Canadian Natives Sitting on Diamond Mine

by Mark Bourrie

Ten years ago, talk of diamond mines was dismissed by most investors as the ravings of penny stock salesmen or confidence tricksters.

But now that a mine is in production on land owned by the Dene Nation, Canada's northernmost Indian community, no one is sneering any more and a second diamond mine may open nearby as early as next year.

Some of the country's poorest Native communities live in squalid reserves in regions that have been found to hold kimberlites, the geological formations from which most diamonds are mined.

Last summer's surveys near the Ontario communities of Wawa, Kirkland Lake, and in a remote area in north-western Ontario owned by an Ojibwe band, found deposits of diamonds.

Now it's a matter of proving the deposits are worth mining, says geologist Harvey Thorleifson, a scientist at the Geological Survey of Canada who is working with prospecting companies to trace diamond-bearing kimberlites.

Test results from last summer's northern surveys sparked a rush to some of the most remote parts of the country as independent geologists, small companies, and the giant De Beers diamond cartel try to nail down the best kimberlites.

De Beers first came knocking on Thorliefson's door in the 1980s, when diamond prospectors started to seriously examine the Canadian Shield, using new, high-tech equipment. Thorleifson was one of the few scientists in Canada to hold a PhD in a usually non-marketable area of geology: glacial deposits.

But the ability to trace the movements of glaciers, and knowledge about the way they unloaded the gravel that they clawed out of the Canadian Shield, was precisely the skill that diamond hunters use to trace glacial deposits of kimberlite gravel back to their source.

By a geological quirk (kimberlite is softer than typical Canadian Shield bedrock) most diamond deposits lie hidden under lakes and muskeg bogs. Over the ages, glaciers moved across the land, grinding down the kimberlite rock and leaving little pockets filled with water and mud after the ice melted.

"The early history of diamond exploration focussed on Ontario," says Thorleifson. "The first sign that there were diamonds in Canada came in the late 1800s, when people found a few -- less than two dozen -- diamonds in the Great Lakes region."

They were discovered in the same type of kimberlites as in the Kimberly region of South Africa, one of the world's most famous mines.

"Anywhere else in the world, the way you would follow up such a discovery would be to heading upstream because rivers carry the diamonds downstream. In the northern United States and Canada, people realized that you don't go upstream, you go up ice."

That's why De Beers took a professional interest in Thorleifson and other geologists who have the ability to follow the 10,000-year-old tracks of the glaciers.

For more than a century, a few oddball geologists tried to crack the mystery of where Canada's diamonds were hidden. Most mainstream prospectors never bothered to even try. It turned out Canada's gems were stashed under muskeg bogs and shallow lakes.

"In Canada, we may have the potential for mines across the Northwest Territories, the prairie provinces, Ontario and Quebec.

The presence of high quality diamonds has been proven, and it's typical in the mining industry to take a number of years to show whether you have a discovery that's economical to mine."

Mines already in development in Canada are projected to produce 10 per cent of the world's 110-million carat annual production within the next three years, say federal experts.

Canada's deposits hold a far larger percentage of gem-quality diamonds than in Russia or southern Africa, and the developers of the mine have not joined the De Beers cartel.

Half of the work force on the Ekati mine come from Native communities. The local Dene people reap resource payments from the company, and have a say over the environmental protection efforts made by the company.

Canadian skepticism of stories of sub-arctic diamonds made development of the country's first mine difficult.

In 1991, diamonds were discovered at Point Lake, Northwest Territories, just south of the Arctic Circle. Dia Met, the small Canadian exploration company that found them, had to become a partner with Australia's Broken Hill company to get the mine opened.

Now, no one's scoffing at the diamond prospectors. "It was a thrill to see the first batch of diamonds," says Graham Nichols, public relations manager for the Ekati mine. "When we put them on display, we finally made believers out of the skeptics."