Dominion Diamond files for bankruptcy
Open pit mining operations at the Dominion Diamond Ekati Mine approximately 300 km northeast of Yellowknife, Northwest Territories. Source: Dominion Diamond Corp.
Private company Dominion Diamond Corp. has filed for bankruptcy protection due to the consequences of the COVID-19 pandemic. The company owns and operates the Ekati diamond mine and the has a 40% interest in the nearby Diavik diamond mine in the Lac de Gras region about 300 km northeast of Yellowknife, Northwest Territories. Rio Tinto owns a 60% interest in the Diavik Mine.
Production was suspended at Ekati about a month ago. Dominion’s Chief Financial Officer, Krystal Kaye, said that the company has US $180 million in diamond inventory “trapped” in Canada, India and Antwerp, Belgium as a result of the COVID-19 lockdowns. In an affidavit, Kaye said Dominion Diamond was obligated to pay some $22 million per month as its share of operating costs at the Diavik Mine while the company had no cash flow.
Dominion Diamond is controlled by the U.S.-based Washington Group of companies that purchased Dominion for US $1.2 billion in 2017. The company had diamond sales revenue of approximately US $528 million in 2019. Diamond mining in the Northwest Territories accounts for about $1.7 billion of its GDP.
In a press release the Washington Group of Companies stated, “On March 19, 2020 Dominion announced that we would suspend operations at the Ekati Diamond Mine to safeguard our employees and the communities surrounding our operations from threat posed by the COVID-19 pandemic. Although no Dominion employees have tested positive for the Coronavirus to date, this preventative action was determined to be a necessary step given the rapid spread of the virus, the remote location of the Ekati Mine’s operations and the high frequency of air travel required for employees and support staff to access mining operations.”
Since the Ekati and Diavik mines are fly-in and fly-out operations, there is pre-screening before employees are allowed to board flights to the mines and social distancing will be maintained while loading flights.
Dominion Diamond is a major employer in the Northwest Territories with 634 employees, 60% of whom are Indigenous. Only 212 people are currently working during the COVID-19 shutdown.
In an interview with Cabin Radio, a Dominion Diamond spokesperson said they plan to resume mining operations at Ekati after the COVID-19 pandemic is over. The Diavik diamond mine remains in production with some adjustments made due to the pandemic.
A restructuring plan will be submitted to the court.