Canadian Mining Journal

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PERSPECTIVE: Is there something wrong with diamonds?

First, the Oppenheimer family sold its remaining interest in De Beers to partner Anglo American. De Beers Canada owns and operates the Snap Lake diamond mine in the Northwest Territories and the Victor mine in Ontario. It is a partner with...


First, the Oppenheimer family sold its remaining interest in De Beers to partner Anglo American. De Beers Canada owns and operates the Snap Lake diamond mine in the Northwest Territories and the Victor mine in Ontario. It is a partner with Mountain Province Diamonds in the Gahcho Kué development, also in the Northwest Territories.

Next it was BHP Billiton announcing that it would review its participation in the diamond industry, notably its 80% interest in and operation of the Ekati mine in Northwest Territories. Ekati was the first diamond producer in Canada, and to sell it would mark a sea change. Peregrine Diamonds wasted no time buying out BHP’s 51% interest in the Chidliak exploration project on Baffin Island.

Now four months later comes news that Rio Tinto is reviewing the future of its diamond business. In Canada any change will affect the Diavik diamond mine, owned by Rio (60%) and its Canadian partner Harry Winston Diamond Corp.

Why is it that Rio Tinto chief executive of diamonds and mineral Harry Kenyon-Slaney says, “The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply,” in the same news release saying the company considering leaving the industry?

The biggest, international miners are backing out of diamonds. Why now, if the market is strong?

Consider this: their diamond businesses are very small compared to their coal, base metals, gold and iron ore segments. To unload the diamond assets at a time of strong market demand is merely good business sense.

Not everyone is so bearish on diamonds. Stornoway Diamond Corp. is busy constructing Quebec’s first diamond mine, Renard. Shear Diamonds is examining the former Jericho mine in Nunavut with hopes of reopening it.

Maybe the diamond industry is soon to become the domain of small, boutique mining companies. That’s okay, too, as long as investors see the value in backing producers of the world’s most beautiful diamonds from Canada.