| Arctic
Diamonds Polished in
Most Unlikely Place
Reuters News Service
Posted July 11, 2003
 By
Lesley Wroughton
YELLOWKNIFE, Northwest Territories, (Reuters) - Peter Finnemore,
a diamond master cutter, had no idea where he was going when
Sirius Diamonds approached him about opening a factory in
Canada's Northwest Territories.
"I had to look at a map to find Yellowknife," Finnemore
said in his thick South African accent about his move to the
newest frontier of the global diamond industry.
Now he cuts and polishes diamonds mined locally and transfers
his knowledge of a centuries-old trade to Canadians living
near the Arctic Circle.
Sirius is one of a handful of diamond polishing companies
set up in Yellowknife, the territorial capital of 18,000,
for the new diamond mines built in the frozen tundra in Canada's
remote Northern Territories.
Less than a decade ago, Yellowknife was a frontier town where
gold mines held sway. But now, in this booming diamond market,
Canada's first two mines, Ekati and Diavik, are already operating
and a third mine belonging to De Beers, a unit of Anglo American
Plc is under construction.
Martin Irving, director of diamonds for the Northwest Territories
government, sees it as an opportunity for the small polishing
industry, with an unexploited supply source on the doorstep
of the United States, the world's biggest market for polished
stones.
The territorial government has designed a certificate system
that accompanies every stone mined, cut and polished here.
It distinguishes the local stones from so-called blood diamonds
from African conflict zones. That advantage could be worth
a 10 to 15 percent premium at wholesale, experts say.
"Diamonds weren't on our radar screen but we learned
fairly quickly, and we had to put together a plan to try and
figure out what the options were," Irving said. "If
you're going to extract natural resources, it needs to be
done in a way that local people benefit from it."
Diamond producers questioned if a local polishing industry
could be sustained in such a remote place as Yellowknife.
They felt such a specialized trade was best left to traditional
centers in India, Tel Aviv, Israel, Antwerp, Belgium and New
York.
Sirius, a small Vancouver-based diamond polishing studio,
opened in Yellowknife in 1999. Four years later, it has signed
a partnership pact with New York diamond handler E. Shreiber.
Sirius President Stephen Ben-Oliel recruited Finnemore from
Antwerp, the world's diamond-cutting center, to the relative
wilds of Yellowknife, where labor shortages are a big problem
and operating costs are high due to its remoteness.
But the benefits are reflected in the big, clear stones mined
deep below the frozen tundra that Sirius laser brands with
a microscopic polar bear on the girdle of each diamond.
"Canadian diamonds are of big interest right now,"
Finnemore said, holding up a small, already polished diamond.
"Last year we doubled our sales to the U.S."
Next door to Sirius, also behind a chain-link fence, Arslanian
Cutting Works employs master cutters from its home base in
Armenia.
Inside the factory, rows of workers are bent under fluorescent
lights, shaping pea-size diamonds into different facets until
they are mirror smooth.
In the next building, still under construction, U.S. jewelry
giant Tiffany & Co. Inc. is getting ready to handle some
of the US$50 million in diamonds it has agreed to buy from
Aber Diamond Corp., one of the partners in the Diavik mine.
One of the initial ventures, an aboriginal company owned
by the Yellowknives Dene community, closed its Deton'cho polishing
factory last year due to the high costs of manufacturing diamonds
and problems with keeping trained staff.
A partnership with Israeli-based diamond player Schachter
& Namdar has brought in skilled diamond cutters from Tel
Aviv, Africa and Europe to revive the operation for now.
"The fact that major players are creating joint ventures
with local cutters brings legitimacy in the eyes of the industry,"
says Irving.
Reuters News Service
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