Is the mine bailout a misguided ‘hail mary’ or a necessary jolt?

“Sometimes you need a really good jolt to maybe hear the message that’s been there.”

NWT finance minister Caroline Wawzonek has just agreed to give three diamond mines an $11-million tax break plus access to another $4 million once reserved for emissions reduction projects.

In exchange, she wants those mines to stick to their plans and keep northerners employed through a crisis in the diamond sector.

Diamond markets are suffering from the arrival of lab-grown diamonds as a cheaper alternative, a lack of consumer confidence in China and now global trade uncertainty.

With the territory’s three active mines reporting losses running into hundreds of millions of dollars, Wawzonek says her government has to “make sure that our economy remains stable to get us over the next few years.”

By the end of the decade, Wawzonek argues at least four smaller mines will be opening to take the place of closing diamond mines. She says this week’s limited bailout, which amounts to collective relief of about $15 million, is an effort not to lose those diamond mines earlier than planned.

“It’s the private sector. They have many, many assets. This particular mine is but one of those assets. And if this mine is bleeding $100 million over years, there’s not an economic reason for them to keep that mine open,” she warned.

“I remember back in the 2006-08 years, where they put the mines into six weeks of just sitting idle. We don’t want to see that happen right now. That has an economic impact on the GNWT, it has an economic impact on the North.”

Wawzonek hopes primarily that the GNWT’s support package keeps northerners employed and the mines operating. But she also hopes Ottawa is taking notice when the new federal government sits down to examine major investments in northern infrastructure, which she says could save the mines money and open up the territory to cheaper power.

“I hope that’s all it is – a jolt. I hope that’s all we need to go to the federal government,” she said.

“This is an election period, so it’s a bit difficult to pin anyone down in the federal government right now, but if you look at some of the narratives out in the election campaign, it certainly sounds like there’s some attention that’s being paid to the North in a very different way.”

‘Shouldn’t we have a better plan?’

The diamond mines on Tuesday released a brief joint statement expressing gratitude to the territorial government.

“Diamond mining is the largest private-sector contributor to the NWT economy in terms of jobs and business investment. Together, the active diamond mining companies spend almost $1.3 billion per year, of which approximately $900 million is with northern businesses. The mines have an estimated workforce of 3,200, with more than 1,000 northern workers,” that statement read, setting out the sector’s economic impact.

“We appreciate the GNWT’s collaboration and financial support for the diamond sector amid recent industry challenges, recognizing the mining industry’s vital role in the territory. The mines will utilize the relief measures to support NWT Indigenous and other NWT resident labour and businesses.”

The GNWT’s relief package promises to speed up diamond valuations – to help product get to market faster – and give back money the mines had placed in a large emitters’ fund during an older version of the territory’s carbon tax. Originally, that cash was for the mines to use on projects that reduced their emissions. Now, they’ll be able to use it to fund any operating costs.

Yellowknife North MLA Shauna Morgan, criticizing that arrangement, noted the deal was published on Earth Day.

“What does this say about the credibility of our climate change policies and commitment, if we say ‘never mind’ as soon as money gets tight?” Morgan asked in a Facebook post.

“If you’re Rio Tinto, the company that took the lead in building wind power and used the fund to build a solar farm, you should be held up as a role model and standard for others to follow. Instead, the one who took early action is painted as the fool, while the others are rewarded with all that tax back in their pockets simply by waiting for hard times to hit.”

Morgan expressed skepticism that in a world where investments, assets and profits are frequently measured in billions, the GNWT’s package would ultimately make a difference.

“If the diamond mines are already in closure or on the brink of early closure, will $15 million in hail-mary subsidies spread across three operations really save them? Really?” She asked.

“Shouldn’t we have a better plan than this, by now?”

Below, read a transcript of Wawzonek’s interview with Cabin Radio.

This interview was recorded on April 22, 2025. The transcript has been edited for length and clarity.

Ollie Williams: This is obviously a fairly extreme step, the government sending money back in the direction of the diamond mines. Why did the GNWT need to take this action now?

Caroline Wawzonek: It’s been a tough few years in the diamond industry. Since Covid, the markets have been challenging. Things were predicted to be a bit on an upswing but 2024, in my understanding, there’s been about $300 million in losses to these diamond mines here in the Northwest Territories.

They approached us about a month or a half ago saying, “Are there some measures that the government can take to help support these mines in the circumstances?” The circumstances also at this point include tariffs and some pretty wide economic uncertainty, really, all around the world.

The balance that we’re looking at here is we’ve got an industry that is 20 percent of our GDP, over 1,000 direct jobs, however many hundreds of indirect jobs – the airlines, the charter companies, the hospitality, all the rest – and saying we want to look at being preventative. If we know there’s some significant challenges that they are facing, are there some steps and things we can do to reduce the financial pressures? That gives more of a runway in terms of planning.

