Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Dominion Diamond Mines, the company that owns a controlling interest in the Ekati mine in Canada’s Northwest Territories, announced that some 60 employees will be called back to the operation for an anticipated restart.
Work at Ekati was suspended in mid-March due to the covid-19 pandemic and over 300 employees were placed on furlough. The restart, with a reduced workforce and increased health and safety measures, is expected for early December 2020.
Dominion has said that after a complete halt to its diamond sales, which caused them to lose about $180 million back in April, gem sales have slowly picked up again.
The company’s creditor protection -into which it entered shortly after placing Ekati on care and maintenance- was due to expire in early November but has been extended to December 15, 2020.
The restart with a reduced workforce and increased health and safety measures is expected for early December 2020
“Dominion has been informed by the banks that comprise its senior secured lenders and an ad hoc group of holders of Dominion’s second-lien notes that they expect to be able to reach a binding agreement in the near future to restructure Dominion’s debt and fund the company,” a media statement issued this weekend reads. “In anticipation of the parties reaching such an agreement, Dominion has determined to recall these employees given necessary lead times required to mobilize the workforce while adequately complying with covid-19 isolation protocols.”
Even though there is a bit more clarity as to what the near future holds for Ekati, what is going to be of the mine later down the road is still uncertain.
Last month, a deal to sell the operation to a subsidiary owned by Dominion’s parent company, The Washington Companies, fell apart.
Back on October 9, three insurance companies – Aviva Insurance Company of Canada, Argonaut Insurance and Zurich Insurance – reached “an impasse” in negotiations with the purchaser, and stated, “there is no reasonable prospect of reaching a satisfactory agreement among them.”
Altogether, the three insurers have issued about C$280 million in surety bonds to the government of the Northwest Territories that were intended to guarantee that the diamond mine could be closed safely and reclaimed once the mine closes permanently.
The sale was subject to a condition that the insurance companies and the purchaser reached an agreement on the treatment of the existing surety bonds.
Dominion Diamond Mines is one of the world’s largest producers and suppliers of premium rough diamonds. The company owns a controlling interest in the Ekati diamond mine, which it operates, and 40% of the Diavik diamond mine. It also holds a controlling interest in the Lac de Gras diamond project.
