Continuing financial troubles for the Dominion Diamond Mining company is putting the future of around 1,000 workers in jeopardy at two different mines.
The company owes the co-owners of the Diavik Diamond Mine, DDMI, more than $120 million in payments for operation fees.
Dominion has been unable to pay those fees since they filed for creditor protection — essentially a pause button on debt payments so the company can restructure its finances — back in April. They had been planning to move out of creditor protection and restart operations at Ekati Mine when it was sold.
But instead, Dominion saw the collapse of its sale of Ekati to its parent company. The Washington Companies because three different insurance companies rejected the deal.
Around 1,000 workers are employed at the two mines. Dominion has had to furlough most of its staff since it shuttered operations back in April. It has already permanently laid off some staff and warned more job losses could follow.
“There doesn’t seem to be any accountability on the part of these corporations to act in the best interests of northerners,” said Todd Parsons, Union of Northern Workers president in a statement when the Ekati sale failed.
On October 30, an Alberta court will be asked to give DDMI permission to begin selling off Dominion’s share of diamonds from Diavik.
This is happening as there is “no realistic chance” Dominion will be able to pay its debts to DDMI, according to an affidavit signed by Thomas Croese, the finance manager of the Diavik mine.
DDMI, owned by Rio Tinto has been paying Dominion’s share of operations cost since the company entered creditor protection back in April. The total debt Dominion has racked is nearly $120 million, plus more than two million in interest, according to the affidavit.
DDMI needs an advance on its finances to be able to continue to pay for Diavik’s operations. But Rio Tinto is refusing to front more cash until it secures repayment on the $120 million Dominion already owes.
The Diavik Mine’s continued operation is at risk in the present circumstances, adds the affidavit.
The affidavit cited WWW Diamond Forecasts, who called for reducing the supply of diamonds to help boost prices, with demand likely to continue to be low during the COVID-19 pandemic.
“Economic uncertainty is unlikely to dissipate in the near-term which will continue to be a drag on any recovery in diamond jewellery sales,” wrote Croese in the affidavit.
In a presentation of the update to its 2020 budget, Finance Minister Caroline Wawzonek said the slowdown in the diamond market has been “quite significant.”
This is impacting territorial revenues as well. The GNWT lost around $30 million as a result of the slowdown in sales from the diamond mines shrinking the royalties the territory received.