For example, we know Diavik is still going to have closure in 2026. We’d rather they go through the process that they’ve got planned out, that we are working on with them, and ensure that the other two are stable to get them to their full life of mine. It’s a difficult time right now, so we’re stepping in to be preventative rather than reactive.

Are there mines you’re more worried about than others here? Diavik has about another year to go. Rio Tinto reported an $11-billion profit last year, five times the territorial government’s annual budget. Burgundy has reported fairly significant losses, De Beers doesn’t seem to have been in the best financial health. Are there areas here you’re more concerned about than others?

Not one mine over another. Each one has different challenges and they also structure themselves differently. The two mines that are going to see some benefit from the Large Emitters Fund having that policy change will be Gahcho Kué and Ekati, who hadn’t used theirs up yet. That’s an immediate cash pressure relief for the two of them.

To be clear, that’s because Diavik had already spent its share of that on a solar project.

That’s correct. Gahcho Kué and Ekati, we want to see some commitments from both of them. They do have solar arrays in their planning processes. But they want to, of course, get through this current financial crush and then they’re saying, “Look, having a solar array is going to help.” So it makes sense that they can defer that for a little bit longer but use cash up front right now to get through a difficult time.

Meanwhile, in the diamond valuations, it’s actually Diavik because if they can use their diamond valuations now and get more product to market early on, that makes more sense. When they go into closure, they’re not going to be pulling diamonds out. The faster they can get the product out right now makes more sense.

Even in looking at the property taxes, the way they build in the payment of property taxes into their mine planning is often different. Some build it in monthly and allow the cash accruals, and others do it over the year. What we tried to do with this is have different benefits that will help different mines in different ways.

From the perspective of the Government of the Northwest Territories and $11 million not coming in on property taxes, the balance is 1,000 direct jobs, probably more than 1,000 indirect jobs, and all of the impacts of having all of that other tax revenue and economic loss otherwise.

Some people will find it a tough sell, taxpayer money going in the general direction of large multinationals. Meanwhile, the GNWT is having to make decisions like we don’t have a transition team for Aurora College any more because the federal funding for that ran out. That’s just one example off the top of my head of where the GNWT couldn’t find a few million bucks for something else that’s a priority, but we’re finding money here.

The money is not going to Anglo American or to Rio Tinto. It’s looking at the mine projects here. We’ve been in discussions directly with the mines here within the Northwest Territories and also had an opportunity to speak to one of the board members from Rio Tinto.

They’ve made it very clear. It’s the private sector. They have many, many assets. This particular mine is but one of those assets. And if this mine is bleeding $100 million over years, there’s not an economic reason for them to keep that mine open. They would simply put the mine into early closure, put it on hold.

I remember back in the 2006-08 years, where they put the mines into six weeks of just sitting idle. We don’t want to see that happen right now. That has an economic impact on the GNWT, it has an economic impact on the North. It doesn’t make economic and financial sense in the commercial market to keep an asset out that’s losing money.

What we are wanting to do – and this is the part of the reason for the way we’ve structured it – is provide financial supports directly to the mines here because we want to see northern jobs be supported and northern benefits be supported.

It was also the development corporations that really echoed this ask, because they, too, see significant amounts of financial impacts on their revenues come from the diamond mines directly.

I certainly don’t want to see money going into the coffers of Anglo American. What I do want to see is thousands of northern jobs stay open and development corporations maintain their capacity – for Diavik, that their closure remains orderly, and the other two stay on track so their closure plans are what we are expecting and not something more shocking.

What cast-iron guarantees do you have as a consequence of taking this action that Diavik’s closure will be orderly, that the other two will stay on track?

We said we were prepared to take these steps and these measures but, in exchange, we wanted to lay out our priorities, which is northern jobs, northern spend. We’ve written all that out, all parties have signed on and said: “We will commit to maintaining those things.”

We’ve also made clear that we want to be kept in the loop before any major decisions would be taken.

We have spent years talking about the territory having a plan for what comes next. What progress are we making in terms of nailing down where our economy goes next?

The mineral resource sector right now is 20 percent of our GDP and so yes, we’re going to step in and shore that up at a time when there’s economic uncertainty affected by tariffs. The mineral resource sector is likely to continue to be the major, major area in the private economy that is going to drive the Northwest Territories.

We have several advanced projects that are looking at 2030 as being when they would come online. About four different projects around the territory are looking at 2030, which does line up well with the planned closures for two out of the three diamond mines.

If we can get to that place where we’re looking at a 2030 transition from the two larger mines to four smaller projects, we want to make sure that we have that labour market capacity to shift gears from the one mining to the other one.

