Canada's discovery of diamonds in 1991 prompted exuberant predictions the country would soon rival top producers Botswana and Russia. But difficult exploration conditions have resulted in only a handful of dazzling discoveries and those early forecasts now seem over-optimistic, according to Richard Molyneux, president and CEO of De Beers Canada.
"Although a number of new discoveries have been made and whole groups of new kimberlites have been located, there is really very little on the radar screen to indicate that any significant new mines are out there," Molyneux told Reuters. Kimberlites are the common host rock of diamonds.
Canada's diamond industry was heavily hyped by insiders, Ottawa and the press and some said Canada would overtake Russia, the world's No. 2 diamond producer by value after Botswana. But Molyneux painted a more sober picture.
"My best guess is that 10 years down the road we'll probably see six to seven mines in production in Canada, of which three or four might be quite large operations, but the others are likely to be small mines like Jericho," he said in an interview.
Canada's third diamond mine, the Jericho Project owned by small Canadian explorer Tahera Diamond Corp, is due to start production next year.
"Canada is certainly going to stay a significant producer for the foreseeable future, but contrary to some of the predictions that were made that Canada may displace Russia I personally think that that's unlikely," Molyneux said. De Beers is 45 percent owned by Anglo American Plc. After 40 years of exploration in Canada the world's top diamond producer is only now building its first mine outside Africa.
De Beers' first Canadian mine, a project called Snap Lake, is scheduled to start up in the Northwest Territories in 2007. Production at a second De Beers venture, Victor, located in northern Ontario, is slated for a year later. Canada became the newest diamond producer seven years ago when the Ekati mine opened following the headline-grabbing discovery of diamonds just south of the Arctic Circle in 1991.
A staking rush, likened to the Klondike Gold Rush of the 1890s, soon spread across the vast country, which has turned out to be blessed with very high quality diamonds. A second rich discovery that became the Diavik mine in 2003 and Canada leapfrogged traditional diamond miners like South Africa and Australia in record time to become the third-biggest producer measured by the annual value of gems.
"Coming out of the staking rush of the early 1990s and the Ekati and Diavik discoveries was the expectation that there was going to be a whole string of other similar highly profitable new diamond mines," Molyneux said.
"But it's a difficult business and what you've seen over the last 10 years is that most of the companies that were involved have dropped by the wayside and it has come down to a core of the real hardened professionals in terms of exploration."
Exploration in Canada is difficult not least because of the country's size - it's the world's second biggest - and the weather, which makes much of the north where the most exploration takes place inaccessible for months at a time.
There are also technical challenges like glacial geology and water cover, Molyneux said.
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