Time International, April 2004

The Diamond Frontier
From bleak and barren to bling-bling–how a growing industry is changing Canada’s Northern communities.It’s a frigid day at the Ekati diamond mine in early March, with temperatures hitting -50thC when the wind chill is factored in. Not the sort of weather in which you’d like to find yourself–300 km northeast of Yellowknife, N.W.T., and just 200 km south of the Arctic Circle–at the bottom of a pit of gargantuan proportions, moving thousands of tons of granite with a $ 9 million hydraulic shovel. But Peter Liske says, “I love driving this thing. No question, this is the best job I’ve ever had.”

Liske, a member of the Dettah community of the Akaitcho Treaty 8 group, is not alone. The discovery of diamonds under the frozen crust of Canada’s North in 1991 and the subsequent arrival of the Ekati and Diavik diamond mines have transformed economic prospects for the 20,000 aboriginal people in the Northwest Territories. Native communities are experiencing increased self-esteem and a better quality of life compared with 10 years ago. And while the diamond mines can’t take all the credit, they deserve the majority of it. No wonder some members of the Dogrib Nation sport T shirts that read, DIAMONDS ARE A DOGRIB’S BEST FRIEND.



The fancy rocks are also friends to most of the other native communities around the mines. Acknowledging that they would be operating on lands traditionally used for hunting and trapping, mining companies entered into agreements with the Dogrib Treaty 11 Nation (made up of the Dogrib Dene communities of Wha Ti, Wekweti, Gameti and Rae-Edzo), the Akaitcho Treaty 8 communities of Dettah and N’Dilo (both Yellowknife Dene), the Lutsel K’e (Akaitcho Dene) and the North Slave Metis and Inuit communities. In Liske’s home of Dettah, a Yellowknife Dene community across Great Slave Lake from Yellowknife, you can see the symbols of increasing prosperity. The village, a scattering of two or three dozen one-story houses, looks less like a stereotypical reservation than, say, a small cul-de-sac in Kingston, Ont. Almost every house sports a satellite dish. The task of the communities in the North now, says Brendan Bell, minister of resources, wildlife and economic development in the Northwest Territories, is to find ways of maintaining traditional values while enjoying unprecedented prosperity. So far–fingers crossed–native communities are doing a remarkably good job of combining the two.

There has always been mining in Canada’s North. Gold was found near Yellowknife Bay back in 1896. But since diamonds were discovered near Lac de Gras in 1991 (a find that became the Ekati mine) and at Diavik three years later, the precious stones have come to account for just over 20% of the Northwest Territories’ economy. Canada is now the third largest producer of diamonds in the world, behind Botswana and Russia.

While mining has long been a feature of the North, never before have aboriginal leaders been able to reap significant benefits from the resources discovered on their traditional lands. “Even though mining has been occurring on our lands for 70 years, we were never invited to participate,” says John Zoe, chief negotiator for the Dogrib First Nation. “We weren’t going to let that happen again.”

Given the Northwest Territories’ legal status, royalties from the mines still go to the federal government. So aboriginal leaders have had to find a different way of getting a slice of the pie. Five First Nations managed to get a say in socioeconomic deals hammered out between the mines and the government of the Northwest Territories. Then they negotiated their own impact-and-benefit agreements to cover hiring, business opportunities, training and even direct cash payments. And all that from an industry that has long been known for shirking its social responsibilities. BHP Billiton at Ekati and Rio Tinto at Diavik are two of the giants in the minerals industry, and De Beers, the world’s largest diamond company, is planning to begin production at its Snap Lake mine in 2008. So far, they have all behaved well. “We really did feel we needed a social license to operate,” says Jim Excell, president of Ekati until the end of 2003. “But we were also fortunate in that a couple of the community leaders saw they needed something for their people.” The leaders’ requirements have evolved over time. During initial negotiations with Ekati, unemployment in many aboriginal communities was in the neighborhood of 70%. Jobs were key. When discussions with Diavik began a few years later, it had become clear that there were equally compelling opportunities in winning service contracts. Discussions with De Beers have even touched on certain aboriginal groups’ owning a portion of the mine.

