In Canada, the New Rush Is for Diamonds

Wealth Beneath the Permafrost Changes the Northwest After the Gold Is Gone

By Doug Struck
Washington Post Foreign Service
Monday, March 5, 2007


LAC DE GRAS, Northwest Territories — Gold opened this northern land, attracting a rush of prospectors and miners who splayed the earth, built up towns and then, after seven decades, closed up the last exhausted gold mine two years ago.

Now there are diamonds.

The first were found by a stubborn geologist who financed years of searching with money borrowed from neighbors. That prompted the biggest rush to stake mining claims in North America. Today, three mines are open and more are planned, bringing a flush of cash to northern Canada and making the country the third-largest producer of diamonds by value, surpassing even South Africa.

The booming industry is replacing the stigma of “blood diamonds” mined in conflict zones with images of polar bears and maple leaves engraved on snow-pure gems.

The riches have brought a juggernaut of men and machines to the remote tundra. They came to a place with no roads, towns or electricity, and brutal winters. Now giant machines screw into the permafrost, moving and sifting tons of rock 24 hours a day.

The territorial government is cheering them on. “Diamond mining is critical for us,” Brendan Bell, the local minister of industry, said from the capital, Yellowknife. “We don’t want to be a one-trick pony. But if you have to be reliant on one industry, diamonds are perfect.”

In 2005, even before the Jericho mine opened in the adjoining territory of Nunavut, Canada’s first two big diamond mines in the Northwest Territories unearthed 15 pounds of the gemstones, worth $4 million, each day.

At the Diavik Diamond Mine site here, Justin Wedawin, 29, sits in a cab 30 feet above the ground, steering a 240-ton dump truck.

“It’s a bit like driving a ship,” he said of his huge vehicle. It shudders as an even bigger machine loads it with ore in the dim light at the bottom of the open mine pit. He then begins the slow, 22-minute drive up the circular road carved into the side of the pit.

“When I come out of the pit, it’s like going from night to day,” he said.

Diavik’s engineers have drained part of the lake here, Lac de Gras, diked it with 6 million tons of rock and corkscrewed 500 feet beneath the lake bed. They have built a sprawling complex to house hundreds of workers and an airport to get them here, brought machines the size of a house to rework the land, and erected towering structures to crush and sift the rock — all to find diamonds.

Like most of Diavik’s 735 employees, Wedawin works 12-hour shifts for two weeks straight, then goes home for two weeks. His home is in the native community of Rae, 200 miles away. Thirteen air routes serve workers who commute from as far away as Edmonton, 750 miles to the south.

There are a few odd rules to working in a diamond mine. “You don’t bend down to pick up anything” off the ground, said Gordon Kretchmar, 47, a heavy equipment operator who commutes from Kamloops, British Columbia. “A stick, a stone or anything.” Employees are searched going to and from work.

But most workers never even see a diamond, only massive tons of gray stone disappearing into the jaws of machines. The machines sift and sort out the diamonds in an automated “no-hands” operation, removing temptation.

Some people here are wary of the north’s latest call to riches. The gold miners who began migrating here in the 1930s created a boomtown in Yellowknife with large gaps between rich and poor. The companies skimmed the largess, pocked the earth and left a highly toxic legacy of arsenic trioxide in chambers underground.

Native groups, which contend they were cheated by the gold mines, have pledged that it won’t happen again. They are surrendering rights to their land only in return for guarantees of jobs and training. The number of Indians and Inuit enrolled in post-secondary education has soared as skilled and technical jobs beckon at the nearby mines.

Environmental groups are giving the mines much tougher scrutiny. Local native groups are part of monitoring teams that hover over the operations and inspect the companies’ plans on issues from water quality to caribou migration paths.

“This isn’t the gold mining that we saw in the latter part of the last century,” Bell said. “Environmental standards are much higher. There is lots of monitoring. It’s a different era.”

