Burgundy Diamond Mines pauses plan for critical Ekati expansion

The company that owns the Ekati diamond mine in the N.W.T. has paused a plan to develop an underground project at one of the mine's pits a plan it previously said was critical to Ekati's future.

Burgundy Diamond Mines notified the Wek'ezh Land and Water Board Tuesday that it would be withdrawing its application forthe Sable Underground development. It previously said its entire business could hinge on that project, and without it, Burgundy "risks the financial viability and sustainability of the business."

"Burgundy has made this difficult decision after taking to heart all the comments and feedback provided during the application process," the company wrote Tuesday. It said recent finds at another part of the mine could extend Ekati's life, taking pressure off the Sable Underground project.

It said it would be revisiting the project in the future after incorporating feedback from the Tcho government.

"We need to take the time to get this right," it wrote.

Burgundy's decision to pull the application came a day before it was to take part in a public hearing in Behchok, which has now been cancelled.

It also came the same day the mining company penned a separate letter to Premier R.J. Simpson, calling for numerous changes to regulations it says "are getting unnecessarily more onerous."

Company asks for reduced regulations

In that letter, Burgundy wrote that regulations and "inflexible" government agencies are the only thing keeping Ekati from operating until at least 2040.

Burgundy, which bought the mine in July 2023, said diamond prices have declined by at least 20 per cent since that acquisition. The letter suggests Ekati's financial viability is under pressure from many directions and a lack of support from government could put the final nail in its coffin.

That's despite the company announcing Tuesday that Ekati "continues to outperform expectations, offering significant earnings leverage potential for shareholders as diamond prices turn higher."

On the other hand, if the government meets all its requests, it says "the size of the prize for the North could be upwards of $500 million" over the next 25 years.

The N.W.T. has been wrestling in recent years with the impending closure of two other diamond mines and what that will mean for the territory's economy.

Among the specific requests in the letter, Burgundy is asking the N.W.T. government to explore "alternate arrangements" that would require it to set aside less money each year for the mine's eventual reclamation.

It's asking the government to guarantee it will grandfather in Ekati's impact benefit agreements when it changes the Mineral Resources Act, instead of requiring new agreements that could force Burgundy to pay more to communities and Indigenous groups impacted by the mine.

The mine currently has such agreements with Kugluktuk andthe Kitikmeot Inuit Association, Yellowknives Dene First Nation andutsel K'e First Nation, the Tchgovernment and the North Slave MtisAlliance.

It also takes aim at environmental and water quality regulations for mining in the N.W.T.

"Whilst permitting of new mining projects is necessary, the process in the north has become so unduly complicated and unnecessary, that projects are being held back and potentially becoming unviable," it wrote.

It said the impacts of diamond mining are well understood and well managed, but current regulations require input from community members, scientists and others, "all of whom gain financially" if permitting processes are drawn out.

It's asking for regulatory timelines to be shortened, especially for underground projects like Sable.

It's also asking the N.W.T. government to support it in reaching out to federal agencies to review water quality regulations, arguing "there is no doubt that [Burgundy] can discharge suitable water quality back into the environment" without the strict regulations that currently exist.

Trista Haugland, media co-ordinator for the Department of Executive and Indigenous Affairs, said in an email Wednesday on behalf of Simpson that the premier is reviewing the requests in the letter.

Haugland said the territorial government recognizes the diamond industry is facing "significant global challenges."She said the government is already looking at how policy and processes can be streamlined.

"Though global trends cannot be controlled, the [N.W.T. government] remains committed to supporting the diamond industry and the local communities and businesses that depend on them," she wrote.

Haugland said Simpson intends to respond directly to Burgundy chief executive officer Kim Truter and wouldn't be commenting further until that happens.