BHP May Sell Ekati Diamonds Online

April 17, 2000

BHP May Sell Ekati Diamonds Online

Australian mining giant BHP Co. Ltd. may use the Internet to sell gems from its Ekati diamond mine in Canada's remote Northwest Territories. The mine produces about 3 milllion carats per year. Currently, BHP sells most of its diamonds through De Beers' Central Selling Organisation and on the open market.

"There's an interest in seeing if we can successfully sell diamonds [over the Internet]," said Graham Nicholls, Ekati's vice president of external affairs, at a briefing Friday in Melbourne. "I don't see an awful lot of risk in it except there's a certain level of effort that needs to go into doing it right."

Investigation of e-commerce opportunities is in the preliminary stages, he says. The high-end retail market would be BHP's likely target. Nicholls says the company is also looking at creating an identifiable brand for its diamonds through certification, packaging and inscription.

The agreement with De Beers provides for the sale of 35% of the run-of-mine production from Ekati over a three-year period. Another 10% of Ekati's production is earmarked for manufacturers in the Northwest Territories.

Production at the mine is expected to increase to about 4 million carats per year in 2001, and the company is still exploring to extend the mine's life. Production began at the mine in October 1998. Profits from Ekati were approximately $80 million during the second half of 2000.

- by Mark E. Dixon