While governments and investors have focused on critical minerals and battery metals in recent years, the NWT’s diamond mines have struggled with falling prices, laboratory competition, tariff disruptions and increasing financial pressure.
With one major mine set to close within weeks and others under pressure, leaders across the North are asking a seemingly once-unthinkable question: What comes after the diamonds?
From strike rush to global player
The modern diamond age in the NWT began in November 1991, when geologists Chuck Fipke and Stewart Blusson discovered 81 small diamonds at Lac de Gras. The discovery caused the largest diamond strike in North American history and led to the development of the EKATI diamond mine, the first in Canada.
By 2004, more than 28 million hectares had been stocked in the NWT and Nunavut. Canada grew to become the world’s third largest diamond producer in terms of value, after Botswana and Russia, largely due to the production of the NWT.
For decades, the sector has generated thousands of well-paying jobs and helped build indigenous businesses across the territory. At its peak, more than 3,000 indigenous workers were employed in the region’s three diamond mines.
Nowadays, that foundation is starting to show cracks.
All pressure, no diamonds
Rio Tinto’s (ASX:RIO,NYSE:RIO,LSE:RIO) Diavik mine, one of the pillars of the industry, is scheduled to close next month.
Although the company recently unveiled a rare 158.2-carat yellow diamond at the site last year, described by COO Matt Breen as a “miracle of nature,” the symbolic discovery cannot undo the mine’s finite life.
In addition, the Gahcho Kué mine of De Beers (a subsidiary of Anglo American (LSE:AAL,OTCQX:NGLOY)) and the Gahcho Kué mine of Mountain Province Diamonds (TSX: MPVD,OTC:MPVD) paused a project that would have extended operations from 2027 to 2030, raising concerns about its longevity.
Meanwhile, EKATI, owned by Australia’s Burgundy Diamond Mines (ASX:BDM), is combating financial distress after diamond prices fell by at least 20 percent following the acquisition of the asset.
During the legislature, Monfwi MLA Jane Weyallon Armstrong warned of the consequences.
“The closure of Diavik and Gahcho Kué will have a significant impact on the Tłı̨ch| communities and today the GNWT has no meaningful alternative,” she said.
Prime Minister RJ Simpson acknowledged the challenge. “We’re now at a point where we know the diamond mines are winding down, and the question was, ‘Okay, what now?’” he said in a recent interview.
The headwinds in the market are increasing
The industry’s struggles are not just a matter of geology. Natural diamond prices are under continued pressure, battered by several macroeconomic forces converging at the same time.
For example, lab-grown diamonds – chemically identical to natural stone and available at a fraction of the price – have rapidly gained acceptance among consumers. What was once a niche product is now mainstream, especially among younger buyers attracted to lower costs.
Canadian diamonds have long marketed themselves as ethical alternatives to so-called “blood diamonds.” But synthetic stones can make similar claims, weakening one of the natural industry’s main selling points.
Luxury spending has also fallen, and new trade barriers have added to the pressure. A 50 percent US tariff on Indian imports has disrupted the global cutting pipeline as most rough diamonds are cut and finished in India before being sold in the US market.
EKATI’s owner has linked its financial troubles in part to these tariffs, as well as the broader collapse in natural diamond prices. The company recently received one Federal loan of C$115 million under a facility designed to help companies affected by U.S. trade disruptions.
Still, EKATI suspended parts of its operations last year and faced criticism from employees over layoffs and severance payments. Burgundy has publicly acknowledged serious financial problems and indicated it may need additional financing if prices do not recover.
At Gahcho Kué, Mountain Province Diamonds manages its own financing challenges. Acting president and CEO Jonathan Comerford said the company’s problems “reflect the continued weakness in the diamond sector.”
“In this environment, our focus remains on carefully managing costs, protecting liquidity and making informed decisions to support the long-term sustainability of our operations.” Comerford said.
The Company has received in-kind financing announcements from joint venture partner De Beers totaling approximately C$49.2 million related to unpaid cash calls.
Political pressure is increasing
Territorial leaders are also under increasing pressure to respond.
Industry Minister Caitlin Cleveland described Gahcho Kué’s announcement as “serious news for the Northwest Territories.”
“Prices are weak, costs are high and companies are having to make tough decisions,” Cleveland said a recent statement. She stressed that while the GNWT cannot control global markets, it will ensure that support is accessible to workers and that employers meet labor standards if employment impacts arise.
But some structural problems are more difficult to tackle. Yellowknife North MLA Shauna Morgan questioned how the government can enforce socio-economic obligations made by mining companies when they set up operations.
Simpson admitted that these agreements did not contain enforcement clauses, such as fines.
“This is about building relationships and making sure we stay on top of this,” he said.
Meanwhile, the call for diversification is becoming louder. “This announcement also reinforces a broader reality for our territory: our economic base remains overly dependent on a single commodity.” Cleveland said.
Looking for the next chapter
There is hope that crucial minerals can help fill the gap. Exploration for rare earths and other strategic metals is increasing, driven by global demand related to electrification and defense technologies.
Weyallon Armstrong has argued that infrastructure, including extensive road links from the Tłı̨ch| region, could unlock new development corridors.
‘We may not have a Ring of Fire, but we can have an icy circle’ she saidreferring to the mineral-rich region of Ontario.
Yet even optimistic observers acknowledge that no project is likely to replicate the scale and stability diamonds once offered. For community leaders, the uncertainty is deeply personal.
“It’s quite a scary situation,” said Chief Fred Sangris of the Yellowknife Ndilo Community of the Dene First Nation told the New York Times last year. “Where do we go from here? What’s the next project?”
Diamonds have long been a symbol of sustainability. In the Northwest Territories, especially this Valentine’s season, where icons of eternal love dominate the marketplace, that symbolism now feels more strained than ever.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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