The Ekati mine in the Northwest Territories is celebrating its fourth anniversary on a note of considerable achievement: production of more than US$1.6 billion worth of diamonds to date.
Ekati was brought into production in October 1998 at a cost of $900 million. Since that time, mining has expanded from one pit, Panda, to open-pit production from the Misery pipe, underground production from a test mine on the Koala North pipe, and prestripping of the Koala pipe, which will soon be the next major source of feed.
Following a series of improvements, the kimberlite processing plant is averaging more than 11,000 tonnes per day, compared to the original capacity of 9,000 tonnes. A further expansion is being considered.
The mine is operated and 80%-owned by BHP Billiton Diamonds, a wholly owned division of
Mine production for the quarter ended Sept. 30, 2002, was 954,000 carats of diamonds — 24% higher than in the corresponding period last year but off 7% from the June quarter.
Proven and probable kimberlite reserves in six commercial pipes, at June 30, 2002, totalled 58 million tonnes grading 0.9 carat per tonne, equivalent to 53 million recoverable carats, based on a 1.5-mm bottom-stone cutoff size. The overall resource stands at 114 million tonnes grading 1.3 carats per tonne, or 148 million carats, using a 1-mm cutoff.
At a recent diamond conference in Antwerp, Belgium, Terry Janes, vice-president of marketing for BHP Billiton Diamonds, told delegates that his company is pursuing ways to add value to its production. Typically, the Ekati diamonds are sold as follows:
q 50% to about 10 regular customers;
q 8% to “window customers,” of which there have been at least 100;
q 7% to three Yellowknife manufacturers (this represents up to 30% of the stones in the larger sizes and better qualities); and
q 35% to the Diamond Trading Company (DTC), which is
A 3-year sales contract with the DTC expired following the October shipment, and BHP Billiton says it will not renew the agreement. “The relationship with the DTC has, at all times, been cordial and professional,” stated Janes, “and the contract has delivered all that BHP Billiton had anticipated.” Instead, BHP Billiton will pursue “value-adding opportunities” with this 35% percentage of production.
“We don’t want to own polishing factories,” Janes said. “However, we see opportunities in working with polishers and, potentially, retailers whereby a guarantee of a steady supply of consistent rough may result in reduced inventory and procurement costs and therefore provide benefits that can be shared. We plan to develop such options with current customers and potential new customers over the coming months.”
Like De Beers, BHP Billiton has been exploring branding options as a way to increase consumer demand. For a little more than a year now, BHP Billiton has been running two diamond-branding programs — Aurias in Australia and Singapore, and Ekati in Canada and the U.S. Both are based on a polished product offering purity, quality and trust. These experimental programs have had the support of 50 participating retailers. BHP Billiton is now formulating plans to begin a much larger-scale initiative under the Aurias banner.
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