DIAMONDS — Ekati mine new jewel in Canada’s crown

A Canadian mine opening that attracts two cabinet ministers, a raft of federal and territorial politicians, aboriginal leaders, top mining executives from Down Under, a planeload of reporters, and a congratulatory message from Prime Minister Jean Chrtien has to be an extraordinary event.

And the newly opened Ekati mine, situated in the Barrenlands some 300 km northeast of Yellowknife, clearly fits that bill. It is Canada’s first diamond mine, the largest mine of any kind in the North, and one of the 15 largest diamond mines in the world. It is a showcase of technical and environmental excellence, designed and built to accommodate the aspirations and values of northerners, and a model for several other diamond mines that are expected to be developed in the remote, sub-Arctic region.

Ekati is operated and owned 51% by BHP Diamonds, a division of Australia’s Broken Hill Proprietary (BHP-N), a large resource conglomerate with annual revenue exceeding $20 billion. Dia Met Minerals (DMM-T) holds a 29% stake, while geologists Charles Fipke and Stewart Blusson each hold 10%.

Officials from both companies were out in full force to celebrate the mine opening, along with about 100 guests. And celebrate they did, with a native song, heart-felt speeches and the unveiling of a commemorative plaque by Jerry Ellis, BHP’s chairman, and Jane Stewart, Canada’s minister of Indian and northern affairs.

“Everyone who has had a part in creating the Ekati diamond mine should feel very proud indeed,” said James Rothwell, president of BHP Diamonds.

Dia Met President James Eccott praised the scientific sleuthing and remarkable tenacity of Dia Met’s founder and chairman, Charles Fipke, who, in 1985, identified diamond indicator minerals which suggested the potential of economic kimberlites in the Lac de Gras region.

“Now, 13 years later, we are celebrating the opening of Canada’s first diamond mine,” Eccott said. “The contribution of Chuck, and in the earlier stages, Stewart Blusson, must be recognized and applauded.”

The odyssey

The Ekati mine opening was literally a dream-come-true for Fipke, who began his search for diamonds in 1978, as part of a joint venture with Superior Oil’s mineral division and Falconbridge’s exploration group. Fipke managed the exploration program, which initially focused on southern British Columbia, where several kimberlite-like bodies had been identified.

Fipke and Superior’s Hugo Dummett went on to test numerous other targets in North America. While they found kimberlites, including some with diamonds, none had economic potential. In the early 1980s, the partners learned that De Beers was exploring in the Northwest Territories and started their own program on adjacent areas.

By this point, the joint venture had funded a research program with John Gurney at the University of Cape Town in South Africa, which focused on developing geochemical techniques that would discriminate between diamond-bearing kimberlites and those that were barren. Gurney established that kimberlitic garnet, in particular pyrope garnet known as G10, was critical to diamond discovery.

A geochemist by training, Fipke relied on the technique in the Northwest Territories, even after Superior and Falconbridge pulled out of the project. He formed Dia Met in 1983 to raise funds to continue exploring for kimberlitic indicator minerals across much of the Northwest Territories.

Most of the programs were carried out with shoestring budgets, under adverse conditions. But Fipke’s perseverance paid off in 1985, when the train of kimberlitic minerals pointed to a source near Lac de Gras. The first claims in this region were staked in June 1989.

By this point, Gurney and associate Rory Moore had confirmed the presence of G10s in Fipke’s samples, which they knew indicated the presence of highly diamondiferous kimberlite. But the Canadian mining community remained skeptical of Fipke and his arcane obsession with diamonds. Fortunately, Hugo Dummett, then with BHP, immediately understood the significance of the finding and urged his company to fund an aggressive program to find the Lac de Gras kimberlites. A deal was signed in the fall of 1990, with field work starting shortly thereafter.

That same year, Fipke and his son Mark found evidence that a kimberlite existed under Point Lake. BHP geophysicist Ray Ashley confirmed the presence of a conductor under the lake, plus others at nearby sites. A drill program tested the Point Lake target in the fall of 1991, with the first hole returning 65 microdiamonds and 16 macrodiamonds in 59 kg of core.

The staking rush that ensued made Canadian mining history, as did the subsequent discovery of more than 100 kimberlites, some of which were found to contain rich concentrations of high-quality diamonds.

Partnership

During the official opening of Ekati, Eccott praised BHP’s management of the US$700-million project, which was completed on time and on budget. Almost all the facilities on site were built since May 1997, in less than 18 months — a remarkable accomplishment given that all materials must be trucked in using a winter road that is open for less than three months.

“Without BHP’s participation, this project would be in its infancy,” Eccott said. “Since 1990, when the joint-venture agreement was signed, our relationship with BHP has been excellent.”

Politicians were no slouches in the celebration department either.

Jane Stewart described Ekati as “a testament to what can happen when industry, aboriginal people and governments work together” and “a truly historic accomplishment.”

She added: “We have a new international business while protecting the environment.”

