Diamonds without ethical issues sparkleDiamonds without ethical issues sparkle for Canada
By Rachelle Younglai
Mon Feb 27, 8:25 AM ET
TORONTO (Reuters) - In the Arctic, high above the treeline, Canada's third diamond mine is rumbling toward full production, cementing the country's position as a hotspot for diamonds -- without "the issues" and without the blood.
The Jericho mine, operated by Toronto-based Tahera Diamond Corp., is the first diamond mine in the vast northern territory of Nunavut, created in 1999 to give Canada's Inuit people a bigger political voice.
It shows how global demand for "a girl's best friend" is growing in a country better known for its trees, oil, and nickel.
"Not only is the quality of our diamonds of a high caliber, but the diamonds in Canada are being mined to the highest environmental standard in the world. There are no issues: no child labor, no war, no environmental problems," said Pierre Leblanc, principal with privately owned Canadian Diamond Consultants Inc.
"You may have heard of blood diamonds ... A lot of people are saying: 'If I don't know for sure, do I really want to buy a diamond to give to my loved one?"'
Those in the know can't pin down exactly why people like Canadian diamonds. Maybe it's for the kitschy symbols of the north, like polar bears and snowflakes, that are discreetly etched into each gem that's sold.
Or perhaps the fact that these diamonds are ethical investments, compared with the so-called blood diamonds where the sale of gems in Africa has been used to fund civil wars.
Canada's diamond history is short, but long on promise.
Kimberlites, the rock formation where diamonds are found, lie throughout the billions-of-years-old rock under the Canadian Shield, which stretches across northern Canada and makes up about half the country's land mass.
"We keep finding (kimberlite pipes) and we keep exploring the ones that are being found, so there is huge potential in Canada," said Leblanc.
FROM NOTHING TO NO. 3 IN ABOUT FIVE YEARS
The first serious diamond discoveries were made in the early 1990s and BHP Billiton's Ekati mine in the Northwest Territories produced the first Canadian gems in 1998.
The 2003 start-up of the Diavik mine, also in the Northwest Territories, catapulted Canada into the big leagues. The country is now the world's third-largest producer of diamonds by value, behind Botswana and Russia but ahead of South Africa.
Diavik is owned by Aber Diamond Corp. and Rio Tinto Plc.
Now, no less than 130 companies, private and public, are prospecting for diamonds, even if the enthusiasm of the early 1990s has waned as prospectors and developers realize that not all kimberlite pipes will produce the same quality of gems.
Still, an estimated 35 to 40 percent of world diamond exploration expenditure is spent in Canada. Preliminary forecasts say firms spent about C$290 million ($252 million) on diamond exploration and deposit appraisal in 2005, up nearly 6 percent from 2004.
Companies are seeing increased investor interest as well.
Venture companies like KWG Resources Inc. and Spider Resources Inc. are developing a diamond property in northern Ontario, and KWG has been able to raise money easily.
"There's enthusiasm out there," said Chief Executive Frank Smeenk. "The awareness is currently still growing. I think that awareness will grow over the next few months as more results are released from the winter (exploration) program and we may see quite a bit more appetite following from that."
Diamond giant De Beers, 45 percent owned by Anglo American Plc, expects its first diamond mine in Canada, Snap Lake, to start producing in 2007. Production at its second venture, Victor, in the James Bay lowlands of northern Ontario, is slated for a year later.
Its third mine at Gahcho Kue in the Northwest Territories is now under construction. That project is a joint venture between De Beers Canada, Mountain Province Diamonds Inc. and Camphor Ventures Inc..
In a country awash with billion-year-old rock, the potential seems limitless.
"There's a good understanding of diamonds in this industry, and (junior companies) are the ones that are driving the grass roots," said Tom Hoefer, with the Diavik mine.
"They have gone out and driven diamond exploration in just about every province in Canada."