DIAMONDS — Value-added for Canadian diamonds

The impact of diamond mining on the Canadian economy would multiply several-fold if the country established a secondary industry to cut, polish and market the production.

Traditionally, about 20% of the value of diamonds is earned by mining. The remaining 80% is generated by the value-added industries, such as those that entail cleaning the rough; sorting, evaluating and cutting the gems; and making jewelry.

The Ekati mine is expected to produce $400-500 million worth of diamonds annually for 20-25 years while the gross value of the Diavik project, now at the feasibility stage, is estimated to be $6 billion.

BHP Diamonds, which has the right to market all of the diamonds from Ekati, has already announced plans to construct a diamond-sorting and valuation facility at the Yellowknife airport. It has also agreed to sell rough diamonds to those who establish cutting and polishing facilities in the Northwest Territories.

Although BHP has yet to reveal its marketing plans, some portion of the Ekati production is expected to be marketed through De Beers Central Selling Organization.

Canada’s secondary diamond industry is in its infancy because the country has no history of diamond mining. Most of the small, near-gem stones produced around the world are cut and polished in Southeast Asia and India, while larger, more valuable stones (such as those from the Northwest Territories) are sent to Israel, Belgium and New York.

Nevertheless, there are a handful of small polishing companies in Canada that are eager to do business with the Lac de Gras rough producers. One of these is Vancouver-based Canadian Diamond Cutters (CDC), a private outfit that cuts and polishes stones from Diagem International Resource’s (DGM-V) properties in Brazil.

“Canada has the manpower, we certainly have the material, and the infrastructure will come together,” says Michael Botha, a master diamond-cutter with 32 years experience who now works as a manager and trainer for CDC. “There is also great potential for equipment manufacturing, a secondary spinoff that will come from the value-added industry,” he adds.