|Pure Arctic Bling
A fortune of ice below the ice
By Margaret Swaine
North Americans have had a long love affair with diamonds. The United States became the world's leading importer in the mid-1800s and remains as such. Americans now buy one-half of the globe's favourite type of bling. Canada holds the honour on a per capita basis. Eight out of ten Canadian women own one or more pieces of diamond jewelry. We love our precious glittering ice. But some things are changing.
Historically diamonds stood haughtily above their origin. Who cared where and how they were dug up? Their cool sparkling beauty was enough for us. The four c's of colour, cut, carat and clarity were the measures of worth. A fifth "c" called country? Not on the radar until recently. Diamonds used to fund conflict and crime in certain countries have given an ugly edge to the "c" list and earned these little gems the graphic moniker 'blood diamonds'.
In order to stem the flow of bad diamonds and bad press, The Kimberley Process certification system was implemented in January 2003 to certify the origin of rough diamonds. It helps identify 'conflict free' diamonds and outlaw the illegally obtained ones. Basically all exports of rough diamonds in countries which have passed the required legislation are shipped in sealed containers, accompanied by a Kimberley Certificate. Within trading centres, all invoices must contain a warranty from the seller stating that the diamonds have been purchased from sources not involved in funding conflict or civil war. By 2004 more than 70 countries were taking part in this program representing 99.5% of global production.
The Kimberley Process reaped a few bonuses beyond its original purpose. By isolating out non-certified rough diamonds, it has reduced smuggling. It has also helped uncover the illicit use of rough diamonds for money laundering and tax evasion. A third, perhaps less expected spin-off, is that geographic origin is becoming a powerful diamond marketing tool. This brings us back to Canada. And our search for ice under the ice. (Diamond is such a heat conductor that if you press one on your tongue it will suck away body heat, creating a chill, hence the nickname ice.)
Let's start way at the beginning. Diamonds are carbon transformed under extreme pressure and heat into the hardest most transparent mineral on earth. This exact diamond forming combination of pressure and heat (44 to 50 kilobars of pressure at about 1,000 degrees Celsius) came together several billion years ago, hundreds of kilometres below the Earth's surface under ancient continents. Then many millions of years ago kimberlite volcanoes erupted forcing magna up through channels called pipes to the surface. Some of these explosions passed through diamond territory carrying the precious stone close to the earth's crust. Only about 30 of the earth's 6,000 or so known kimberlite rock deposits have ever become major mines. Even when companies think they have a mine, they may test dig for years before they know it's a profitable one.
A diamond carat (the measurement term) is based on the weight of a tiny dried locust tree seed and equals one-fifth of a gram (20mg). By comparison gold ore grades are measured in ounces per ton, up to a pound per ton. Rich diamond deposits are measured in carats per 100 tons, that is in parts per million. It can take hundreds of millions of dollars to build a diamond mine which then must process thousands of tons of kimberlite per day to get at the diamonds.
Back in 1991, diamond rich kimberlite was found at Point Lake in the Northwest Territories' Lac de Gras area by two Canadian geologists Chuck Fipke and Dr. Stewart Blusson. They'd been searching for years in Canada's frozen north driven by a conviction that something precious lay below the sub-arctic tundra. This spot far north of the treeline about 200 kilometres northeast of Yellowknife had the right kind of kimberlite. The geologists' discovery launched a land staking rush that eclipsed any seen during gold rush days. Over 8 million hectares of permafrost ground was staked out in short order by a multitude of players both big and small. Today billions of dollars of sizable high quality diamonds are being brought to surface annually from within this formerly uninhabited vast stretch of Canada known as the Barren Lands. Fipke and Blusson are listed in the top 100 richest Canadians today, worth about half a billion each.
The Northwest Territories discovery has catapulted Canada into number three position in world production of rough diamonds after Botswana and Russia with about 14 per cent of the total. (South Africa has slipped to fourth position.) The region's two mines, the first off the block Ekati (the Dene natives called Lac de Gras - Ekati) now 80% owned by BHP Billiton, and Rio Tinto's Diavik (in partnership with Aber Diamonds) produced $2 billion in stones in 2004. At start up Diavik went through about 4100 tons of kimberlite daily to retrieve 16,000 carats, about a hard hat full a day. Ekati processed 12,500 tons of ore to recover 12,500 carats daily, about a litre coffee can. Fifteen years ago these two enormous resource based companies weren't even into mining diamonds.
De Beers is now entering the NWT with their Snap Lake project, their first mine outside of Africa, expected to be ready for 2007. A fourth diamond mine, Tahera Corporation's Jericho in Nunavut is set to start production in 2006. The latter has an estimated annual production of 4.7 million carats and Snap Lake an estimate of 1.5 million carats. In Saskatchewan, Fort à la Corne has been found to host one of the largest kimberlite clusters in the world with over 80 discovered so far, most of them diamondiferous. De Beers is already sniffing under the sediment doing bulk samplings and finding diamonds. Shore Gold has sunk a shaft with good results. If Saskatchewan 'goes' it could push the Canadian share to 25 to 30 % of global production, according to Martin Irving, former director diamond projects Northwest Territories. Not coincidentally, he just moved to Saskatchewan to head up diamond projects there.
