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Diamonds in the ice

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A century after the Klondike gold rush, the land of the midnight sun is yielding a different precious mineral: diamonds. Canada has quickly risen to third place in production on the list of diamond-producing countries, after Botswana and Russia.

A handful of adventurous mining companies are leading the exploration and mine development. The opening of diamond mines has been as dramatic for the economy of the North as the Klondike gold rush, particularly for the Northwest Territories.

From 1999—the first year of production—to 2005, per-capita gross domestic product in the Northwest Territories climbed at an average annual rate of 12.5%, compared with 1.7% before 1999. That 12.5% is about three times the rate for Canada as a whole.

In 2006, three mines were operating in the Northwest Territories, clustered northeast of Yellowknife. A fourth mine is located just over the territorial boundary in Nunavut.

From 1998 to 2002, companies mined about 13.8 million carats of diamonds in Canada, worth $2.8 billion. This is roughly equal to 1,825 1.5-kilogram bags of ice, but worth $1.5 million each. Canadian diamonds are fetching top dollar. Their value averaged $228 per carat in 2001, third in the world behind Namibian and Angolan diamonds.

The value of diamond exports tripled from 1999 to 2005. Exports from the Northwest Territories were worth $1.7 billion in 2005. About 95% of Canada’s exports, measured by value, are ‘rough’ diamonds, which have not yet been sorted, cut and polished. More than 90% go to the world’s two major diamond-trading centres: London, England and Antwerp, Belgium.