N.W.T. braces for economic sting of Snap Lake mine shutdown

Communities and First Nations in the N.W.T. are bracing for hits after De Beers announced it's shutting down operations at its Snap Lake diamond mine. 'It's going to hit them really hard right now just before Christmas,' say Henry Zoe of the Tlicho Government.

30 people from Tlicho region among those who received layoff notices

Only a third of the people who worked at the Snap Lake diamond mine were from the N.W.T. (De Beers Group)

Exactly how De Beers' decision to mothball the N.W.T.'s Snap Lake diamond mine will weaken the territory's mining-dependent economy remains to be seen, but some groups are already bracing for hits to their employee numbers and bottom lines.

De Beers has spent $1.5 billion with N.W.T. companies since construction of Snap Lake began in 2005, more than half of which went to aboriginal-owned companies or joint ventures, according to the company.

That's on top of annual spending on training, scholarships and donations to more than a dozen events like Yellowknife's Folk on the Rocks festival.

De Beers CEO Kim Truter briefly addressed Yellowknife reporters about Snap Lake's closure on Friday, saying the company will try to keep on as many of its 258 N.W.T. employees. (CBC)

Jobs-wise, the mine employed 747 direct De Beers employees and contract workers as of last year, according to the company's latest socio-economic report. 

Of those, only a third, or 258 people, were from the Northwest Territories, with a large proportion coming from Yellowknife, Hay River and Behchoko.

Here's a more specific breakdown by community:

Hay River32.8
Fort Smith8.1
Fort Providence4.2
Wekweeti 2.7
Fort Resolution1.7
Fort Good Hope1
Lutsel K'e0.8

It's not clear yet how many people from each N.W.T. community have received layoff notices (with benefits and salaries guaranteed for 16 weeks).

Nor is it known how many Northerners will remain at the Snap Lake site to wind operations down over a period of months, or how many are being moved to the construction site of De Beers' next N.W.T. mine, Gahcho Kue.

De Beers CEO Kim Truter said the company will try to keep as many Northerners on the payroll as it can.

Tlicho region particularly hard hit

The Tlicho Government began crunching rough numbers Friday, the day De Beers confirmed the bad news in a letter to various groups.

"Some time [this] week, we may have more information as to the ... decrease and how much less people are going to be working," said Henry Zoe, the Tlicho Government's senior community director. 

Zoe estimated that of the 434 direct De Beers employees given layoff notices, 30 are from the Tlicho region.

"It's going to hit them really hard right now just before Christmas, so we're going to try [to] provide as much support as we can," including counselling, said Zoe.

Zoe said De Beers' decision will also affect approximately 50 Tlicho members who work for companies owned by the Tlicho Investment Corporation, such as Tli Cho Logistics and Ventures West Transport.

Ventures West Transport, a trucking company owned by the Tlicho Government, says it's waiting to hear how its contract to deliver fuel to Snap Lake will be affected by the shutdown. (CBC)

Ventures West — in which the Tlicho Investment Corporation significantly increased its ownership stake in August — delivers fuel to Snap Lake via the Tibbitt to Contwoyto ice road.

"Is it going to be the same amount as what was delivered last year? Or are they going to lessen that amount? What is the intention of De Beers? We don't know that yet," said Zoe.

Need to diversify economy: Yellowknife mayor 

Peter Vician, N.W.T. deputy minister of Industry, Tourism and Investment, said the diamond industry accounts, at minimum, for $400 million of the territory's direct GDP annually, but could not provide specific numbers on Snap Lake.

Yellowknife Mayor Mark Heyck says De Beers' announcement underscores the need to diversify the territory's economy. (CBC)

Yellowknife Mayor Mark Heyck said it's "premature" to speculate on what impact Snap Lake's closing will have on Yellowknife's economy. He's holding out hope for the mine's reopening in the future.

Heyck echoed comments made by the territorial government, saying he hasn't received hints of potential shutdowns from the owners of the Ekati and Diavik diamond mines.

But he said Friday's news underscores the need for the N.W.T. to diversify its economy.   

"Mineral exploration and development has always been a big part of the northern economy. Here in Yellowknife that's the reason we exist as a community today," he said.

"But the writing's on the wall: we can see the horizon of the lifespan of these mines, and it's really important that we look at other sectors and how, as governments, we can strengthen those sectors."

De Beers had plans for $1 billion in spending

De Beers has signed impact and benefit (IBA) agreements with the Tlicho Government, the Yellowknives Dene First Nation, the North Slave Métis Alliance and the Lutsel K'e Dene First Nation. 

The exact payments set out in those agreements are traditionally kept under wraps, but generally the agreements call for companies to spend money on training, jobs and scholarships.

Profit-based payments to aboriginal groups may also be included, but in the case of Snap Lake, that has been a moot issue.

Glen Koropchuk, De Beers Canada's chief operating officer, said in March that keeping Snap Lake in production until 2028 would have resulted in another $1 billion in spending. (CBC)

"Snap Lake Mine has not been profitable to date," Glen Koropchuk, De Beers' chief operating officer, said at a public hearing in March. 

"Members of our IBA communities will know that because we have not been able to make profit-related payments to this date. We would like to, but we haven't."

Snap Lake was supposed to keep producing diamonds until 2028. Koropchuk said that would have resulted in "approximately another billion dollars of investment ... in salaries, taxes, purchases, local spends.

"It's quite considerable."


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