Canadian Premiers to Launch a National Diamond Strategy

Diamond mines may well be operating in at least seven out of Canada’s thirteen states and territories in the years ahead. By the end of 2003, Canada will be producing approximately 12 percent of the world’s rough diamonds, placing it third in the world, behind Botswana and Russia but well ahead of South Africa. There is a real possibility that, within two decades, fifty percent of the world’s diamond production may come from Canada! The Federal Government of Canada has never displayed great enthusiasm for the development of a domestic cutting industry. “Canada lacks a coordinated national strategy to ensure that benefits and opportunities from the diamond industry are realized for Canadians,” says Northwest Territories Premier Stephen Kakfwi. Now, at the urging of Kakfwi, the individual states have seized the initiative and have decided to develop policies aimed at preparing the necessary infrastructure (incentives, taxation systems etc.) to encourage the establishment of cutting and polishing plants throughout the country.

The cause was strongly promoted by Premier Stephen Kakfwi at the just concluded Annual Premiers Conference (held in Charlottetown, Prince Edward Island) where he succeeded in convincing his colleagues that Canada’s political leaders must move quickly if the country is to turn the Northwest Territories' booming diamond mining industry into even more lucrative, employment-generating national industries. “Canada is now one of the world’s top diggers of diamonds,” the NWT Premier says, “now we must also become one of its foremost providers of finished diamond products.”

In a formal decision adopted at the conference, the Premiers of the 13 autonomous states embarked on the development of a national diamond strategy. “The Premiers have directed their Ministers to develop an action plan for a national diamond strategy that maximizes the benefits to Canadians from all stages of the emerging diamond industry and to report back to Premiers. Premiers will invite the federal government and other stakeholders to join the provinces and territories in the development of this important national initiative,” reads the protocol of decisions.

Asked why Canada needs a national strategy on diamonds, Premier Kakfwi replies “there is ongoing diamond exploration across Canada.  Advanced projects are located in Nunavut, Saskatchewan and Ontario. Significant diamond exploration projects can be found in Alberta and Quebec, with encouraging discoveries in Manitoba and possibilities in the Yukon. As mining projects across Canada are developed, we need to increase our participation in this multi-billion dollar sector. But this will not happen without planning and cooperation. Currently, there is no coordinated national strategy to ensure that benefits and opportunities from the diamond industry are realized for Canadians. A national strategy is essential if we are to create a strong, competitive value-added diamond industry in Canada and become known for finished diamonds and jewelry, and not simply as diggers of rough diamonds.”

Kakfwi stresses that the Northwest Territories has two operating diamond mines. By the end of this year, they will make Canada the world’s third largest producer of rough diamonds, with a value of over US$1 billion. Once these diamonds are cut, polished, turned into jewelry, their value will increase to US$7.2 billion. “But 99 percent of rough diamonds are leaving the country and the value-added work is being done elsewhere,” Kakfwi points out. Presently, diamond cutting and polishing facilities exist in the NWT, British Columbia and Quebec, and there are significant jewelry centers in Vancouver, Calgary, Toronto and Montreal. “This is a truly national opportunity,” said Kakfwi to his fellow Premiers, “If we are to seize it, the time to plan and act is now.”

Premier Kakfwi had carefully laid the groundwork for his policy initiative. He privately met with major opinion makers, such as Quebec Premier Jean Charest, to discuss the diamond industry strategy and other areas of mutual interest. Kakfwi’s call was echoed by Prince Edward Island Premier Pat Binns who invited his colleagues to a cutting and polishing demonstration of NWT rough diamonds at Norton Jewelers in downtown Charlottetown.

“Canada currently participates in less than 1 percent of the downstream opportunities flowing from our diamond mines. We must now plan to benefit from the extraction of our natural resources by developing value-added industries such as cutting and polishing, and design, manufacture and retail sectors. A strong Canadian industry will be good for the NWT industry - and the NWT is happy to share the experience it has gained over the last decade to help create one,” says Kakfwi, who clearly is looking beyond the more narrow interests of the NWT.

The leadership role in diamonds comes naturally to Kakfwi, whose government has spearheaded the development of standards to ensure that Canadian diamond workers are properly trained, also ensuring that such training is properly recognized. Actually, the NWT has developed a pre-employment course, the first of its kind in Canada that is now attracting students from all over the world. Together with the industry, the Government of the Northwest Territories has developed occupational standards and certification for a variety of diamond positions including sawing, bruting, crossworking, brillianteering and fancy cut specialist.  This represents another “world first” for Canada’s diamond industry and the Northwest Territories is prepared to share these standards and programs with the rest of Canada.

To avoid distortions in the terms of trade and ensure Canada’s international competitiveness, Kakwfi wants to address tax issues right on. For this, a national strategy is needed. Says the Premier: in Canada’s tax structure, the sole remaining luxury tax is on jewelry and includes everything from watches and tiepins to large jewelry pieces. It does not apply to luxury cars, yachts etc. This 10 percent hidden tax is not harmonized with General Sales Tax, so tourists and visitors cannot get a rebate for it. This means Canadian diamond products are less expensive in the United States than in Canada, making it even more difficult to build viable industries such as jewelry making and retail.”

At the Premiers Conference it was agreed that there are a number of issues that need to be addressed by a national diamond strategy. These include training, security, labor force needs, immigration of skilled labor, marketing of Canadian diamonds, development of a value-added industry and competition issues. The national policy will be premised on the belief that simply exporting rough diamonds “will not allow Canadians to develop value-added industries and will limit our ability to be a key player in the world diamond industry. Canada must be involved in the entire diamond pipeline. We will see more money and jobs for all Canadians if we look beyond just being a supplier of rough diamonds to all the other opportunities that come with this industry,” says Premier Kakfwi, pointing out that “the scale of value-added in the diamond pipeline is very significant.” The Premier is determined to show his colleagues, the Federal Government and the producers that it is commercially feasible to create secondary diamond industries in Canada. “But we need to start now because it takes time to develop workforce, expertise, technology, etc.,” concludes the NWT Premier.