Federal Ekati loan brings relief, skepticism

Some leaders and industry professionals welcome a federal $115-million lifeline to the Ekati mine’s owner, Burgundy, to help preserve jobs. Others are more critical of the approach.

The federal Department of Finance announced on Thursday it is issuing the nine-figure loan though a tariff relief program.

Ekati, one of the NWT’s three active diamond mines, has laid off hundreds of people this year and is behind by millions of dollars on payments to some contractors.

The federal government says the mine would have closed without its intervention.

Karen Costello, executive director of the NWT and Nunavut Chamber of Mines, said the organization appreciates Ottawa’s support and recognition of American tariffs’ effect on the sector.

Costello said chamber members have described the pain from a 50-percent tariff the US government placed on India, where a lot of diamonds are cut – an issue Burgundy has also cited as a factor in Ekati’s financial trouble.

This type of financial support, Costello said, is critical because northern economies are typically more sensitive to mine closures than other parts of the country.

“We have big territory but we are small population base, and we would feel the impacts more so than if this operation was down in, say, Ontario or Quebec,” said Costello.

While she described the loan as important recognition of the NWT’s diamond sector, Costello acknowledged those mines are maturing and more needs to be done to establish what she called “the next generation of mines.”

“We are not maintaining our share of the national picture when it comes to exploration investment and we need to do a better job,” said Costello.

“Improving our regulatory environment, addressing such things as land claims within Indigenous groups – all of this is really vital to ensuring the sustainability of NWT’s mining sector.”

Michael Critch, an ex-Ekati employee and former regional vice-president for the Union of Northern Workers, is skeptical the loan will have a meaningful impact on the mine’s finances.

“Every article that comes out is about Ekati and Burgundy being in debt, so now they’re just going further in debt to get out of debt – it doesn’t make sense,” said Critch. “I don’t think it’s going to save the mine.”

He said he doesn’t have confidence the loan will be used to benefit northerners or northern companies.

“I don’t see anything good coming out of it for the small guys,” said Critch.

This loan, he said, also won’t undo what has already been lost.

“With this $115 million, it’s not going to get those people that were laid off their jobs back. It’s not going to bring those northerners back to that job that they lost,” said Critch.

The precise effect of the loan on northern employment was not clear, though Burgundy has said Ekati will be a smaller mine than it once was.

Tłı̨chǫ Grand Chief Jackson Lafferty said about 100 Tłı̨chǫ citizens continue to work at the Ekati mine.

“Having that operation continue is somewhat of a blessing, especially just before Christmas, close to the holidays,” said Grand Chief Lafferty.

He said he’s heard from people laid off from Ekati and his government is doing what it can to help them find work in areas where they might have transferable skills, such as haul truck operators in Tłı̨chǫ communities or other mines.

Lafferty says this loan gives the mine and Tłı̨chǫ Government more time to figure out next steps.

“This gives us at least six months,” he estimated.

“We’re hoping there might be more from the federal government but, at this point in time, it gives us at least leeway to work on a plan for going forward with the Ekati mine.”

Lee Cawson, vice-president of the Aurora Group, told CBC earlier this month that Burgundy was about $8 million in arrears for heavy truck and mechanical services Aurora provided to the mine.

Cawson told Cabin Radio he couldn’t comment on the federal loan and how it might impact the arrears. He said Aurora is “still working with Burgundy on a plan but nothing [has been] finalized yet.”

Kate Reid, the MLA for Great Slave, called the loan “a tourniquet response” in an email to Cabin Radio.

“The frustration I see from northerners boils down to: fool me once, shame on you, fool me twice, shame on me,” Reid explained.

She pointed to the $11.2 million in property tax relief the GNWT provided to Ekati and two other mines in April as a measure that was meant to save jobs, though Ekati saw layoffs anyway.

“This time around feels dubious. And we are left wondering if this is the best way to spend $115 million in the territory when there are so many areas of intense need – housing, education, healthcare, to name just a few,” said Reid.

“I’d like to see GNWT/federal actions focused on next steps for workforce transition, if the reasoning behind this loan is indeed about creating better conditions for the operator to help transition a workforce to new opportunities and other kinds of mines, eg critical minerals.”

In a statement released on Thursday, NWT industry minister Caitlin Cleveland described news of the loan as “a relief to many northerners” and said it was a signal from Ottawa that the North matters to the national economy.

“Ekati is an important private-sector employer in the Northwest Territories, and this federal decision will help provide support at a difficult time for workers, their families, northern contractors, and communities that depend on the mine and its supply chain,” Cleveland was quoted as saying.

She admitted, though, that one financing decision may not be enough to relieve pressure in the diamond sector caused by changing consumer demand, volatile global markets and tariffs.

“More work will be needed, and we will continue working with our partners to do everything possible to support and protect northern workers and northern businesses,” she said.