Diavik Underground Production Delayed, Exploration Curtailed

In an attempt to defer costs until the global economic situation improves, Diavik Diamond Mines Inc. (DDMI), operator of the Diavik min in Canada, is taking a number of steps to protect itself. These include delaying underground mining.

DDMI, a subsidiary of Rio Tinto, intends to continue only essential capital projects, including those involving personal safety. The small diamonds project is put on hold but underground project remains “largely unchanged,” DDMI said.

 Underground production, however, will be deferred to the third quarter of 2009. This will decrease Diavik’s overall operating cost, as underground labor and supply costs are higher than surface mining.

Exploration on the Diavik claim will be reduced to focus on the immediate mine site area and on maintaining existing claims and leases.

Each department within Diavik will be asked to contribute to cost management.

The company is following in the footsteps of other diamond mines that are shifting their operations to meet the global economic situation, as well as the sharp decline in rough diamond prices.

DDMI’s parent company Rio Tinto announced this week that it plans to cut 14,000 jobs. At Diavik, where the miner is committed to certain local hiring policies , work force reduction will minimized by postponing hiring and eliminating vacant positions.