The Canadian diamond mines are just a part of the evolution of the diamond industry which has radically transformed itself in the past 15 years. Prior to this much of production and sales were under the tightly controlled fist of De Beers and most of the world's diamonds came from southern African countries and Russia. Experts say the end of apartheid in South Africa and of communism in Russia cracked open diamond's closed door. Those with diamond expertise lost their shackles and opened their mouths to reveal the secrets to prospecting, mining, cutting and polishing of the precious stone. All this helped Canada enter our own special ice age.
Diamonds emerge out their earthy prisons in a rough state mistakable for pieces of crystal or even thick glass. The most common rough shapes are octahedron (8 faces), dodecahedron (12 faces), and cube (six faces) which are also the shapes most popular for polishing. Not all roughs are gem quality. Among the gem quality, thousands of different categories are identified based on small variations of size, colour, clarity and shape. Once sorted gem diamonds are then cut and polished. This process can lose up to half the size of the diamond depending upon the cut.
India is the world's dominant diamond processing centre with over half of the estimated total global output of polished diamonds. Isreal has the highest level of polished output among the high labour-cost manufacturing centres. Its cutters are renowned for obtaining the highest yields from rough stones. Russia and Armenia are two other well established polished diamond producers. Belgium's Antwerp remains the largest diamond trading centre in the world but it's no longer a major cutting centre.
The rules of the past were discarded in the NWT. While historically De Beers did not support the cutting and polishing of diamonds within the country where mining took place, the Canadian newcomers took the opposite approach. They encouraged it. This smart decision maximized the benefit locals got from diamonds in their territory. Since 1991, the diamond industry and its spin-offs have added $5.2 billion to northern coffers. There's a diamond training college in Yellowknife, a city which has the trademarked slogan "Diamond Capital of North America", and four cutting and polishing factories.
On Yellowknife's "Diamond Alley" outside of downtown near the airport are Arslanian Cutting Works, Polar Bear Diamond Factory (both owned by Basal Diamonds, a wholesaler and jewellery manufacturer) and Laurelton Diamonds, an affiliate of New York luxury jewellery retailer Tiffany. Amidst fierce competition for rough diamonds, dealers and manufacturers looked at mine exploration and ownership. That's how Tiffany & Co. got involved. Aber Diamond company, a 40 per cent owner of Diavik, agreed to sell a share of production directly to the jeweller in return for financing to help develop the mine. Canada Dene Diamonds owned by Deton'Cho Corporation is on the other side of Old Town Yellowknife on Dene land. Developed in partnership with Israel's Moshe Namdar group, it's the globe's only Aboriginal owned diamond polishing factory.
Local training takes place at Aurora College in Yellowknife. The basic course is 22 weeks of theoretical and practical skills. The Gemological Institute of America comes up to deliver the polished grading component. Instructor and consultant Mike Botha an expat South African who mentored under famous experts in his native country is the brains behind the curriculum. He's developed a system of trigonometric profiling of fancy diamonds that's set a world standard as well as helped to create an overall occupational standard for diamond polishing. (He's registered two patents for his work on perfecting polishing accuracy and speed.) His Aurora program ranks up there with the best on the planet. "We are the only place in the world which teaches in a written curriculum how to cut the traditional fancy shapes," said Botha. After two years Botha says a student with the right aptitude can polish a diamond as well as any pro in the world. After five years they'll be as fast as anybody. To date about 100 people have gone through training.
The story has come full circle back to geographic branding. Traditionally all diamonds were sold through De Beer's Central Selling Organization (CSO) now called the Diamond Trading Company (DTC). In 2000 when De Beers ceased trying to control rough diamond supply, they switched to championing brands and advertising. Central to their new corporate strategy was the "Supplier of Choice" policy. They told their customers to create brands and spend money advertising them. They trimmed their list of "sightholders" by a third to 84 based on the strength of the marketing plans developed to promote the new branded diamond or jewellery products.
Today DTC markets less than half of the world's diamonds. The De Beers
rejected wholesalers and manufacturers have taken up with other rough
gem suppliers. BHP Billiton and Rio Tinto market their diamonds independently.
This has encouraged the now multitude of brands and certification programs
for polished diamonds around the world. There are logos, serial numbers
and even short messages marked by laser on the girdle of a finished stone
for example along with fancy certificates. Despite the proliferation of
brands, all studies show at the moment an excess of demand over supply
for gem quality diamonds.
Still less than one per cent by volume of diamonds mined in NWT is cut on location. BHP Billiton polish a part of the Ekati production and have established Aurias as their own brand for Canadian stones. Their CanadaMark is a lasered hallmark to guarantee Canadian origin. Eskimo Artic Ice, Maple Leaf, Canadian Diamonds and Gelées are among their partners in the CanadaMark program, all with their own brands and logos. (The vast majority of Canadian roughs is sold in Antwerp and goes all over the world to be cut. Therefore identification and tracking programs like CanadaMark that monitor stones from rough through to polished are very necessary.)
Meanwhile the NWT is taking their association with diamonds to another level with a partially government backed program to promote 'diamond tourism' called Rare in Nature. Packaged 'diamond tours' are set to begin this March organized by boutique travel company Horizon and Co. Diamonds may be forever, but their world is now permanently, positively changed.
The Hallmarks of Diamond Appraisal: Four C's (and now a Fifth?)
If You Go to Yellowknife