As much as there’s a tremendous amount of economic uncertainty, one of the things that’s creating is this national conversation about the Arctic and about transportation corridors, energy corridors and nation-building. That is the message that I know I’ve been saying for the last six years in this role, but it hasn’t been one that I’ve seen on the national stage the way it is right now.

So while it’s a crisis it’s also, I think, an opportunity to say, “Look, we’ve got this transition taking place between now to 2029, 2030,” but we also have an opportunity to say, “Imagine if nation-building had taken place and there was an actual road up to the diamond mine area.”

Firstly, they wouldn’t be spending $25 million a year to build a winter road. But what other opportunities would we have seen in that region? Maybe it’s time to revisit that. That is a conversation with the federal government. That’s not the kind of money that the GNWT necessarily has.

But yes, as you said, people have been sending out that signal for a while. Sometimes you need a really good jolt to maybe hear the message that’s been there. And so hopefully that’s what’s going to be part of what comes of all this.

Is this that jolt?

I hope it is, and I hope that’s all it is – a jolt. I hope that’s all we need to go to the federal government.

This is an election period, so it’s a bit difficult to pin anyone down in the federal government right now, but if you look at some of the narratives out in the election campaign, it certainly sounds like there’s some attention that’s being paid to the North in a very different way.

The tariff situation has arrived at a point where some Canadian industry is kind-of better off. If it complies with CUSMA it can go from Canada to the US without tariffs, which is not the case for the rest of the world. Meanwhile, there is this crazy tariff war with China and the United States. China is home to a lot of critical minerals. Does the GNWT see any opportunity in its own critical minerals projects, given the actions China is taking in response to the US?

Absolutely, there’s shafts of light. I mean, the North is so full of opportunities, and it’s often just a matter of how we find a pathway to take opportunities and to act on them.

They are the kinds of investments that require either major players in the private sector to step in and take on those opportunities – we’re not the ones that are going to be the private sector. We are there to support and encourage and enable – or it takes federal dollars to unlock some of the barriers, which are really large-scale infrastructure barriers.

We’ve been talking about our opportunities in critical minerals for a while. We’ve got projects in lithium, there’s tungsten, there’s a couple of zinc projects. They’re at a point where they’re moving forward. They are taking critical actual steps towards being ready to go in 2029 or 2030, which is not that far away.

If the demand for those minerals grows, obviously the ability to find investment, even in a tight market, is going to be there. The ability to find significant investment perhaps even from other governments, that is there.

It is not lost on me, either – and it’s frankly come to light over this conversation with the diamond mines – what can we do to get your product out to a market faster and in a way that is more competitive? And you know, the ability here right in the Northwest Territories to do the cutting and the polishing, which would avoid having it be tariffed if it goes through a different country – we have the equipment. We have the facilities.

What we don’t have is the labour, but there are significant labour pools available, particularly in southeast Asia and India. Obviously, immigration took a bit of a hit at the very end of the last federal government. It will be interesting to see whether or not this creates an opportunity to re-examine what kind of skilled labour we could bring to the Northwest Territories and what that would do when we’re in the middle of a trade war. Again, a bit of a conversation with an incoming government after the election.

I don’t want to lose sight of the opportunities of the nation-building conversation. Energy corridors – are we going to have an energy corridor here? It’s a little bit different, we’re not connected to the grid. Is this an opportunity to run some pilots and small nuclears?

Well, Nunavut also just signed a deal with Manitoba related to an energy corridor. Are we talking to anybody? Did we talk to Manitoba? Are we talking to Alberta? Are we talking to Sask?

For us, getting the two grids connected – the Taltson hydro expansion – would be really quite significant. Our situation in terms of the communities is different from both Yukon and Nunavut, but if we can get 70 percent of the population connected onto one grid? Significant.

Whether that then has power that’s going to run up into the Slave geologic region and provide an energy opportunity for a potentially upcoming critical minerals project? That’s one option. Whether it goes down into Saskatchewan? Another option. Saskatchewan right now can buy power from Manitoba an awful lot cheaper than it would be from our grid up here, but that doesn’t mean that’s not something that’s being looked at or considered.

There’s Alberta that we signed an economic corridor with last year. They certainly are looking north. They certainly are alive to the fact that this is a land where there’s some significant critical minerals metals, and we’re probably not going to be doing the refining or the processing of those minerals in the near future, but Alberta could.

So there’s lots of opportunity for the rest of Canada by looking north at what we have and the capacity that we have to bring things out of the ground, but then not necessarily be the place of refining and polishing – with the exception of the diamond mines, again, where that’s maybe an immigration question.

Lots of things are on the horizon. Lots of things are being looked at – even looking at the LNG market in the far north of Canada right now, which is question for the Inuvialuit. Again, lots of opportunity, and it’s a different conversation than it was five years ago given what’s going on.

But we do need to make sure that our economy remains stable to get us over the next few years so we can have those conversations out, in a way, and take action on them.