Need to Know
There Are No Clean Diamonds: What You Need to Know About Canadian Diamonds
There are no clean diamonds. Exploring for them, digging them out of the ground and selling them requires sacrifices from the natural environment, from the wildlife and fish that live on it, and from the Aboriginal people who depend on it.
We want to ensure that the public understand that Canada's Aboriginal communities are engaged in a daily power struggle to ensure that the mines benefit their people, and to ensure that these mines do not irreversibly damage the intricate web of life on which we all depend.
We want to ensure that the DiCaprio film and its response strengthen the ability of Canadian Aboriginal communities and indigenous communities elsewhere in the world to protect their interests.
Campaigning to Stop "Blood" Diamonds
The Leonardo DiCaprio film Blood Diamond, released December 8, 2006, draws important attention to the terrible price that has been paid to mine and market diamonds from Africa. The film follows on two decades of campaigning by non-governmental organisations (NGOs) such as Global Witness and Partnership Africa Canada. Mining companies, trading firms and jewellers have been playing a role in sustaining the bloody wars in Sierra Leone, Angola and the Democratic Republic of the Congo. The coalition of NGOs called on each of these actors in the industry to address the issue.
In 1999, a United Nations study of the war in Angola cited diamonds as a key factor in warring factions' ability to procure weapons and transport. The report argued that many countries were helping to smuggle and launder Angolan diamonds for the rebels, and the U.N. concluded that the monitoring systems that were in place were "wholly inadequate" to monitor an illegal diamond trade.
The Kimberley Process was negotiated with diamond producing and processing countries to try to control the trade in conflict diamonds. Under this system, each link in the chain of custody must prove to third-party observers that it has effective processes for tracking a diamond while it is in possession. Entire national diamond-trading systems are certified at one time under the Kimberley Process, and governments, therefore, are relied upon to place pressure on their industries. The effectiveness of the Kimberley Process in stopping the flow of conflict diamonds is still unknown.
However, in Sierra Leone, other factors have come together to stop the war, and the diamonds produced there are still an important source of income for many of its citizens. The Network Movement for Justice and Development's Campaign for Just Mining in Sierra Leone does not want to see diamond mining stopped; they want justice, human rights and environmental protection for miners.
There is a continuing campaign led by Earthworks in the United States to get the jewellery industry to accept standards for their diamond sourcing, by following the Golden Rules.
Canadian Diamond Producers See an Opportunity
"In a marketplace increasingly worried about blood diamonds -- called that because, amid reports of slave labour and torture, they have helped finance horrific civil wars in countries such as Angola, Democratic Republic of the Congo and Sierra Leone -- Canadian gems have the additional cachet of being conflict-free. Producers here are initiating the concept of branded gems -- stones with a miniscule symbol like the maple leaf implanted on an edge -- and are charging a premium for them." (Katherine Macklem, Maclean's, September 8, 2003)
At the same time as the Conflict Diamonds Campaign was underway, Canada had become a diamond – producing nation at the hands of the same transnationals that were plundering diamonds and gold in Africa. Northern Aboriginal peoples were faced with demands from competing and impatient mining companies to stake, explore and to develop mines on their traditional territories. Their lives have been transformed by the complicated and time-consuming negotiations required to protect the interests of their people. And now, they are also being transformed by the impacts of the mines themselves.
"In your eyes," (De Beers' Nicky Oppenheimer) told Harvard Business School alumni in Cape Town, "I must be the devil incarnate, the Antichrist. For I am chairman of De Beers, a company that likes to think of itself as the world's best-known and longest-running monopoly. We make no pretence that we are not seeking to manage the diamond market, to control supply, to manage prices and to act collusively with our partners in the business." (Victor Mallet, "Rock Hard Beneath the Old Charm", Financial Times, October 18, 1999.)
The Canada diamond industry is controlled by the biggest transnational mining companies in the world: BHP-Billiton, Rio Tinto and De Beers. The wealth of these three companies has been built on the plunder of indigenous lands around the world. (For more information on these companies, see Mines and Communities.)
When communities have to make the terrible choice to sell their land and labour for diamond money, they need the power to protect their interests in dealing with these giants.
Canada has three operating diamond mines: BHP-Billiton's Ekati and Rio Tinto's Diavik mines in the Northwest Territories and Tahera's Jericho mine in Nunavut (where Teck Cominco recently took a 25% share). DeBeers has the Victor Mine under construction on the James Bay Coast of northern Ontario. DeBeers also has Snap Lake – an underground mine in the development phase in the NWT. DeBeers has also filed applications to operate another diamond mine at Gacho K'ue, about 90 km southeast of Snap Lake, but is fighting the more rigorous environmental assessment that has been ordered.