What’s the source of the new opportunities? Diamonds were formed about 3 billion years ago deep below the earth’s surface. About 50 to 75 million years ago, volcanic eruptions shot molten kimberlite to the earth’s surface and left behind carrot-shaped pipes from which diamonds can be mined today. To get at diamondiferous ore, it is often necessary not only to drain parts of a lake (as has been done at Diavik) but also to move thousands of tons of granite. At Ekati’s Fox Pit, shovel operators like Liske are moving 8 tons of granite for every ton of kimberlite they will eventually mine. Ekati uses a fleet of 25 trucks, some of which can carry 240 tons and have tires that are 3.6 m high and cost $ 22,000 apiece. The trucks haul their loads to the mine’s processing plant, which crushes, scrubs, grinds and sorts the ore. The plant processes some 12,000 tons a day, from which about 15,000 carats of diamonds will be recovered. That’s only enough to fill a small coffee can.

Both existing mines adopted targets of aboriginal hiring during construction and operation and have broadly met them. Diavik recently had in its employ some 630 people, of which 37% were aboriginal. (The target is 40%.) At Ekati, which directly employs some 800 people, 28% come from aboriginal communities, just short of its 32% target. When Snap Lake comes online with an estimated 500 employees, there will probably be so many jobs available that the mines may not be able to find enough aboriginal employees to fill the quotas. “When you talk about the number of people who are eagerly looking for work, there won’t be that many left,” says Brendan Bell.

Jobs in the mines are two weeks on, two weeks off, which not only alleviates the burden of work in such a remote location but also allows aboriginal people to make time for hunting and trapping. So far, though, aboriginal employees tend to be limited to unskilled and semiskilled jobs. But John Bekale, senior aboriginal-affairs specialist at BHP Billiton, thinks it is only a matter of time before more of his people take on increased responsibilities. Six years ago, he says, the Dogrib had just five people in college; today there are more than 125.

Because many potential aboriginal employees suffered from a lack of education, the agreements include training initiatives. Johnny Smith of Rae-Edzo, a Dogrib community 100 km from Yellowknife, started at Ekati in 1998 and was the first person to complete a production-technician training program in the mine’s processing plant. Today he works in the facility’s control room. Diavik offers community-based training, such as a recent Lutsel K’e heavy-equipment course that had 16 graduates. De Beers has pledged to invest $ 380,000 in a new training center that is scheduled to open in Yellowknife in April. Susan Devins, an adult educator at Ekati who lives at the mine for two weeks at a time, says, “Three years ago we had people who couldn’t read the letters of the alphabet, and now they’re reading, writing and sharing it with their children.” Some 120 people at Ekati participate in literacy, numeracy and GED education as well as learning more practical things like how to read a pay stub or manage a credit-card account.

The mines are also committed to making business opportunities available to aboriginal-owned or joint-venture companies. Diavik disburses nearly 70% of its annual goods-and-services expenditures among Northern-owned companies and about $ 19 million more on labor outsourcing, predominantly with Northern aboriginal outfits. Of $ 910 million in contracts handed out during construction of the mine, $ 458 million went to aboriginal or joint-venture companies. Among the results: there are now more than 200 aboriginal-owned businesses on record in the Northwest Territories. Nuna Logistics, a 50%-Inuit-owned company, has a $ 45 million-a-year contract to mine Ekati’s Misery Pit, and Ke Te Whii, a joint venture of the Dogrib and Akaitcho communities, has an eight-year contract to haul kimberlite from the pits to the processing plant at Ekati. Tli Cho Logistics, a joint venture between the Dogrib Rae Band Nation and ATCO Frontec, part of an Alberta-based conglomerate, has a labor contract worth $ 11 million a year from Diavik. “We told them they’d be doing themselves a favor by giving us the contracts,” says George MacKenzie, CEO of Behcho Ko Corp., a Dogrib Rae Band holding company that owns Tli Cho and six other enterprises. “They have a success story to tell the rest of the world, and they’re leaving a good legacy behind.”

