The territorial government has terminated its monitoring, certification and trademark licensing agreements with Deepak International Ltd.
The announcement was made by Industry, Tourism and Investment Minister Wally Schumann on Thursday.
Deepak International, a diamond manufacturer, purchased two abandoned diamond cutting factories near the Yellowknife airport in 2013.
At the time, the GNWT called the sale a ‘rebirth’ of the city’s diamond cutting industry, however the plants still remain empty.
The company is now facing a $5.9 million lawsuit from Callidus Capital Corporation, the financing company that loaned it the money to buy the factories.
“Deepak International is no longer an Approved Northwest Territories Diamond Manufacturer and no longer licensed to use Polar Bear Diamond or other GNWT trademarks,” Schumann said in his statement.
Under the terms of its previous agreement, the company was authorized to market its diamonds as “Government Certified Canadian Diamonds” and “Polar Bear Diamond” internationally.
That title guaranteed potential buyers that the diamond was 100 per cent Canadian, but without a licensing agreement in place Deepak International can no longer make that claim.
The territory’s mining industry has been under increased pressure this week after Dominion announced it would be moving its head office from Yellowknife to Calgary by the middle of next year.
Despite this, Schumann says the GNWT is still confident about the future of the mining sector.
“The NWT was recently reconfirmed as the world’s third largest producer of diamonds by value and there continues to be significant manufacturer interest in establishing operations in the NWT,” he said.
“All NWT diamond producers remain committed to providing up to 10 per cent of their NWT mine production to approved manufacturing operations based in the NWT.”