Early Ice Road Closure Will Affect Production Costs

Unusually warm weather has led to an early closure for the winter ice road, used to transport fuel and equipment to the remote Canadian diamond mines. The Tibbitt to Contwoyto Winter Road Joint Venture Management Committee (JVMC) says that despite efforts to halt the thinning ice, the road can no longer safely support loaded trucks.

The Tibbitt to Contwoyto winter road Photo courtesy Nuna Logistics Limited

The early closure will force mine owners to airlift supplies, fuel and equipment that was not transported to the area in time. Airlifting costs considerably more then trucking and will therefore affect the cost of production in the coming quarter.

About 7,200 of the approximately 9,000 truckloads needed to support the mines made the trip across the 570 km long ice road.

This past winter has been unseasonably warm. Attempts to find alternate ice routes or methods to extend the life of the deteriorating ice conditions at the southern end of the road were unsuccessful.

Tahera Diamond Corporation, operators of the new Jericho diamond mine north of Yellowknife, said it uses the road to transport fuel and bulk explosives.

While the road was open, Tahera received 60 percent of its planned deliveries, including over half of its planned fuel supply; the company currently has 6 million liters of fuel on site. Despite the lower supply, Tahera expects diamond processing and diamond production to be maintained at planned levels.

According to Tahera, the cost of air transport is estimated at 0.75 cents per kilogram or liter more than trucking rates. In Tahera’s case, it believes that the cost of adding air freight costs in order to operate at budgeted capacity, would be approximately $3 million, should it be required.

Aber reported that its 40 percent owned Diavik diamond, located northeast of Yellowknife, has approximately 44 million liters of diesel fuel, sufficient for about 10 or 11 months of operations. All other critical loads that exceed size limitations for air transport have been hauled to site with the exception of 10 truck loads of excavation shovel and dyke cut-off wall construction components. Aber said that these loads are being reviewed for disassembly or other alternative methods of delivery.

Diamond mining giant De Beers said the ice road closure will have “significant implications” for its two projects in the region, Snap Lake and Gahcho Kue.

De Beers was especially hard hit by the weather. About a quarter of the planned truck loads, 600 out of 2,200, did not make it through on time. De Beers provided few details, but said accommodation for 200 construction workers are among the items that were not transported.

“There are some things which won't get to site probably. There are others which can be flown in, but that will add to the cost,” said De Beers spokeswoman Linda Dorrington.

If the weather turns cold and ice conditions improve before March 25, the JVMC may consider reopening the road. However, the weather forecast is for continued unseasonably warm weather.