The world’s largest mining company has raised flags suggesting its interest in the diamond business in Canada’s North is waning.
BHP Billiton announced last Tuesday that it is reviewing its diamonds businesses, signalling a potential sale of part or all of its shares in both the EKATI Diamond Mine and Chidliak exploration project.
The English-Australian company said the review was in line with its strategy to invest only in large, long life, expandable assets, which it said will be difficult to maintain in these cases.
“EKATI is a world class operation and Chidliak is a promising exploration opportunity, but many years of extensive exploration suggest there are few options to develop new diamond mines that are consistent with this approach,” the company stated in a press release.
BHP indicated it will only pursue a sale that will ensure the EKATI mine’s environmental and safety standards, as well as community benefits, are preserved. In the event that those criteria could not be met, BHP would continue to operate the mine.
“EKATI has made a substantial contribution to economic growth and development in the North ever since diamonds were first discovered there in 1991,” said Tim Cutt, BHP’s diamonds and specialty products president. “The review we’ve announced today will seek to maintain this legacy so that EKATI continues to bring social and economic benefits to the North while remaining a great place to work.”
BHP owns 80 per cent of the EKATI mine, located approximately 300 km northeast of Yellowknife, which opened in 1998 as Canada’s first diamond mine. The remaining shares belong to geologists associated with its original discovery in the 1990s.
EKATI has produced an average of more than three million carats of rough diamonds per year over the last three years, contributing 10 per cent of the diamond supply globally.
Chidliak, located on southeast Baffin Island in Nunavut, is a joint venture between BHP, which holds 51 per cent, and Peregrine Diamonds. Aside from ongoing exploration indicating seven of the 59 known kimberlite deposits show economic potential, the property could also contain deposits of platinum, lead-zinc and copper.
BHP Billiton’s review of its diamonds portfolio is expected to be completed by the end of January 2012.