Sale of Ekati raises hopes that reopening not far off
The pending sale of the Ekati Diamond Mine is just the latest glimmer of hope that the diamond industry is beginning to recover from the hammering it has taken as a result of the COVID-19 pandemic.
Dominion Diamond Mines announced the $166-million deal this week. A subsidiary of The Washington Companies, based in Montana, made the only bid received for Dominion's assets after the company moved into creditor protection earlier this year.
Ekati, which is about 300 kilometres northeast of Yellowknife, has been shut down since March. Dominion said it closed the mine for the safety of workers during the pandemic. In announcing the sale, Dominion said it plans to return the mine to full operations, but said one of the prerequisites for doing that is the recovery of global diamond sales.
"This industry is dependent on buyers and sellers getting together in person and inspecting the diamonds before a transaction is made," said independent diamond industry analyst Paul Zimnisky. "The travel restrictions have really made that difficult."
Zimnisky said that at the height of the pandemic sales were about 80 to 90 per cent below normal levels. But he said recent developments show diamond miners' optimism is increasing.
"There were eight larger-scale commercial mines that had been suspended for multiple months due to the pandemic," said the New York-based analyst. "In recent weeks it was announced that two of those mines would recommence production shortly."
The two diamond mines that are reopening are the Renard Mine in Quebec and the Mothae mine in Lesotho, Africa.
Zimnisky said in recent weeks buyers and sellers have returned to in-person sales after trying to make due with video conferences and more detailed descriptions of the diamonds being offered.
Company says reopening a work in progress
Dominion refused to say when it plans to reopen Ekati. Its president reportedly told workers at the end of June that the company plans to reopen the mine sometime between October and December of this year. An official refused to comment on whether that is still the plan.
"We are working to restart operations at Ekati as soon as possible and will keep our employees and other stakeholders updated as we have more information," said a communications official in an email.
When it is operating, Ekati is one of the biggest employers in the Northwest Territories with more than 700 northerners working there for Dominion and contractors, according to the company's 2018 socioeconomic report.
In an emailed statement, the president of the union that represents most of those workers says the sale of Ekati is good news.
"We hope that the recent sale announcement will reduce some of the uncertainty that our members are facing with regard to job security and a return to full operations," said Union of Northern Workers president Todd Parsons.
"The past six months have been incredibly stressful for the workers at Ekati and their families; especially those who have been temporarily laid off, but also those who continue to work on care and maintenance and have seen dramatic changes to their rotations and working conditions."