De Beers to shut down N.W.T. mine for 10 weeks in 2009

Diamond company De Beers announced it is further cutting back on work at its Snap Lake mine in the Northwest Territories by closing the mine for 10 weeks over the next year.

As a result, more than 400 workers will have to take unpaid leave during those 10 weeks, which include six weeks in the summer and four weeks at the end of the year. Employees of the mine were informed of the company's decision this week.

De Beers spokeswoman Cathie Bolstad told CBC News that some employees will be able to use their vacation time, while others have opted to have some pay deducted throughout the year so they can keep receiving cheques while the mine is closed.

"We're creating an opportunity for them to have an employee savings shutdown plan that can deduct off their salaries starting in January … so that their salary remains covered throughout the shutdown period, albeit their income at a reduced rate over the year," Bolstad said.

Bolstad estimated that as of Wednesday, about 96 per cent of workers who were offered the employee savings shutdown plan have signed up for it.

"Most of them are breathing a sigh of relief and saying they're thrilled with this," she said.

"It's as a way to weather a storm and let them avoid much tougher financial times."

Economic downturn to blame

It's the second time in the past month that De Beers said it would reduce work at the mine, located 220 kilometres northeast of Yellowknife. Last month the company said it would lay off 105 contract workers by the end of this year.

The move comes as diamond producers scale back on production around the world, due to the current economic downturn. Some said it's a sign that the diamond industry — the main driving force in the Northwest Territories' economy — is in serious decline.

"The jewelry trade and the [diamond] cutting and polishing industry have had a liquidity problem," said Mike Vaydik, president of the N.W.T. and Nunavut Chamber of Mines.

"They can't get credit basically to buy the product. So I think that's what really led to this."

One of De Beers' competitors in the N.W.T., Diavik Diamond Mines, announced earlier this month that it's delaying its underground production and putting a $50-million diamond project on hold, citing economic conditions.

And on Saturday, Tahera Diamond Corp. shut down operations at its Jericho mine in western Nunavut.

Tahera officials have said the company, which has been under creditor protection since January, could be forced into bankruptcy by April 2009 if a buyer cannot be found.

Vaydik warned that the slowdown facing the N.W.T.'s diamond industry will be felt in every community in the territory, and by the companies that provide services to the mines.

"The smart ones will be probably reducing inventories, and they may be taking similar employment steps to reduce the costs of employees," he said.