BHP expands Canadian diamond interests

Gary Park, Petroleum News Calgary correspondent

BHP Billiton, the world’s largest mining company, is pouring C$7.1 million into a diamond exploration venture in Canada's Northwest Territories.

In return it will get a 20 percent stake in the Aviat Joint Venture from Hunter Exploration Group. Aviat was created by three Vancouver-based juniors — Hunter, Northern Empire Minerals and Stornoway Ventures — to hunt for diamonds on the Melville Peninsula.

Northern Empire and Stornoway said May 29 they would not exercise rights of first refusal on the Hunter interest, opening the door to BHP.

BHP already operates the Northwest Territories’ Ekati mine, which produced diamonds valued at US$492 million in 2002, it fourth year of operation.

With the diamond business in full swing in Canada’s North one of the obstacles in its way is a shortage of qualified labor from mine operators to diamond cutters and polishers.

Canada’s Indian Affairs and Northern Development Minister Robert Nault acknowledged the problem in a mid-May speech to an industry roundtable in Edmonton, Alberta, amid fears that Sirius Diamonds could be forced to move its cutting and polishing operations from the Northwest Territories to China or India.

That would do serious damage to Canada’s hopes of becoming a world diamond center over the next 10 years, based heavily on its proximity to the U.S. market, which buys more than 50 percent of the world’s diamonds.

The need for workers is so desperate that skilled workers are being flown in from Armenia, Ukraine and Mauritius.

The pressures will only grow, with about 400 companies involved in various stages of exploration and 2,500 claims covering almost 6 million acres now staked in Nunavut Territory, the third of Canada's northern territories, which was broken off the Northwest Territories about three years ago.