When word broke Wednesday that Dominion Diamond Mines, operator of the Ekati diamond mine and junior partner in Diavik, is trying to fend off insolvency, many in the NWT started worrying about jobs in an economy already ravaged by Covid-19.
NNSL file photo
NWT MP Michael McLeod said it was hoped that such unfortunate circumstances could have been avoided.
"We knew that this downturn in the economy and downturn in the market sales for diamonds, along with the effects of the pandemic, could lead to this," McLeod said. "I think a lot of people are going to lose jobs if we're not able to turn the situation around and if the markets and the industry doesn't allow for it to turn around."
Asked whether the federal government has a role to bailout or financially support the mineral industry, McLeod said several departments have been in contact with the Dominion Diamond Mines to find resolutions, but he was non-committal on funding assistance.
"I think for this mine, the future is going to be dependent on whether it (will) restructure or sell. We also have to wait and see how well the diamond sales resume after we get through the pandemic," he said.
Of the mine's 1,625 employees in 2018, 715 were Northerners.
Yellowknife Mayor Rebecca Alty said the news is very disappointing given the company's vital role in the territory.
NNSL file photo
"It's such an important part of our economy and it creates a lot of jobs in Yellowknife and a lot of business spent here. Anytime you see news like this it hurts. I hope it is the pause they need to restructure and coming out of the Covid-19 restrictions, they will be up and running again," said Alty, acknowledging the hardship created by the pandemic. "With (Dominion Diamond's) India and Antwerp offices still closed, they do have their diamonds but they just can't sell them, so they can't make their debts."
Todd Parsons, president of the Union of Northern Workers (UNW) and who represents more than 400 workers with the company, said the news came as a surprise.
"We had no indication prior to being advised by the employer that there were any concerns around solvency for the company, so we were caught off guard," he said.
The mining company's struggles add "another extra layer of stress" to union members who have been dealing with the impacts of Covid-19, Parsons said, adding that the biggest priority is to ensure members have job security as the company works through its restructuring while avoiding bankruptcy.
"For the union, we are going to continue to protect our members and all of their benefits and their rights that are under the current collective agreement and labour law in general," he said.
Katrina Nokleby, minister of Industry, Tourism and Investment, said she was "disheartened" by the announcement.
"The mining sector is the biggest source of private-sector jobs and income for our residents and has been part of our landscape for almost 100 years," Nokleby wrote in a statement. "Despite the economic challenges faced during this pandemic, I remain committed to ensuring this sector has the tools it needs to endure and rebound. All sectors of the global economy are suffering from the impacts of Covid-19. Many are being forced to make difficult decisions like the one Dominion had to make today, but the Government of the Northwest Territories will continue to collaborate with industry to overcome the challenges ahead."
photo courtesy of Dominion Diamond Mines
Dominion Diamond Mines' press release on Wednesday stated that it cannot generate sufficient revenue to support ongoing financial obligations because, despite its strong diamond inventory, sorting houses and diamond markets are closed.
"The company believes that filing for protection... is the most prudent course of action," the release reads.
The diamond miner, owned by the U.S.-based Washington Companies, indicated that it's considering a financing proposal from its parent company that would get it through the creditor process. Pending court approval, it would entail a possible sale of assets to an affiliate of the Washington Companies and bidding procedures for competing offers to an asset sale. If the Washington Companies' affiliate is the successful purchaser, it would pay what's owed to employees, the government -- including reclamation -- and fulfill obligations under the company’s agreements with Indigenous groups.
Ekati's spent $302 million with Northern businesses in 2018. Half of that money went to Indigenous enterprises.
Located about 300 kilometres northeast of Yellowknife, Ekati has been in production since 1998.