Key expansions at iconic Canadian diamond mines hit by setbacks

Expansion projects at two of Canada’s oldest diamond mines, Ekati and Diavik, have suffered setbacks this week on the back of permits delays and disputes with landowners.

One set of bad news came Wednesday, when Dominion Diamond (TSX, NYSE:DDC) — the owner of Ekati — said it was not planning to begin construction of the new Jay pipe until 2018, a year later than previously planned.

The project, which would add about 13 years to the mine’s life, received the Northwest Territories government’s blessing last month. However, Dominion said this week it was still waiting for permits needed to start construction, adding that existing reserves at Ekati were enough to prevent the cessation in mining that Jay was originally intended to prevent.

While Dominion Diamond has pushed construction of Ekati’s new Jay pipe to 2018, Rio has said that a denial of a request to change its water licence could have an ‘immediate and materially-adverse impact’ on Diavik.

Then there’s Rio Tinto’s (ASX, LON:RIO) Diavik mine ongoing challenges. The operation, Canada’s largest diamond mine and one of the oldest, has been at the centre of relentless debate involving the company and the land and water board for the Tlicho region, which is denying Rio a requested change to its water licence.

Late last month, the miner said that a refusal of such application could have an "immediate and materially-adverse impact" on the operation, CBC News reported.

Rio Tinto wants the authority to relax the existing rules for water quality in Lac de Gras while it builds a dike to contain a new pit, called A21, inside the lake.

In response, the land and water board has proposed even stricter water quality rules than the regulations in place when Diavik's first two dikes were built inside the lake years ago.

Diavik is located in the North West Territories, 300 kilometres northeast of Yellowknife, close to Ekati, which Dominion bought from BHP Billiton (ASX:BHP) in 2013.

Experts agree that a decision to call off the new pit project could be too costly for Rio Tinto, especially as the area where its Diavik mine is located is attracting renewed recent interest from explorers.

Competitors are getting closer. Gahcho Kue, a large diamond deposit located southeast of Diavik and Ekati, is expected to become one of the largest and richest new diamond mines in the world.

The $700 million project is jointly owned by DeBeers Canada and Mountain Province Diamonds (TSX, NYSE:MDM), with production expected to begin in a matter of weeks.

Key expansions at iconic Canadian diamond mines hit by setbacks

Jay is a significant undeveloped deposit at Dominion Diamond's Ekati mine. (Image by Jason Pineau, WikiMedia Commons)