But the prosperity has brought a housing squeeze in Yellowknife. There are new drugs and crime in town. Attempts to establish a gem-polishing industry are flagging. Some of the companies owned on paper by natives have mostly non-natives on staff, and other aboriginal groups still contend mining companies’ profits take precedence over residents’ concerns.

“The thing about diamonds is they make the companies incredibly rich. The question is how much of that they leave behind to the community,” said Joan Kuyek, national coordinator of MiningWatch Canada, an Ottawa-based watchdog group.

“Most of the aboriginal people are desperate for cash, desperate for work, desperate for some opportunities for their young people. Anyone coming in and offering those things cannot really be resisted.”

Environmentalists also say that despite tougher regulations, the mines will leave a long-term scar on the land. Caribou numbers are falling; Indian hunters blame the mines. Long after the diamond mines have closed, their piles of excavated earth will be the tallest features on this subarctic tundra.

“The monitoring agency has said the environmental performance on the ground has been quite good, or very good. But that doesn’t mean there are no environmental impacts,” said Bill Ross, a University of Calgary professor who chairs a committee that reviews environmental management at one of the mines.

“There will always be issues,” said Tom Hoefer, a Yellowknife native and Diavik’s point man with the community. “But if you have to have a mine in your back yard, a diamond mine isn’t bad to have.”

The Diavik mine, co-owned by a Toronto company and mining giant Rio Tinto, and the Ekati mine, run by Australian mining giant BHP Billiton, are among the richest in the world.

In 1998, the BHP mine was the first to open at the site of Canada’s original 1991 discovery by geologist Charles Fipke and a partner, Stewart Blusson. Fipke spent decades pursuing diamonds around the world. Abandoned by companies and a wife who tired of his obsession, he borrowed money from friends and sold stock to neighbors, offering only hope.

Like a detective, he sleuthed out purple garnets and emerald-green chrome diopsides that might accompany diamonds, refined his hunches about where the glaciers might have picked them up, and eventually solved the mystery by drilling near the frigid shores of Lac de Gras, 200 miles northeast of Yellowknife.

Other prospectors moved in quickly after him. Small exploration companies flocked to Yellowknife, rented anything that could fly and raced into the wilderness to plant wooden stakes marking their claims. The Diavik mine, 20 miles from Fipke’s find, was staked out under the waters of Lac de Gras and opened in 2003.

“It was a surprising time. We lived through the largest staking rush the world has seen,” said Yellowknife Mayor Gordon Van Tighem. “There were bales of stakes around town. The local construction companies were churning them out, running out of wood. With the gold mines petering out, it came along at a very good time for us.”

The diamonds lie in ancient magma, called kimberlite pipes, which burst from the earth’s core through fissures in the granite 55 million years ago. Surging to the surface, a very few of them passed through even more ancient beds of diamonds formed 3 billion years ago, carrying the crystallized carbon stones to the surface.

The Diavik and BHP mines are centered over several of those conical pipes. Both operations have now strip-mined in a circle so deep they must move to underground tunneling to follow the pipes further.

Most of the diamonds produced here will be sent to London and then Belgium, the heart of the diamond trade. Some will be returned to three Yellowknife firms that cut and polish the rough stones into gems, and use lasers to engrave on them an emblem of Canadian authenticity.

A system of registering and tracking diamonds worldwide was launched in 2002 to crimp the trade in “blood diamonds” that has financed horrific violence in Africa. While activists have criticized the system’s shortcomings, Canadian retailers are cashing in on the innocent reputation of their stones, marked with microscopic polar bears or maple leafs.

The mines will probably last only about 20 years. But with the optimism of a miner, Diavik’s Hoefer notes that Canada has hundreds of kimberlite pipes that have not yet been fully explored.

Diamonds can dazzle — and disappoint, Hoefer knows.

“But for right now,” he said, “life’s good, everybody’s fat and the mines are rich.”

Special correspondent Natalia Alexandrova in Toronto contributed to this report.



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