The grade of Canada's diamond mines vary from Victor's average 0.23 carats per tonne of ore, to Ekati's 1.8 carats/tonne and Diavik's 3 carats per tonne.
Diamond exploration expenditures were $251 million in 2005, with the Northwest Territories, followed by Nunavut and Saskatchewan with its Fort-à-la-Corne activity, led all Canadian jurisdictions, followed by northern Ontario and the Otish Mountains area of Quebec.
What are some of the problems with Canadian diamonds?
1. The ecological footprint of the diamond mines:
Ekati: Canada's first diamond mine, was "the largest construction project completed north of the tree line. It is 350 kilometres north of Yellowknife, and is accessible by air or ice road. "During the construction phase, more than 40 million kilograms of building materials, trucks, diesel fuel and food were moved by truck over the 475 kilometre ice road from Yellowknife to the mine." (from the Ekati website) In 2002, the footprint was already 1400 hectares.
150 kimberlite bodies have been discovered within the mineral lease area held by the company area, although most of these do not carry economic diamond concentrations. Ekati has open-pit mined from the Panda, Koala, Fox, Beartooth, and Misery pipes, and underground production from Panda with future production from the underground at Koala. The project is expected to have a life of 25 years or beyond (dating from 1998). Koala is 900 metres in diameter and 230 metres deep, Panda is 800 metres in diameter and 300 metres deep.
Each open-pit requires the draining of the lake that sits atop the kimberlite pipe and then some 35-40 million tonnes/year of waste rock is excavated from the pits. Any fish are removed. The ore feeds a central 18,000 tonne/day-capacity processing plant. The 3.4 kilometre Panda Diversion Channel diverts water around the Panda and Koala pits into Kodiak Lake. Other lakes were taken for disposal of processed kimberlite and waste rock.
Ekati is one of the most closely monitored mines in Canada, as the First Nations involved negotiated for the company to fund an Independent Monitoring Agency as a watchdog. In its report for 2004, the IEMA reported that total habitat loss to date was 19.7 km2 (twice the size of Yellowknife). It noted an increase in all monitored lakes of total dissolved solids, potassium and ammonia; and an increase in some lakes of nitrates and molybdenum. It has also been found that some of the polymers in the processed kimberlite are chronically toxic to water fleas (a crucial part of the aquatic food chain).
BHP-Billiton's last closure plan for Ekati was approved in 2002 although the company is now required to produce an updated plan that accurately reflects current operations. There is some question as to whether the financial security currently held is adequate to allow for a third-party to carry out closure and reclamation.
"The clay slurries present serious, and as yet, unresolved closure challenges for the company. Despite questioning by the Agency at the workshop, it is apparently not yet known by the company how these, and the transition zones with beached tailings which are prone to liquefaction, can be effectively stabilized and reclaimed. For example, it is not known how to place a waste rock cover (as outlined in the currently approved tailings closure plan), or how to construct internal erosion control measures within the tailings facility."
The Bathurst caribou herd is the largest mainland herd in the NWT. The herd migrates through the area of the diamond mines. Dust from mining is a serious threat to caribou, as it can spread out and contaminate the lichen, on which they depend. The herd has declined in numbers from a high of about 400,000 animals in the 1980s to 128,000 in 2006. This reduction is apparently still within the range of natural variability but caribou are much more sensitive to disturbance when a herd is in decline. There is some statistically significant data from limited satellite collaring that female caribou tend to avoid mine sites in the critical post-calving period.
The Diavik Diamond Mine is located on Lac De Gras about 300 km (180 miles) north of Yellowknife. It is located on 20 square kilometre island, informally called East Island. It employs 700, and produces 8 million carats (1,600 kg) of diamonds annually. There are three ore bodies named A154 South, A154 North, and A418.
The area was first staked in 1992 and construction began in 2001, with production commencing in January 2003. It is connected by a 475 km ice road and a 1,585 metre (5,200 ft) gravel runway that regularly accommodates Boeing 737 jet aircraft.
The mine is owned by a joint venture between the Aber Diamond Corporation and Diavik Diamond Mines Inc., a subsidiary of Rio Tinto Group. The lifespan of the mine is expected to be from 16 to 22 years.
Aboriginal people named the lake Ekati for quartz veins found in local bedrock outcrops resembling caribou fat. Lac de Gras is 60 kilometres long, and averages 16 kilometres wide. Lac de Gras has a 4,000 square kilometre drainage area. Lac de Gras, with Lac du Sauvage to the northeast, form the headwaters of the Coppermine River flowing 520 kilometres from western Lac de Gras to the Arctic Ocean. It has a maximum depth of 56 metres. Water temperature ranges from 0°C to 4°C in winter and 4°C to 18°C in summer. The water quality resembles distilled water. Although aquatic productivity is low, lake trout, cisco, whitefish, arctic grayling, burbot, longnose sucker, and slimy sculpin are among the fish the live in the lake.
