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Ekati to cut costs

Lauren McKeon
Northern News Services
Published Wednesday, January 28, 2009

SOMBA K'E/YELLOWKNIFE - BHP Billiton's Ekati Diamond Mine is significantly ramping up its goal to cut operating costs down to $50 a tonne as diamond prices take a dive.

The $50 goal is set for 2012, to follow successfully decreasing costs to $70 a tonne for 2009. In the past, Ekati representatives said it was this kind of cost reduction that enabled the mine to better weather the economic storm causing other mines to initiate massive layoffs.

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Pictured here is an aerial view of Ekati Mine, which is currently ramping up its cost-cutting measures. - photo courtesy of BHP

But things have changed.

"Because of the situation the world is in and BHP Billiton is in - and particularly at Ekati Diamond Mine - we're escalating that goal and trying to achieve the $50 much sooner than 2012," said Ekati spokesperson Deana Twissell, who later added sooner means "as quickly as we can."

"We know this is a financial crisis and we've also experienced a very significant drop in the value and the sales of diamonds in the world marketplace," said Twissell.

"With that as our climate we need to ramp up our cost-saving initiatives that we've already had underway for the last two years."

Globally, mammoth mining company BHP announced layoffs for 6,000 workers on Jan. 21. The majority of the layoffs stemmed from its closure of the Australia-based Ravensthorpe nickel operation, with jobs in Chile and the U.S. making up the rest.

Twissell had not heard of any layoffs reaching Ekati yet.

"There have not been any announced positions here within the Northwest Territories," she said.

Even so, she said, Yellowknifers need to recognize the economic situation is a serious one.

"It's important for people to recognize this is a very serious situation for all companies, and for our company particularly, with the demand for diamond and the sale of diamonds that we're now experiencing," said Twissell.

"We're watching it very carefully, and it will have an impact on our operations," she added.

Mike Vaydik, general manager for the NWT/Nunavut Chamber of Mines, agreed the diamond market has taken a big hit - one that could naturally affect operations.

"The world commodity market is down and in spite of us saying that diamonds are different, if people don't have credit or they don't have cash, I suspect diamonds are one of the first things you decide not to buy - despite all the advertising to the contrary," he said.

When commodities are down and a company doesn't have a market for its goods, the

company has to cut production, Vaydik said.

"That's a rule of business, and nobody is immune, even if you're in the diamond business," he added.

However, this is not a decision any mine makes lightly, he said.

And Ekati has a few plans in store yet.

"We've invested in a new research and development department, and that department is researching innovative mining techniques," said Twissell, adding other initiatives include reducing idling time for on-site vehicles and focusing on efficiencies within departments.

Twissell would not speculate on whether there would be layoffs at Ekati should other cost-cutting measures fail.

"All I can say is we always resource our business according to our development plan and the needs of our business," she said.