De Beers Canada announced that it may consider closing its Snap Lake diamond mine in the Northwest Territories, of Canada as it grapples with falling prices and costly operations at the unprofitable Arctic mine, Reuters reported.
The mine, which opened in 2008, has never turned a profit. It employed 747 staff and contractors last year at the mine that is only accessible by air or an ice road that operates for two months a year. The company had planned for operations to continue until 2028.
Ground water problems at the mine, which extracts diamonds from beneath Snap Lake, have added to high costs at the site. It produced 1.2 million carats last year.
“Any time these scenarios come forward, where the cycle is challenging, everything’s on the table and everything's looked at including the option of what would we do if we had to go into any kind of a care and maintenance or closure situation,” said De Beers spokesman Tom Ormsby. “Nothing’s off the table.”
Global diamond miners have cut output and lowered prices in the face of slowing demand growth in China and a glut of supply.
Prices for rough stones are down 18 percent from last year, data from roughprices.com shows, while polished diamond prices are down 20 percent year-to-date, the Rapaport Group said.
De Beers, which is 85 percent owned by Anglo American Plc and 15 percent owned by the government of Botswana, is the world's largest diamond producer. It has cut global production three times this year.
De Beers Canada said in October that its new Chief Executive Kim Truter would relocate the company headquarters to Calgary as part of a restructuring to cut costs.
The company, which also operates the Victor diamond mine in Ontario, continues to build the Gahcho Kue mine in the Northwest Territories, with 49 percent partner Mountain Province Diamonds Inc. Gahcho Kue is expected to start production in late 2016 and operate for 11 years.
The company is also reviewing Victor and Gahcho Kue, Ormsby said, to determine if efficiency or operations could improve.