With Diavik mining the bottom of the lakebed and discharging its mine water back into the lake, there is increasing concern over water quality changes. Diavik is discharging more ammonia than permitted under its original licence and there are serious concerns about the aquatic baseline and the ability of the current aquatic effects monitoring program to detect changes in water quality. These concerns recently came to a head during the November 2006 Wek'ezhii Land and Water Board public hearings for Diavik's water licence renewal.
Like Ekati, there are also concerns about dust and contamination of the lichen.
Diavik has an environmental agreement with the affected First Nations, the NWT and the federal government. The Agreement establishes an Environmental Monitoring Advisory Board (EMAB).
The Jericho Mine: Tahera Diamond Corporation is a Canadian-owned diamond exploration, development and mining company. Tahera's wholly-owned Jericho project, commercial production of which was achieved effective July 1st, 2006, represents Nunavut's first diamond mine. Teck Cominco recently acquired a 25% interest in the mine due to the junior company's need for cash and mining expertise.
Jericho is a kimberlite deposit located at the north end of Contwoyto Lake, 25 kilometres north of the Lupin gold mine site, in the Slave Geological Province. The deposit is located on Crown land although parts of the proposed project will be on land with Inuit-owned surface rights.
The federal regulatory instruments will be in the name of Benachee Resources Inc., a wholly owned subsidiary of Tahera Diamond Corporation.
The final "Part 5" environmental review of the Jericho project was completed in July 2004 with the issuance of the Nunavut Impact Review Board's Project Certificate. An Inuit Impact and Benefits Agreement was signed between the Kitikmeot Inuit Association and the Tahera Diamond Corporation on September 8, 2004. On January 25, 2005, the Minister approved and signed the water licence.
Indian and Northern Affairs Canada executed land lease documents with Benachee Resources Inc. on February 11, 2005 in order to allow the company to use Crown land at the project site.
The mine is an open pit – 350 metres long, 500 metres wide, and 270 metres deep. Total processed kimberlite is 5.52 million tonnes at a nominal rate of 680,000 tonnes/year; average grade mined is 0.85 carat per tonne (recovered, diluted); total waste from the mine is 28.6 million tonnes (or 33.6 million tonnes when the allowance for flattening pit slopes is included).
The fine tailings will be deposited in the Long Lake tailings impoundment located in a long narrow lake southwest of the processing plant area. Based on current reserves estimates, approximately 830,000 tonnes of fine tailings solids will be produced over the mine life.
The first four years of production will be from a land-based open pit, followed by about two years of underground mining. A stockpile of ore would be generated during this time so that processing would continue for two years after the end of mining operations for a total mine life of only eight years.
The Victor Mine: The Victor Diamond Mine is a massive diamond mine being proposed by the DeBeers diamond conglomerate in northeastern Ontario near Attawapiskat on James Bay in northern Ontario. This region is part of one of the largest, intact wilderness areas left on earth and currently has no industrial development. There are several First Nations communities in the area that are accessible by winter road only. This wilderness supports abundant wildlife, including threatened woodland caribou, healthy fisheries, clean and plentiful water, and sustains the traditional activities of First Nations.
The mine site will cover an area of 5,000 hectares. The open pit would be 230 metres deep and up to 950 metres wide. The ecological footprint of the mine (the area its operations will impact), however, is much larger. Up to 260,000 hectares -- an area roughly four times the size of the City of Toronto -- will be impacted by dewatering -- the pumping of water out of the pit -- which is likely to massively change water flows above and below ground throughout the area.
A new hydro corridor and access road from the coastal community of Attawapiskat to the mine site 90 kilometres away will bisect intact wilderness. An existing winter road along the James Bay coast has been upgraded for heavy use by large haul trucks (currently it is used infrequently by community members), thus furthering spreading the ecological footprint of the mine.
Environmental Impacts of the Victor Mine include:
2. Exploration and mining distort the cultural and social lives of indigenous communities, and a small portion of the financial benefits return to the affected peoples
When the community of Muskrat Dam in northern Ontario arrived at Agusk Lake for their spring goose hunt in late April 2006, they discovered that exploration activities undertaken by De Beers Canada Inc. had driven away the geese. The elders of the community depend on the traditional community goose hunt for food.
