Diavik Mine Closes after Permit Declined

January 21, 2000

Diavik Mine Closes after Permit Declined

On Wednesday, one day after Canada's Department of Indian Affairs and Northern Development declined to issue an interim land use permit to Diavik Diamond Mines to begin work on its new Northwest Territories mine, the company said it would mothball the site and send non-essential workers home.

In a statement, Diavik said the company "continues to be of the opinion that the interim activities planned for this current period could be conducted within its existing land use permit framework." Nevertheless, the company promised that it would continue to negotiate in good faith with DIAND "to conclude the agreements and regulatory approvals required for the project to proceed."

Given the brief season to transport materials to the Diavik site, the shut-down could delay start-up of the $1.3-billion mine (in Canadian funds) by at least one year, according to the company. The mine was expected to open in 2003, producing up to 8 million carats a year – 6% of world diamond output – and employing 400 people. Diavik is a joint venture between British miner Rio Tinto Plc and Canada's Aber Resources Ltd.

In early November, the development of the mine received approval from Canadian Environment Minister David Anderson despite concerns from environmental and aboriginal groups that it could harm local ecosystems. An environmental report on the project was filed last summer.

- by Mark E. Dixon