Dominion Diamond Mines to update workers after filing for creditor protection
Company sought creditor protection after cash flows cut off due to COVID-19 lockdowns
The union representing 400 workers at the Ekati diamond mine had no forewarning of the financial difficulties that led to Dominion Diamond Mines' decision to file for creditor protection this week.
"We weren't aware there were any concerns regarding Dominion's solvency issues," said Union of Northern Workers president Todd Parsons. "We first became aware when we received notification ... just prior to the press release being put out."
Dominion's internal finances are not as public as they were when the company was publicly traded. Since being bought by the U.S.-based Washington Group of Companies for $1.2 billion US almost three years ago, they have not been required to share any information about their finances.
Parsons says the company has told the union it intends to return to full production as soon as possible, "keeping in mind we are in the middle of a COVID-19 pandemic. But they indicated they intend to go back into full production and retain the workforce."
Parsons said the union is encouraging employees to participate in an electronic town hall meeting Dominion has scheduled for Friday at 2 p.m.
Crushing pressure of COVID-19
Dominion suspended production at Ekati due to COVID-19 four weeks ago.
In an April 21 affidavit filed in support of the application for creditor protection, Dominion's chief financial officer Krystal Kaye said COVID-19 lockdowns around the world have been "sudden and devastating in their reach and effects" on the company's operations.
Kaye said Dominion has $180 million US in diamonds trapped in Canada, India, and Antwerp, Belgium, due to COVID-19 lockdowns.
"Mining operations have been suspended, sorting and manufacturing hubs are shut, the diamond tender network is shuttered, and retail stores are closed," said Kaye in the affidavit.
Though its cash flow has stopped, Dominion's obligation to pay its 40 per cent share of the operating costs of the nearby Diavik diamond mine continue. Dominion is the minority joint venture partner with Rio Tinto at Diavik.
Those costs amounted to an average of about $22 million per month for the last three months. Kaye said Dominion is was unable to pay a second instalment of $16 million for operations this month.
The company said it was also facing heavy costs due to the borrowing that was used to purchase it. Borrowed money was used to cover about $600 million of the purchase.
According to the affidavit, the company currently has just under $300 million in security posted for the mine. It's unclear how that compares to the environmental liability it is supposed to cover.
A spokesperson for the Tłı̨chǫ Government said they had also "been in communication with Dominion and are still examining the potential impacts of their decision."