Ralph Goodale, Canada’s minister of natural resources, was equally enthusiastic. “We are here to celebrate a new mining frontier for Canada and a new source of economic opportunity for the western Arctic,” he said. “Diamonds are our newest and most exciting offering to the world. Ekati will bring great benefits to the territory in the long term, including full-time employment for some 600 people during the life of the mine.”

Goodale also praised Blusson’s recent commitment to provide up to $50 million to the University of British Columbia for mineral research, and endorsed Blusson’s comment that “Ekati was no fluke, but rather the result of rigorous science.”

Ethel Blondin-Andrew, secretary of state for children and youth, described the mine opening as “a defining moment in the history of Canada. It defines the moment when the spirits of the old world and new world come together.”

Eventually, the politicians and company officials were upstaged by the unveiling of Ekati diamonds. The oohs and aahs that greeted the dazzling display of cut and polished gems, and the keen interest shown in a nearby showcase of rough stones (which included two 12-carat diamonds and many clear octahedra), provided plenty of testimony as to the high quality of this new kind of northern ice.

Environment protected

The Ekati mine also was praised for its environmental excellence. Indeed, this aspect of the project proved to be both expensive and challenging for BHP, as a flurry of environmentalists raised concerns that mining would disrupt wildlife and cause untold damage to the local ecosystem. Those doom-and-gloom predictions proved to be groundless, and wildlife, including caribou, continue their traverses across the mine property. Lost fish habitat has been replaced, and great care was taken to ensure that aboriginal groups participated in the environmental planning process.

Government officials also noted that Ekati will serve as a model for resource development on aboriginal lands. The company signed several agreements ensuring that jobs, training and other benefits would flow to northerners — including aboriginals, who make up the bulk of the local population.

A tour of the operation revealed that open-pit mining is well under way at the Panda pipe, one of five kimberlites in the current mine plan. Three of the five (Panda, Koala and Fox) are near the processing plant. Sable is 17 km north, whereas Misery is 29 km
to the southeast. All five will be mined by open-pit techniques, followed by underground mining at Panda and Koala.

During the mine visit, BHP officials said a newly discovered kimberlite, Panda North, would likely be incorporated into the mine plan. Ongoing exploration of the 100-plus kimberlites found on the land package to date may also add pipes to the mine plan, thereby extending the life of the operation.

The Panda pit will have a total depth of about 300 metres, measure 1 km wide, and have a 55 slope. Initial ore production will be 9,000 tonnes per day, though production is scheduled to double to 18,000 tonnes in year 10 as other pipes are readied for mining. In total, 78 million tonnes of ore and 508 million tonnes of waste rock are scheduled to be mined in the initial 17 years of the project.

Guests toured other facilities, including worker accommodations and the high-security processing plant. Other infrastructure includes a 55-million-litre fuel tank farm and a power plant equipped with five 4.4-MW generators (enough to supply the city of Yellowknife).

The processing plant is the largest building in the Northwest Territories. The first stage of the circuit includes crushing, scrubbing and screening, followed by high-pressure grinding. Heavy-media separation is used to separate high-density particles, including diamonds, from lower-density, non-diamond material. This is done in a conventional separating cyclone. Diamond recovery is based on X-ray sorting. No toxic chemicals are used in the process.

Security is taken seriously at Ekati, with Michael Loper, a retired U.S. military police colonel, overseeing the task. Loper told guests that his goal is to protect employees and “deliver them from temptation.” The operation does exactly that by ensuring that no human hands touch the ore after it is dug out of the ground. As an extra precaution, surveillance cameras and other built-in features ensure multiple levels of security.

Ekati is expected to produce more than 3.5 million carats per year, about 6% of the value of world’s diamond production. Reserves for the initial five pipes total 65.9 million tonnes at an average grade of 1.09 carats per tonne (diluted). The average value is US$84 per carat for all five pipes. Panda has the highest value per carat at US$130.

Ekati is expected to have at least a 25-year life span and, during that time, contribute well over $6 billion to the gross domestic product of Canada, with more than $2.5 billion of that accruing directly to the economy of the Northwest Territories. However, since those projections were made, diamond markets have weakened, owing largely to the Asian crisis. Recent figures show sales have fallen by as much as 41% over a year ago.

“As we enter the diamond market, we are aware that it is soft due to cyclical factors affecting the global economy,” Rothwell said. “However, we expect attractive economic results from the outset and are confident of our ability to market our full production, even in the current circumstances. Further, we are very positive about the diamond market outlook beyond the short term.”

BHP, which has the right to market all production from Ekati for five years, has established a marketing office in Antwerp, Belgium. The company intends to use the office to gain knowledge of its product and the overall market before completing any major sales commitments.

“The office is now staffed with experienced diamond people and ready to do business,” Rothwell explained. “We have a very attractive product, with many potential customers keen to purchase Canadian rough diamonds. Further, discussions are continuing with a number of major diamond companies eager to purchase a significant portion of the production.”