By Chaim Even Zohar

 

The regulatory process involving the Snap Lake diamond project in the Arctics of Canada isn’t over yet - but the greatest hurdle is now behind De Beers. The Mackenzie Valley Environmental Impact Review Board (MVEIRB) has completed the environmental assessment of the Snap Lake Project and has recommended to the Minister of Indian and Northern Affairs (INAC) that the project proceeds to the regulatory phase of approvals. There is little to stop De Beers now from using the “winter road” (the small window in the year during which the mine site is accessible by land) in early 2004 and, subject to the securing of some remaining regulatory approvals, the mine could well be in production around 2006-2007. 

 

For the diamond cutting industry it is significant that the De Beers commitment to supply rough diamonds directly from Snap Lake to local manufacturers has been enshrined in the wording of the approval. This commitment is part of the Environmental Assessment conducted by the MVEIRB. The positive recommendation to proceed follows a 14-month Environmental Assessment (EA) of the impacts of the planned underground diamond mine at Snap Lake. The findings of the Board are contained in a report of over 300 pages which includes numerous recommendations and suggestions currently being reviewed by De Beers.

 

Commenting on the report, Richard Molyneux, President and CEO of De Beers Canada finds this “a significant step forward for our project and we are pleased that it has received a positive recommendation from the Board. We hope to receive the land and water use permits during the first quarter of next year, allowing us to use the 2004 winter road to start site activities.” “Achieving a balance between environmental, social and economic considerations is the guiding principle of our approach to project development and the operation of our mines. The socio-political conditions within which we operate are a significant factor in our planning and inform our decisions about where to focus our investments,” says Molyneux.  

 

As was previously reported in IDEX, the De Beers Snap Lake project has been the subject of a detailed environmental assessment carried out by De Beers. The company filed a 5000-page environmental assessment report with the MVEIRB in February 2001. Thereafter De Beers had to respond to well over 1000 requests for additional information, it had to address and participate in a series of technical and public hearings that almost appeared like “court cases” and it had to engage in extensive community consultation.

 

The key question which MVEIRB had to consider is whether the Snap Lake project “would be likely to cause a significant adverse impact on the environment.” Environment is very broadly defined and includes socio-economic ramifications, such as the effect on local culture, language, economy, etc.  In order to prevent this significant adverse impact, the Board has recommended a number of measures in this report.

 

To be precise, “the Board has concluded that with the implementation of the measures recommended in this Report of Environmental Assessment and the commitments made by De Beers during the course of the Environmental Assessment the proposed development will not likely have a significant adverse environmental impact and should proceed to the regulatory phase of approvals.”

 

What exactly are these rough supply commitments made by De Beers? The MVEIRB report lists the following undertakings made by De Beers in respect to rough supplies to local industry:

 

• If at the time that Snap Lake starts production significant further supply of rough is required for viable manufacturing businesses approved by the GNWT (in excessive of available rough from Ekati and Diavik), De Beers could facilitate the supply of suitable DTC assortments of rough either directly from the DTC through the DTC’s own clients, or through a trading subsidiary of the DTC (Conformity Response, August 2002, Section 8.3)

 

• De Beers intends to offer access to rough diamond production as part of the BAs (Conformity Response, August 2002, Section 8.3)

 

• Supply of rough diamonds provided to partners identified in impact benefit and socio-economic agreements will be certified NWT Snap Lake production (Technical Sessions, 25 November - 06 December 2002)

 

• During the technical sessionsDe Beers made the commitment to try and work with the GNWT to come up with a facility for

the provision of rough, to one

or more NWT cutters and polishers. De Beers reconfirmed this at the public hearing (Public Hearing Transcripts, Day 5, May 2, 2003, p. 81). 

 

In addition to the commitments already made by De Beers, MVEIRB has numerous recommendations and suggestions which are “currently being reviewed by De Beers.” It is not clear whether De Beers has much room in not accepting these recommendations and suggestions as the MVEIRB decision stresses that “it is the Board’s opinion that without additional mitigation

[i.e. implementation of the recommendations and suggestions], the proposed development, considered as a whole, would be likely to cause a significant adverse impact on the environment.

 

The subject on supplies to local industry is, however, closed, as on this issue De Beers has made specific commitments. The MVEIRB reiterates these commitments in its over 300-page report. It seems that De Beers is free to sell its DTC rough to anyone it wants in Canada. However, rough supplies agreed in the Impact Benefit Agreements entered into with various local aboriginal groups or supplies agreed through a Socio Economic Benefits Agreement with the Government of the Northwest Territories must be rough from the Snap Lake mine.

 

The Snap Lake Diamond Project involves the development of a 3,000-ton per day underground diamond mine with an operating life of 22 years. The proposed mine is approximately 220 kilometers northeast of Yellow-knife, NWT, and is situated on Snap Lake at the headwaters of the Lockhart River drainage system. The mine will house up to 350 people. IDEX has calculated that the mine will produce some 1.5 million carats a year. At an estimated $90 per carat, the mine will contribute some $140 million to the annual De Beers rough production. The DTC can surely use this addition to its rough intake from what promises to become its first non-African mine.