The territory’s mining community says the loss of more than 400 jobs at the Snap Lake diamond mine is sad, but no surprise.
In the seven years since it began operation, Snap Lake has failed to turn a profit. De Beers, announcing the suspension of mining at Snap Lake on Friday, termed conditions there ‘challenging’.
Alongside the fragility of the global diamond market, Snap Lake faced unique problems related to groundwater. De Beers consequently spent years looking for solutions as water issues obstructed its ability to effectively mine underground.
“There were warning signs,” Mine Training Society general manager Hilary Jones told Moose FM.
“The water issue shows it has been a tough mine to mine. They have been pumping more water than they can manage – they are pumping a lake a day, and that was a good heads-up.”
Lack of profit
Cory Vanthuyne, the MLA-elect for Yellowknife North, said Snap Lake’s challenges made a change in De Beers’ thinking all but inevitable.
“Most have known that this particular operation has not been profitable from day one,” he said.
“The GNWT has not, and will not, ever gain any royalties off of this mine because it never operated at a profit. You’ve got to think, at some point, De Beers is going to review its business case for the mine.”
The Mine Training Society scrambled to find new placements for its trainees on the back of Friday’s announcement, with help from other partners such as Dominion and Diavik.
Meanwhile, the NWT and Nunavut Chamber Of Mines said the entire territory can expect to feel the effect of Snap Lake’s closure.
Tom Hoefer, the chamber’s executive director, said there is no sign of a turnaround in global commodity prices.
“When a mine shuts down, there are two options,” Hoefer told Moose FM. “One is that you close the mine forever and you remove all traces of it having been there.
“The other is to say, ‘Well, hopefully this will be a short-term marketplace challenge. So we’ll put the mine in a condition where all systems are maintained and it’s in good shape, so that we can come in again and re-open it in future.'”
De Beers has taken the latter option, adding that it will continually evaluate the market over the next year in case the mine becomes viable once more. Snap Lake has at no point been close to becoming the territory’s largest source of diamonds.
“It’s tough around the whole world for our industry,” said Hoefer. “If you googled mine layoffs, you’d find them all over the world and the reason why is because most commodities are in a downward trend.
“When mines are facing falling revenues but their costs are fixed, they’re going to be in a tough situation. They’ll have to reduce their costs.
“In this case they couldn’t reduce their costs significantly enough to make it economic so they made the decision to close the mine.”
Leave the territory?
Hoefer now wants the Northwest Territories government to focus on preparing the territory for what he believes is an inevitable future recovery in prices.
“We know, at some point in time, the market’s going to come back up again. We just don’t know when,” he said.
“Now is probably a good time to get our house in order so that when the markets do turn around, all of our mines will be very healthy and our exploration will be healthy and we can move forward very quickly.
“Hopefully [the next government] will roll up their sleeves and support our industry here and help make things healthier.”
Jones, however, is encouraging her trainees to broaden their horizons for the foreseeable future as the NWT mining job market shrinks.
“There is more than mining in the NWT – there’s mining all over the world,” she said. “It’s a global economy in mining, so think big.”
That has ramifications for the NWT’s target of increasing its population by 2,000 in the coming years. However, Vanthuyne believes there is no need to abandon the broader ambition.
“That number is hopeful and whether that remains the number is yet to be seen,” he said. “I don’t know if we need to attach a number. We need to do the right thing first and that means getting back to growing our resource economy.
“That’s going to require some strategic investments on behalf of our government, fast-tracking negotiations on unsettled land claims, and we have to find a way to get more affordable power – so we’re improving the cost of living and the cost of doing business here in the North.”