How diamonds quickly became this country’s new best friend.
By Cynthia Moore McGovern
From female field geologists to senior legal advisers, engineers and company executives, diamonds are much more than a girl’s best friend. In this country, they are a source of some serious female talent. The female influence of finding, mining and marketing diamonds in Canada is becoming carbon crystal clear: brilliant minds make for brilliant mines.
“We barely got taught about diamond exploration at university and now it’s a big component, because Canada is third in the world for diamond production. That’s huge, for all Canadians,” says Pamela Strand, a geologist and president of Shear Diamonds Ltd., a Canadian-based company focused on diamond exploration and development in the Canadian North.
Diamonds are the hardest known mineral on Earth, making their use widespread. You may not have one on your finger, but chances are there have been many diamonds in your life — from precision medical, manufacturing and other industrial cutting, drilling, grinding and polishing tools to electronics and yes, jewelry.
Diamonds were created billions of years ago about 150 km below the earth’s surface. Intense pressure bonded pure carbon atoms together in a very specific arrangement to make diamonds. A diamond is colourless unless trace impurities are present (boron creates a blue hue and nitrogen, yellow, for example). Some people enjoy diamond colour variances in jewelry, whereas others prefer the white sheen of the colourless carbon crystal when cut.
Diamonds in the Great White North
In 2009, Canada’s diamond output of 11 million carats accounted for approximately 17 per cent of world production, which was estimated at more than 120 million carats. The value of Canada’s output was $1.7 billion, making it the third top producer by value (Russia is first and Botswana second). Strand says thank Canada’s geography — or geology for that. “Canada has one of the largest cratons in the world,” she explains.
Prehistoric volcanic eruptions sent magma bubbling up through the craton, carrying diamonds up to the earth’s surface (or at least close enough to be mined). This diamond infused magma cooled and settled as vertical, carrot-shaped rock structures called kimberlite pipes or as wider, flatter structures just underground, called dikes. Canada is a hotbed of kimberlite because of that craton, yet less than two per cent is estimated to hold enough diamonds to be economically mined. That didn’t seem to stop prospectors from searching.
Canada’s diamond rush
Diamond exploration in Canada first exploded in 1991 when Charles Fipke and partner Stewart Blusson discovered a huge concentration of diamonds in kimberlite at Point Lake, in the Lac de Gras region of the Northwest Territories. This would become Ekati, Canada’s first diamond mine.
About this time, Eira Thomas, founder and former chairman of Stornoway Diamond Corporation, had just completed her geology degree and was considering pursuing graduate studies at the University of Cape Town. Thomas deferred her plan for graduate studies and in 1992 began working as a field geologist at her father’s company, Aber Resources. Grenville Thomas was one of the first prospectors to quickly stake claims close to the Ekati site after its discovery. “This was the beginning of one of the largest land staking rushes in world history and I got swept up in it,” his daughter says.
And in 1994, just two years later, Thomas and her exploration team did in fact find diamonds — one of the world’s richest discoveries ever made. This became Diavik, Canada’s second diamond mine in the north, worth an estimated $9 billion in its lifetime.
To this day, Strand, Thomas and countless others continue their quest for the next great diamond discovery in Canada. Smaller diamond mines have opened and both Thomas and Strand are involved in several potential mid-scale diamond development projects. Stornoway’s proposed Renard diamond mine, part of its Foxtrot project, could become the first diamond mine in Quebec.
Beth Bandler, now an independent Toronto-based lawyer and consultant, started working with Aber in 2002, shortly before the Diavik mine began commercial production of diamonds. She was one of a small, 10-person, Toronto-based team and the growing company made the most of her skillset: more than 18 years of previous corporate law and international industry experience.
In fact, in just five years Bandler’s role with Aber evolved from part-time legal consulting work to becoming senior vice president and general counsel, legal and human resources, head of global legal services and human resources, responsible for more than 500 employees around the world at Harry Winston. Canadians may not realize that international luxury diamond jeweler Harry Winston is owned by a Toronto-based company, thanks to Aber’s success with Diavik. Aber acquired Harry Winston in a two-stage process, owning it 100 per cent in 2006. And Aber changed its own company name in 2007 to Harry Winston Diamond Corporation.
In the early days, Bandler helped Aber put the company infrastructure in place. She guided the company through its legal processes and start-up policies, ensuring a regulatory compliant procedure for international diamond sales. While she speaks humbly about her influence and rapid rise at the company, it is important to note that these were unchartered waters for Canada’s newest diamond company. “The senior executives were experienced but the junior people did not have prior corporate experience,” she says. Many of the juniors came from accounting firms and other outside service providers and Bandler coached them to now think critically about outside advice and to ensure they asked the right questions in order to make better decisions for their company.
Carat careers for women
Careers in the diamond industry are as varied as the thousands of different diamond classifications. Everything from camp cook to company CEO is critical. “This industry is incredibly diverse,” says Thomas. “There are opportunities at every stage in the diamond pipeline, whether it be for the geologists engaged in exploration, the biologists and environmental scientists who examine sustainability, the engineers who build the mines, the diamantaires who value and purchase rough diamonds or the designers and retailers who sell the final product.”