Muskrat Dam has a moratorium on development in their traditional territory. In a letter to the Ministry of Mines (OMNDM), Chief Vernon Morris writes: "The lands in question are traditional lands essential to the maintenance of the distinctive culture of the Muskrat Dam First Nation, and the exploration program have seriously disrupted the Muskrat Dam First Nation's spring goose hunt. There will be few geese for the community of Muskrat Dam this year."
A press release addressing the situation issued by De Beers on May 10, claimed that the company had approached Muskrat Dam First Nation in March 2006 to request a meeting "to enquire about the community's traditional land and pursuits as well as to discuss the early exploration work planned in the region for spring of 2006. This request was declined."
Chief Morris categorically denies that De Beers made any contact with Muskrat Dam regarding this exploration plan. In a letter to De Beers Canada on May 15, he wrote: "That statement is incorrect. I am Chief of this community and I have no knowledge of such a meeting request."
There are nine First Nations in northern Ontario that have imposed moratoriums on resource development.
The Ekati and Diavik mines have entered agreements with a number of First Nations whose lands are affected by the mine – the Dogrib Treaty 11 Council (now known as the Tlicho Government), Yellowknife Dene First Nation, the North Slave Métis Alliance, the Kitikmeot Inuit Association and the Lutsel K'e First Nation – that cover everything from contracting out to training. The Diavik commitment is to have 66 per cent of the work force from the North, with 35 per cent aboriginal. Diavik says it now exceeds both commitments and has pumped $233-million into the territorial economy since the mine was constructed, three quarters of that going to northern businesses. "Participation agreements" have been signed that apparently provide for annual cash payments in the order of about $1 million per year. There agreements are confidential but do not appear to be tied to profitability or involve revenue sharing.
The negotiation of these agreements continues to be incredibly time-consuming and disruptive for First Nations Leadership. An excellent descriptions of the process can be found In Dealing Full Force, published by the North-South Institute and Lutsel K'e Dene First Nation in 2006, and in Ellen Bielawski's book, Rogue Diamonds: the Rush for Northern Riches on Dene Land, (Douglas and MacIntyre, 2003).
"Community leaders were daunted and overwhelmed by trying to understand the proposed plans for the diamond mining, and what the implications could be for the people and the traditional territory in order to negotiate a good deal. "We're trappers who live off the land. And people live in the bush and trap," one community member said. "And all of a sudden this mining company comes in. We didn't know anything about mines, or how to deal with it. That was our first experience. We didn't know how to negotiate with them." (from Dealing Full Force)
Ekati is also the only diamond mine in Canada with a union. The Public Service Alliance of Canada was certified in July 2004. In 2006, when they tried to negotiate their first contract with BHP-Billiton, they faced stiff opposition from the company, who brought in replacement workers. The strike lasted from May until June 30, 2006. The union were only able to achieve a one-year contract, and very modest concessions from the company.
The big money – the billions – goes out, much to the growing concern of Premier Joe Handley and the government of the Northwest Territories. Mr. Handley claims that, since 2004, $286-million in royalties have been paid by the diamond operations to Ottawa, as the mines are on federal Crown land. The Northwest Territories, says Mr. Handley, received "not one cent" in return.
Over the coming two decades, Mr. Handley says, Ottawa will collect $23-billion in taxes and royalties. At the same time, the NWT government has failed to exercise its ability to raise taxes from the diamond mines. When BHP's Ekati mine was about to enter production, the NWT government pushed very hard for a guaranteed supply of rough diamonds to build a local secondary industry based on sorting, cutting and polishing of gem quality diamonds. The territorial government even provided loan guarantees to prospective secondary diamond companies to locate facilities in the NWT. Unfortunately, several of these ventures have failed, leaving taxpayers on the hook for millions of dollars.
There have been local impacts from the diamond mines in the capital city of Yellowknife. Housing prices have skyrocketed and drug-related crime is on the increase. Local service providers and retailers find it very difficult to retain staff and attract new employees given the attraction of the diamond mines and related services. Since none of the companies pay municipal taxes, the City of Yellowknife has to bear this burden without increased revenues.
The December 2005 Environmental Audit in the NWT found that; "While traditional economic indicators show that the NWT population and economy are growing, there is no commensurate progress in community wellness with numerous measures of social well-being being found to be less favourable than national comparisons. The social problems identified appear even more pronounced in the NWT smaller communities and are more associated with the Aboriginal population."
Jericho Mine in Nunavut: Tahera says that up to 60 jobs will be created during construction. Employment during mining would peak at 116 during open-pit mining, decreasing to 48 during underground mining and to 40 while processing stockpiled ore. The Inuit Impact and Benefits Agreement was implemented prior to the start of mining operations. Cambridge Bay, Kugluktuk and Gjoa Haven as well as the Northwest Territories are best situated to provide services and employees to the project.