The next logical step is to capture a greater portion of the industry’s value-added segment. So the territory’s government has pushed the mines to supply a portion of their rough diamonds to local companies for cutting and polishing. In Yellowknife there are three independently owned cutting-and-polishing firms, two of which have aboriginal ownership, and they receive roughly 10% of the mines’ annual production. A fourth, Laurelton Diamonds, owned by New York City’s Tiffany & Co., opened in October of last year. The jeweler, which is a minority owner in Aber, Rio Tinto’s junior partner at Diavik, has pledged to buy $ 38 million worth of Diavik diamonds from Aber each year. “We’ll recruit locals when we can,” says Michael Kowalski, chairman and CEO of Tiffany.

To keep up with demand, Aurora College in Fort Smith, N.W.T., offers a diamond-cutting and -polishing program that has graduated more than 80 students. Shane Fox, from Fort Simpson, about six hours southwest of Yellowknife, is training to become the factory manager at Sirius Diamonds’ cutting-and-polishing facility in Yellowknife. “By the time I’m finished with him,” says the factory’s current manager, Peter Finnemore, “he’ll be the top rough-diamond man in Canada.”

Not everything has gone smoothly, though. Negotiations between aboriginal people and the mines continue to be civil, but some feel that the companies have relaxed efforts to live up to the letter of the agreements. “Now that we’re in production, there does seem to be more of a focus on the bottom line,” says John Zoe of the Dogribs. Other Dogribs see a distinct difference in the amount of business they have obtained from the two mines. Behcho Ko’s MacKenzie says he has done $ 30 million worth of business with Diavik but only $ 3 million with BHP. On the other side of the fence, De Beers feels that First Nations representatives’ expectations may be higher than they should be. Ekati and Diavik are two of the richest diamond mines in history. But De Beers says it is having trouble adjusting community expectations for its Snap Lake mine, which will produce far fewer diamonds. “We simply can’t afford cash payments of the same level as Ekati or Diavik,” says Richard Molyneaux, president and CEO of De Beers Canada.

Familiar social problems–alcoholism and substance abuse–continue to haunt local communities. Many people employed in the mines pass through Yellowknife on their way back home, and the town has a growing drug problem. “Crack cocaine arrived in Yellowknife around a year and a half ago,” says Jake Kennedy, editor of Canadian Diamonds magazine. Even though the two-weeks-on-two-weeks-off setup was requested by the communities, the schedule puts pressure on the people involved. Local communities are reporting more separations and divorces, and children can find it more difficult to focus on school when the primary wage earner is away from home. But “mining is the way of the future in the North,” says Helen Brown, office manager of Ek’ati Services, a joint venture between the Yellowknife Dene and the PTI Group, based in Edmonton, Alta., that provides services for Diavik. “While there are stumbling blocks, people need to accept that it is making life easier.”

The statistics bear that out. Employment in small communities in the Northwest Territories rose from 27% in 1989 to 35% in 1999. Dogrib employment jumped from 33% in 1999 to 43% in 2002. Those numbers should continue to improve. While high school graduation rates in the Northwest Territories are only about one-third the national level, the percentage of the population with less than a ninth-grade education dropped from 22% in 1989 to just 13% in 1999. According to the 2000 Northwest Territories Housing Needs survey, overcrowding–defined as six or more people in a single house–has fallen from nearly 50% in 1981 to just over half that today. And while the average annual income in local communities was $ 17,290 in 2000 (compared with a Canadian average of $ 23,137 and a territorial average of $ 36,200), employees at the mines can make $ 45,000 or more.

That increased wealth has brought its attendant pressures on communities that have a tradition of sharing. Inuit now distinguish between goods that have long been shared under the protocol of antiquity, like harpoons or rifles, and those that haven’t, like the new Ski-Doos showing up in many yards. “As far as they’re concerned, the Ski-Doos are white man’s goods,” says a person who has worked among the Inuit. “And the discussion goes like this. ‘There are different rules now. Get your own damn Ski-Doo.'” Still, those “white man’s goods” might help preserve an aspect of aboriginal life. There’s now more money for Ski-Doos and trucks, which means it’s easier to go trapping.

But it’s the new opportunities to work, not play, that have changed the North. There is a sign behind the grill at Bullock’s Bistro, a Yellowknife establishment with some of the best Arctic char you’ll find anywhere. WORK IS FOR PEOPLE WHO DON’T KNOW HOW TO FISH, it reads. For the aboriginal people of the North, that’s no longer true. It’s not just the fish that got lucky.





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