Ekati diamond mine owner Burgundy has reduced the value of its next severance payments to laid-off staff as its financial position worsens.
One of the NWT’s three operating diamond mines, Ekati has already laid off hundreds of workers this year in a bid to cope with a depressed diamond market and the effects of tariffs introduced by the United States.
In particular, US 50-percent tariffs on India – through which most diamonds flow for polishing before onward sale – are having a huge effect. NWT Premier RJ Simpson discussed the issue with US ambassador to Canada Pete Hoekstra this week.
Burgundy, which is based in Australia, says Ekati is eligible for federal tariff relief – a package put together by the Canadian government to help firms affected by the US trade war. That program could ultimately provide Burgundy with up to $150 million in financial support, but nothing has been finalized yet.
In the meantime, laid-off workers were told on Thursday that they won’t receive the full amount of their anticipated severance payments on Monday.
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Workers who were laid off this summer are being paid their severance in installments, which was already an indication of financial strain at the mine.
Each month, people had been told they would receive a six-week chunk of their severance.
However, Thursday’s email stated that “due to financial constraints and cash flow considerations, the company will need to adjust the payment schedule.”
On Monday, workers will receive “a maximum of 1.5 weeks” of severance instead.
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“Future installments will be communicated in the coming weeks, and we remain committed to ensuring the full severance amount is paid,” the company stated in that email, copies of which were seen by Cabin Radio.
A Burgundy spokesperson confirmed the move and stressed that Burgundy intends to eventually pay out full severance to each individual.
“Our industry is experiencing record drops in diamond prices, compounded by the US tariffs on the diamond trade – particularly the 50-percent tariffs on imports from India, where most of the world’s diamonds are manufactured. Burgundy is no exception,” the spokesperson stated.
“At this time, this is all the information we are providing externally, as there is currently too much uncertainty to have a meaningful conversation on what any of the outcomes may be.”
Thursday’s announcement was poorly received by some affected workers who already felt let down by the company.
“Last month, they made the promise to pay in good faith. Now, the laid-off workers are carrying the mine on their backs without what is due to them in severance,” one person wrote to Cabin Radio in an email after receiving Burgundy’s message.
Burgundy executives were scheduled to meet with industry minister Caitlin Cleveland and cabinet colleague Jay Macdonald on Thursday, as were representatives from the Diavik mine.
While the NWT government stepped in with a bailout for the mines amounting to about $15 million in support earlier this year, Premier Simpson said on Monday that no further action of that nature would be taken.
“They’re such large organizations and there’s a lot of money flowing in and out of those mines. We’re not in a position to support an organization of that size,” he told Cabin Radio.
“If the GNWT support is what’s going to make the difference between a diamond mine surviving or failing, it’s probably too late at that point.”