The company estimated that benefits from taxes to the Crown and the Nunavut Government would be in the tens of millions of dollars. However, most of these benefits are based on the company making a profit, and using up tax exemptions for exploration and development expenses. However, since it started operations, the company has been in financial difficulty.
Under an agreement with Tiffany, signed in October 2004, in return for credit, the US jeweller will buy the entire diamond production from Tahera's mine in Nunavut, and use a large part for its own manufacturing. It will market the remainder for a fee on the international market.
On 15 October 2006, Tahera announced that it expects to produce fewer diamonds than expected due to lower grade kimberlite and slower than expected processing rates. The company also said it is in talks with Tiffany regarding the deferral of certain payments with respect to the existing credit facility.
Victor Mine in Ontario: Of total exploration expenditures to 2003, slightly over 12% of the total was paid out for Attawapiskat labour, goods and services. Over 40% of the local workforce of 400 was employed by De Beers during the time that the company was trying to obtain its 'social licence to operate". Although DeBeers estimated total cash inflow to Attawapiskat in the order of $235 million from 2005 to 2023, it is likely that transfer payments from the federal government to Attawapiskat will be reduced in proportion to earned income.
"There are real challenges to employment of the people of Attawapiskat in jobs requiring more than limited skills." The more educated are already working, and the unemployed are people with low and very low educational achievement. During the 3-4 months the camp was open last year, 45% of the 60-90 people were Aboriginal, most from Attawapiskat.
"Uptake of direct business opportunities (by the affected community) will depend on the degree to which new businesses are started in response to project supply requirements and on the revitalization of the Attawapiskat economic development corporation. There have been recent initiatives in Attawapiskat to start joint ventures with, for example, catering, road construction, and maintenance suppliers from outside the area". The communities have a strong interest in accessing training in areas of high value to large mines, including administration and secretarial work, computers, heavy equipment operation and trades.
There is definite concern regarding inflationary pressures, first on wages and then more broadly in the local economy. Inflation will put pressure on housing costs, energy costs and food stuffs. The average wage from the Victor project will be $40,000. Present average income in Attawapiskat is $17,000. The total increase in community wages will be $3-4 million annually. The increase to average household income and the economy as a whole will be in the order of 26 to 35%. "Increased income can have negative effects at the individual and family level, and these can spill over into negative community effects." There is an association with increased incomes and gambling, drugs and alcohol, and there is a likelihood that there will be a greater income gap and increasing inequity.
The Victor project may draw home some of the almost 45% of Attawapiskat First Nation members that live off reserve. These returnees may obtain jobs instead of the on-reserve population, and put pressure on supplies and services, particularly housing. They may cause "inflation, contribute to drug and alcohol problems, undermine traditional values, compromise public health and security". They may create demands for increased social and recreational services.
"At the end of the three year closure phase, all expenditures, with the exception of limited employment – related to environmental aspects and monitoring, will end. This has the potential to cause economic and associated social dislocation." The only possibility for future economic development foreseen by DeBeers is more mines. There are at least 8 other kimberlites in the region in the De Beers portfolio. "The Proponent has stated that while these other kimberlites have not been fully evaluated, there is reasonable potential for at least a few of these other kimberlites to become mineable, and that mining these kimberlites could extend the life of the project, perhaps by as much as 2 to 4 years, as a best guess. Further, none of these other kimberlites, as currently understood, would be capable of supporting a mine on their own, because of their small size."
3. Federal, provincial and territorial regulatory frameworks in Canada are inadequate to protect the environment from long term environmental effects
An Environmental Audit, required under the Mackenzie Valley Resources Management Act in the North west Territories shows some of the shortcomings of the current regulatory system.
Conducted by an independent auditor, the first-ever NWT Environmental Audit was completed in December, 2005. Unique in Canada, this audit reviewed the effectiveness of programs and processes related to monitoring cumulative impacts and the effectiveness of the regulation of land and water use in the Mackenzie Valley and the Inuvialuit Settlement Region.
The Report found the following:
In Ontario, the other diamond jurisdiction, an application to the Environmental Commissioner under the Environmental Bill of Rights filed by CPAWS-Wildlands League and MiningWatch Canada in December 2006 states:
The current situation with respect to the assessment of the potential environmental impacts of proposed mining projects is uncoordinated and incomprehensive. Approvals of proposed mining projects occur under the Mining Act, with exemptions and piecemeal assessment of potential environmental harm under the Environmental Assessment Act.
This article reprinted with the permission of Mining Watch Canada.