BHP Billiton Diamonds template for potash at EKATI DIAMOND MINE
Diamonds and potash have few similarities, and the market for luxury jewels
is a world away from the ground-level demand for fertilizer.
But for BHP Billiton, the products aren't so different. While the company
aspires to produce its own potash in Saskatchewan, it already mines and sells
diamonds out of its Ekati operation in the Northwest Territories.
Located 300 kilometres north of Yellowknife and 200 km south of the Arctic
Circle, Ekati's average annual production of three million carats accounts for
four per cent of the world's diamonds by quantity and six per cent by value.
A planned tour of the site was cancelled last week when poor weather
conditions made flying to the remote site impossible.
But the message BHP Billiton hoped to send by showcasing its operation was
made as clear as the rivers and lakes that cover so much of the Northwest
Territories: It wants to replicate its success in northern diamonds with
Saskatchewan's potash.
"Like every other BHP Billiton asset, we're a good example of how we
operate and how we integrate in the communities where we work," said Paul
Harvey, president and COO of the Ekati operation. "I think we've got a
great story to tell." BHP's proposal to acquire Potash Corp. of
Saskatchewan Inc. became news in August when its $38.6-billion US bid for the
world's largest fertilizer producer was made public.
The Melbourne, Australia-headquartered company has also been working to
advance its Jansen potash project, located about 130 km east of Saskatoon,
since acquiring the property in 2008. A production decision on the project,
which is projected to have an eight-million tonne annual maximum capacity,
will be made in early 2012.
Harvey, who has worked for the company for 18 years in various locations,
said he would expect any BHP operation in Saskatchewan to follow the same
template regarding community relations as Ekati.
"I'm sure it will be the same down there, engaging with locals of all
origins," he said in his Yellowknife office.
"Wherever they live or wherever they're from, if they're going to be
affected or impacted in any way by the business, we as a company will be
engaging with them openly and upfront." In the city of Yellowknife,
population 20,000, it's difficult to find a business or organization not
touched directly or indirectly by the dollars BHP Billiton spends in the
community -- and the province -- through wages, procurement and donations.
Because it operates in a territory, royalties generated at Ekati go to the
federal government.
Speaking in a telephone interview, Bob McLeod, the Northwest Territories'
minister of industry, tourism and investment, said few criticisms of the
company are heard in the region.
"(It's) nothing out of the ordinary," said McLeod, adding some
residents are vocal in their belief that all those employed by the mine should
live in the North. Ekati staff come from the Northwest Territories as well as
British Columbia, Alberta and Saskatchewan.
The territory itself once had concerns abut how the diamonds were being
valued, but has since resolved the issue, meeting with BHP regularly in
Yellowknife, London, England, and Antwerp, Belgium, to discuss the pricing of
the gems.
The minister agrees BHP Billiton's dollars are spread across the Northwest
Territories, leading to a generally positive perception of the company by
local residents.
"You just have to go to the smaller aboriginal communities in this
region and you can see lots of people have steady jobs; they're able to buy
trucks and boats and ATVs," McLeod said.
"It allows them to practise their culture and way of life a lot better
than they used to before because hunting and trapping are pretty expensive
these days." Much of the focus of the company's operations in the
territory is on aboriginal communities and employment, said Robert Beaulieu,
BHP Billiton's community relations adviser for the Ekati project. An
aboriginal person born and raised in the North, Beaulieu says he's happy
career opportunities have become available for northern residents through the
project.
"It empowers people, it gives people hope," he said, sitting in
the company's Yellowknife office. "We have some of our employees that are
in leadership positions in their community and they benefit from the
opportunity." Since the company started operating the mine in 1998,
Beaulieu said the region has seen aboriginal graduation rates rise,
unemployment rates drop, interest in financial planning grow and an overall
increase in interest in skilled trades training.
"Certainly the employment numbers have increased and it added a
positive spinoff effect with the younger generation," he said. "They
see the value now of staying in school because their parents are driving a
Ford F150 -- that's how you can tell who is working for BHP." Much of the
aboriginal employment at Ekati is a result of impact benefit agreements (IBA)
signed with four First Nations, Metis and Inuit communities whose traditional
territories are located around the mine site.
The confidential IBAs -- which were signed before construction began at the
mine -- includes agreements on preferential hiring, cash payments, scholarship
funding, business opportunities and travel to and from the community and Ekati.
"It gave us an opportunity to operate on aboriginal land and the
important part is to encourage the residents to participate in the
project," Beaulieu said.
While the IBA formula would not be copied in Saskatchewan, Graham Kerr,
president of BHP Billiton's diamonds and specialty products division, said the
company would implement agreements that "encompasses the same
spirit" as the IBAs.
"Certainly we'll be pushing the three objectives of creating jobs,
building business opportunities and building capability," Kerr said in a
telephone interview from his Vancouver office.
When it comes to the actual mining of diamonds and potash, few similarities
exist, he said. BHP Billiton's plan for mining the pink plant nutrient is more
in line with its global coal mining techniques, which both fall into the
soft-rock mining category.
The company's overall production, employment and safety strategy for
potash, however, would be the same as all of its other resource divisions.
Kerr said BHP's 40-year history in Canada -- with Ekati being the
"jewel in the crown" of its operations in the country -- speaks for
itself as far as its reputation as a corporate citizen.
"We have established an excellent relationship and excellent, if you
like, track record in terms of how we mine and how we engage with our
community stakeholders," Kerr said.
"We will be applying the same standards of that to the PotashCorp
business if we're successful."
ckyle@sp.canwest.com
FAST FACTS ABOUT THE EKATI DIAMOND MINE
- Produces an average of three million carats annually
- Employs about 650 people as well as about 650 contractors
- Of its employees, 60 per cent are from the North and of the 60 percent,
53 per cent are aboriginal
- About 54 per cent of all staff, including contractors, at the site are
northerners, with about one-half of the northerners coming from an aboriginal
background
- Between 550 and 600 people are on-site at any given time
- The mine produces four per cent of the world's diamonds by quantity and
six per cent of the world's diamonds by value
- Since 1999, the company has spent nearly $3.5 billion on northern
businesses, $1.14 billion of which has been spent on local aboriginal
businesses
- Canada produces 15 per cent of the world's diamonds by value
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