Rio Throws Diamond Project

Rio Throws Diamond Project

The Diavik diamond project 300 kilometres north of Yellowknife in Canada's North West Territories, managed and majority owned by a Rio Tinto subsidiary, has been fined in court and is the centre of controversy over its water licences.

The project is a joint venture between Diavik Diamond Mines Inc. (DDMI), a Rio Tinto subsidiary with a 60% interest, and Toronto based Aber Diamond Mines Ltd.

In late July 2000 Diavik Diamond Mines (DDMI), was fined $3,000 after pleading guilty to proceeding with work on a quarry without having a final permit for the work. DDMI has also been criticised for its approach to obtaining regulatory approvals for water.

DDMI had a water licence, known as a Type B licence, that capped the amount of water the project could take for use for dust suppression. In September 1999 DDMI applied for a Type A licence which, as it allows much greater volumes of water to be extracted, has to go through a process of hearings and approval by the Minister for Indian Affairs.

At a meeting with the North West Territories (NWT) Water Board on 11 July to discuss the company's needs for a greater water volume it was suggested that company apply for an amendment to its Type B licence. It was a proposal that DDMI rejected.

Ten days later the President of DDMI, Stephen Prest, told a media conference that the company had suspended its mining operation and would be forced to stand down staff if the application for a Type A licence was not resolved within a month. "A Type B licence will not allow for the type of water consumption we need at this stage of the work at this site", he said. 2

The chairman of the NWT Water Board, Gordon Wray, was bemused by DDMI's claims. "This is a squeeze play", Wray told local media. 3 "The media has been brought in as the sort of operating arm. If the end of July was so critical to your planning, why did you (they) wait until July 23 to tell any of us?" he said.

"The company has been doing this since the beginning," Wray said. "The land-use permit, they were going to pull out. The water licensing hearings, they were going to pull out. This company has not understood there is a process they have to go through, they just seem to want to short-circuit it all the time", Wray said.

In mid-August the project was granted both an amended Type B licence and a Type A licence.