Company leaders such as Strand, Thomas and Bandler are also proving that women in the diamond sector can make it to the top. Female enrollment in geology programs is “way up” since she was a student in the male-dominated field, says Strand (a University of Toronto administrator says about half the students in their geology program are female). Strand herself is now joined at Shear Diamonds by its new Executive Chairman Julie Lassonde-Gray, a well-known mining engineer in Canada. And Thomas co-founded Stornoway with current company director Catherine McLeod-Seltzer, another influential woman in mining who won the Northern Miner’s 1999 Mining Man of the Year award in 1999 (now called the Mining Person of the Year award). “I do think women take a very honest approach to how we do business, yet we still do systematic science,” says Strand. And as for her own role at Shear Diamonds, which began in 1997, “I’m very fortunate that I’ve been given many opportunities in my life and one of them was the trust at Shear that I could run a company.” After graduation, Strand immediately moved to Yellowknife from Toronto to begin her career in geology in the late 1980s. She worked in the private sector and in government. “I’m a firm believer that if you want the experience you have to take the risks and move around and do different things,” she says. As for running a diamond exploration and development company: “It takes passion, you need to have that excitement to keep the momentum going.”
Diamonds take forever
The process of diamond exploration, discovery and production is achingly slow. It takes years to find diamonds (if not decades or never), years to permit the project (water and wildlife are sacred to Canadians and diamond mining can be tough on both) and years to get mines up and running (building mines is no easy feat when it involves transporting equipment and supplies to remote areas across endless stretches of forest, frozen lakes and tundra).
Those in a hurry might prefer Strand’s strategic shortcut. In 2010, Shear Diamonds purchased the bankrupt Jericho diamond mine (Canada’s first in Nunavut) in a $6 million cash and stock option deal with the hopes of resurrecting the formerly operational mine. The deal allowed Shear Diamonds to bypass the $200 million to build the mine and not assume any of the former company’s liabilities. For Shear Diamond investors, it shaves years off the process.
Hopes were high when Jericho opened in 2006, yet Strand says “a snowball effect” of operational and financial problems amidst dismal market conditions closed Jericho’s doors in 2008, where it sat, unsold, for two years.
The entire diamond sector was hard hit during the recession. Consumer demand for diamonds dropped and therefore so did prices. Fuel prices skyrocketed, significantly increasing costs to run the equipment at the mines. Even the winter road in the north — a cost effective route for delivery of fuel and supplies — missed a season in 2007 due to warmer weather, as the road is actually a frozen lake. What’s more, diamonds may be produced in Canada, yet are sold in U.S. dollars. When the Canadian dollar reached parity with the U.S. dollar, anticipated returns on diamond sales dropped. When Jericho shut down for good, a new expression became: Diamonds are a girl’s best friend, unless she’s a miner.
Not anymore. “There is no doubt that the future for diamond producers is rosy,” says Thomas.
The future of diamond mining
Market conditions have rebounded globally and diamond prices are up significantly — between 35 and 65 per cent higher from 2010 to 2011, Strand estimates. Future demand in “new wealth” markets, such as India and China, could drive up prices (and profits) even further. These emerging markets are expected to grow at an annual rate of 10 to 15 per cent over the next decade, compared to about three per cent in all of North America.
Interestingly, many of the diamond mines around the world are reaching the end of their lifetime — even Ekati and Diavik in Canada could be halfway through theirs. And in an era of steadily growing diamond demand and decreasing supply, this means both challenge and opportunity for Canadian producers.
Africa and Canada hold the highest hopes for future diamond discoveries, yet as the long and expensive project pipelines show, diamond exploration efforts are generally limited to a handful of companies that can survive the downturns. “Over the last 10 years,” says Thomas, “many diamond exploration companies have failed, not because they didn’t have good people or projects, but because they were unable to sustain investor enthusiasm over the long haul.” That means without a steady inflow of investor funds, projects may never reach production.
For now, Strand, who has spent her entire career living and working in Canada’s north, is eager to do her part to continue the growth of the sector by putting Jericho back into production and people back to work.
According to the Canadian Minerals Yearbook 2009 – Diamonds, Canada’s four diamond mines (the Ekati, Diavik and Snap Lake mines in the Northwest Territories and the Victor mine in northern Ontario) have added 8,000 direct and indirect jobs to these areas and have helped create several hundred Aboriginal companies.
“Mining is a great opportunity for employment,” says Eva Aariak, premier of Nunavut. She says the territory responded to the need for an increased number of skilled labourers by opening a new trades school in Rankin Inlet and providing additional training programs through Nunavut Arctic College. And since the 1991 diamond discovery, The Mining Association of Canada Impact Economics Report (2009) shows that the percentage of the population on income assistance has dropped in northern mining communities from 11 per cent to 4.5 per cent while the high school graduation rate has also improved, up from 33 per cent in 1995 to 56 per cent in 2007. “The spinoff effect in the north from those diamonds is so significant that it affects all of us as Canadians,” says Strand.
Dig this …
Space: the final diamond frontier? The Lucy star (after the Beatles’ song, Lucy in the Sky with Diamonds) contains mostly carbon and measures almost 10 billion trillion trillion carats in size — perhaps not as big as Kim Kardashian’s engagement ring — yet about the size of our Earth’s moon.
Big, bigger, biggest: The rule of thumb before making a diamond purchase is to consider the 4Cs: carat, cut, colour and clarity. On the wholesale side, a gem-quality, rough cut, one carat diamond might sell in U.S. dollars for: $20 (poor quality), $200 (medium quality), $400 (very good quality) and $1,000 (outstanding quality). By the time these diamonds reach a jewelry store, however, there’s at least another zero added to those prices. British billionaire jeweler Laurence Graff purchased a rare 24.78 carat pink diamond for approximately US $46 million in November 2010 — the most expensive diamond ever sold. His wife of 50 years must be looking forward to 60 years of marriage: that’s the diamond anniversary!
Finders keepers: Canada’s Eira Thomas wears diamonds that she helped discover. How many women would love to say that?