De Beers confirms layoffs at N.W.T.'s Snap Lake mine

International diamond company De Beers has confirmed that 105 people will be laid off at the Snap Lake mine in the Northwest Territories, with global economic turmoil to blame.

Officials told CBC News that De Beers has ended its contract with Procon Mining and Tunnelling, a Burnaby, B.C.-based company that has been mining on the margins of Snap Lake's main site since production started this summer.

Snap Lake is about 220 kilometres northeast of Yellowknife.

'Diamonds may not be immune to the actual short-term impact of a global recession.' —Cathie Bolstad, De Beers spokeswoman

De Beers spokeswoman Cathie Bolstad said the company is tightening its budget and cutting back production in all its diamond mines, including Snap Lake, its new Victor mine in Ontario and its mines in South Africa.

"Diamonds may not be immune to the actual short-term impact of a global recession," Bolstad said Tuesday.

"And so in anticipating that we will have a decline in demand for rough diamonds temporarily ... we're reducing our production across all of those mines. And Snap Lake, of course, is included in this adjustment."

Jim Dales, vice-president of operations at Procon Mining and Tunnelling, told CBC News earlier this week that De Beers had informed his company "they've decided to curtail the work in the area of the mine that we were working on."

Bolstad says there are about 300 underground miners at Snap Lake: about 200 work for DeBeers and the rest work for Procon.

North workers highly affected by layoffs

About 75 of the affected miners will finish work in early December, with the rest leaving by the end of that month.

Dales estimated that up to about 15 per cent of his workers are from the North. He said Procon will do its best to find affected workers other employment.

Procon is also involved at BHP Billiton's Ekati diamond mine, located about 310 kilometres northeast of Yellowknife, as well as in other projects in Canada and worldwide.

BHP Billiton spokeswman Deana Twissell said it has no plans right now to lay off any of the 1,500 people working at the Ekati mine.

"We certainly need staff in our underground operations," Twissell said.

"Our Panda and our Koala underground mines are fully operating, and we do have extensive training underway with other partners for an underground miners' training program. So, yes, we do have that need."

Twissell added that BHP Billiton hopes its ongoing efforts to reduce production costs will help it survive the economic crisis, especially given the price of rough diamonds has fallen by 35 per cent.

A spokesman for Rio Tinto told CBC News that it's proceeding with planned underground construction at its Diavik mine in the N.W.T.

While De Beers cuts back on production, it will also ramp up its marketing: Bolstad said the period from November through February is the diamond industry's key sales period, and De Beers is gearing up for what she said will be the strongest holiday campaign the company has ever launched.