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Ekati to Close, Leaving Canada With One Diamond Mine
The diamond mine, which opened nearly 30 years ago in Canada’s Northwest Territories, is expected to shut down by mid-August.
A file photo showing the main camp at the Ekati Diamond Mine in Canada’s Northwest Territories. The mine, which opened in 1998, will close next month amid financial troubles. (Photo courtesy of Burgundy Diamond Mines Ltd.)
Vancouver, Canada—Ekati, Canada’s oldest diamond mine and one of only two remaining diamond mines in the country, will close following a failed process to find a buyer.
On July 13, the Government of the Northwest Territories filed an application in the Supreme Court of British Columbia asking the court to place the mine into receivership and begin winding down operations, a request a judge granted the following day.
The mine is expected to close by mid-August.
“This is a deeply disappointing for Ekati’s workforce, Burgundy’s stakeholders, and communities across the Northwest Territories,” Jeremy King, CEO of Burgundy Diamond Mines Ltd., which owns and operates the mine through its subsidiary, Arctic Canadian Diamond Company Ltd., said in a stock exchange filing.
“Ekati has made an extraordinary contribution to the territory for more than 25 years as a major private-sector employer and through its longstanding relationships with Indigenous communities and local businesses.”
Burgundy did not respond when asked how many jobs would be lost as a result of the mine’s closure.
Burgundy and Arctic Canadian were granted insolvency protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) on May 1, with the stated intention of financially and operationally restructuring Arctic Canadian so Ekati could continue to operate.
Ekati, like a handful of other diamond mines worldwide, is in financial straits due to multiple factors, including the drop in diamond prices and competition from lab-grown diamonds, which has been particularly detrimental to smaller natural goods.
On May 11, the court granted an order to begin a sales and investment solicitation process to find a buyer for the mine or investors for Burgundy and Arctic Canadian.
The process went on for eight weeks, with a bid deadline of July 10.
According to the government’s application, the company didn’t receive any viable bids and is expected to run out of money by the end of the week.
It also has a substantial amount of debt, court documents show.
As of July 13, Burgundy owes $175 million to the Canada Enterprise Emergency Funding Corporation (CEEFC), a government-owned entity that loans money to troubled businesses, and $79 million to various lenders.
“The sales process conducted in these CCAA proceedings did not result in any compliant bids, and the interim funding available to the Burgundy respondents is fully exhausted. CEEFC (the DIP lender) has determined it will not fund the companies any further,” the government’s application states.
“The [Government of the Northwest Territories] requires the urgent appointment of a receiver over the Burgundy respondents to conduct an orderly wind down of Ekati Mine operations, and to oversee environmental remediation and reclamation activities.”
The court appointed PricewaterhouseCoopers as receiver. PwC will oversee the closure of the mine, which is expected to take about five weeks.
After that, the site will be turned over to the government to begin environmental remediation and reclamation work.
Related stories will be right here …
On July 13, the Government of the Northwest Territories filed an application in the Supreme Court of British Columbia asking the court to place the mine into receivership and begin winding down operations, a request a judge granted the following day.
The mine is expected to close by mid-August.
“This is a deeply disappointing for Ekati’s workforce, Burgundy’s stakeholders, and communities across the Northwest Territories,” Jeremy King, CEO of Burgundy Diamond Mines Ltd., which owns and operates the mine through its subsidiary, Arctic Canadian Diamond Company Ltd., said in a stock exchange filing.
“Ekati has made an extraordinary contribution to the territory for more than 25 years as a major private-sector employer and through its longstanding relationships with Indigenous communities and local businesses.”
Burgundy did not respond when asked how many jobs would be lost as a result of the mine’s closure.
Burgundy and Arctic Canadian were granted insolvency protection under Canada’s Companies’ Creditors Arrangement Act (CCAA) on May 1, with the stated intention of financially and operationally restructuring Arctic Canadian so Ekati could continue to operate.
Ekati, like a handful of other diamond mines worldwide, is in financial straits due to multiple factors, including the drop in diamond prices and competition from lab-grown diamonds, which has been particularly detrimental to smaller natural goods.
On May 11, the court granted an order to begin a sales and investment solicitation process to find a buyer for the mine or investors for Burgundy and Arctic Canadian.
The process went on for eight weeks, with a bid deadline of July 10.
According to the government’s application, the company didn’t receive any viable bids and is expected to run out of money by the end of the week.
It also has a substantial amount of debt, court documents show.
As of July 13, Burgundy owes $175 million to the Canada Enterprise Emergency Funding Corporation (CEEFC), a government-owned entity that loans money to troubled businesses, and $79 million to various lenders.
“The sales process conducted in these CCAA proceedings did not result in any compliant bids, and the interim funding available to the Burgundy respondents is fully exhausted. CEEFC (the DIP lender) has determined it will not fund the companies any further,” the government’s application states.
“The [Government of the Northwest Territories] requires the urgent appointment of a receiver over the Burgundy respondents to conduct an orderly wind down of Ekati Mine operations, and to oversee environmental remediation and reclamation activities.”
The court appointed PricewaterhouseCoopers as receiver. PwC will oversee the closure of the mine, which is expected to take about five weeks.
After that, the site will be turned over to the government to begin environmental remediation and reclamation work.
The closure of Ekati will leave Canada with one operational diamond mine, though that mine, De Beers Group’s Gahcho Kué, is nearing the end of its life.
The country once had more than a half-dozen diamond mines, including De Beers’ Snap Lake and Victor mines, which closed in 2015 and 2019, respectively, and Stornoway Diamonds’ Renard mine in Québec, which closed in 2023.
Earlier this year, Rio Tinto announced it had hauled the last load out of the Diavik Diamond Mine and De Beers said it was pressing pause on the Tuzo Phase 3 expansion project at Gahcho Kué, which would have extended the mine’s life from 2027 to 2030.
Without the expansion project, production at the mine will come to a close at the end of next year.
During a presentation at the Las Vegas jewelry shows, De Beers CEO Al Cook said next year could be the last year diamonds are mined in Canada, a point he reiterated during an interview with National Jeweler at the shows.
“You look around the world, there are no more commercial diamonds produced out of Australia. Brazil used to be a great diamond-producing country. It’s gone down to next to nothing. India used to be the great diamond-producing country. It’s gone down to next to nothing. I wouldn’t be surprised if Canada is the next one,” Cook said.
“It’s just a reminder that diamonds are getting rarer, and that the number of countries that have commercially viable diamond deposits are getting fewer and fewer.”
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