De Beers Canada’s new Snap Lake mine as well as Diavik–have had a tremendous impact on the local community, with average wages pushing $100,000/year. They are offering many local people on-the-job training and long-term stability for the first time in their lives.

“If we can sustain diamond mining into the next generation, we’ll make real inroads into the have-not communities,” says Hoefer, and he has some ideas how this can happen. Access to cheap hydroelectric power could help reduce mining costs, as might better road access that does not rely on the seasonal ice road from Yellowknife to the mines, which he describes as “our biggest business risk right now.”Others are talking of building a road from an arctic port to access metal orebodies in Nunavut’s Kitikmeot region–Izok, High Lake and Hackett River. If approved, such access might also offer cheaper costs to help sustain diamond mining and its many benefits.

“I truly believe that Diavik and our neighbouring mines are on the leading edge for creating community and especially Aboriginal benefits in Canada if not in the world,” he concludes. “Working with governments and Aboriginal communities, we are showing the power of partnership. The trick for us now is to maintain the momentum and the innovation, to sustain the opportunities for as long as we can.”

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“If we can sustain diamond mining into the next generation, we’ll make real inroads into the have-not communities.” HOEFER