N.W.T. government hoping Ekati deal will lead to reopening of mine

The Northwest Territories government says a proposed deal to buy the Ekati diamond mine could lead to its reopening, which ceased operations in March.

"Having the mine reopen would be a great deal for the Northwest Territories," said Finance Minister Caroline Wawzonek in an interview Friday. "I'm hoping that as this moves forward it gives them the conditions they need to reopen their operations."

About half of the 1,600 workers at Ekati are northerners, according to Dominion Diamond Mines, the mine's operator.

The sale of Ekati is the result of Dominion, which is owned by a subsidiary of the Montana-based Washington Companies, seeking creditor protection. The Washington subsidiary bought Dominion for $1.2 billion US three years ago. Another subsidiary is now proposing to buy Ekati, Dominion's biggest asset, for $126 million US.

The subsidiary made the only bid, known as a stalking horse bid, received by the accounting firm overseeing the restructuring of Dominion. The deal is scheduled to be approved or rejected by a judge later this month. Wawzonek said the territorial government has been paying close attention to the proceedings.

"We've continued to appear at the courts through counsel certainly to give that flavour and context about how important a player of this size is to the Northwest Territories' economy," she said. "More specifically with respect to the stalking horse bid right now, the role of the Northwest Territories right now is on the environmental assessment side."

From our perspective, it's ensuring that the environmental process is still secure and I have no reason to believe that it is not.- N.W.T. Finance Minister Caroline Wawzonek

Dominion has said it intends to restart Ekati as soon as global diamond prices recover. But last week, it suddenly fired a number of senior staff associated with the mine.

Deal subject to a number of conditions

For the deal to move ahead, the territorial government must be satisfied that all of the environmental conditions, as well as the security posted for the reclamation of the mine, will be transferred intact along with the mine.

The deal does not include Dominion's 40 per cent stake in the nearby Diavik Diamond mine, or any environmental liabilities associated with it. Wawzonek said she is not worried that will increase the risk taxpayers may have to eventually pay part of the cleanup costs of Diavik.

"I'm not concerned from the perspective that the securities that are held remain available. So from our perspective, it's ensuring that the environmental process is still secure and I have no reason to believe that it is not."

The deal for Ekati is opposed by a group of Dominion's creditors who financed Washington's initial purchase of Dominion. In court filings, they say they want to put together a bid for Dominion's assets but the Washington repurchase is being rushed through.

The group says if the deal goes ahead, Washington will get Ekati at a reduced price because it is being sold during a global pandemic.