An expansion project has been put on hold at a diamond mine in the Far North, a move the Northwest Territories government says underscores the need to reduce its economic reliance on that industry.
Mountain Province Diamonds Inc. says it and joint-venture partner De Beers Canada Inc. have decided to pause the Tuzo Phase 3 project at the Gahcho Kue mine some 300 kilometres northeast of Yellowknife.
Mountain Province owns 49 per cent of the mine and De Beers owns 51 per cent.
“This decision follows a careful assessment of the project’s economics considering the prevailing market environment,” Mountain Province said in a news release late Monday.
“While the Tuzo Phase 3 project has demonstrated strong potential, current market conditions have prompted the partners to take a measured approach to its development.”
The growing popularity of lab-grown diamonds has caused prices for raw diamonds to plummet in recent years.
U.S. tariffs on India, where most raw diamonds are cut and polished, has also been a headwind for miners.
“This is serious news for the Northwest Territories,” N.W.T. Industry Minister Caitlin Cleveland said in a news release.
“Gahcho Kué is an important employer and economic driver, and any decision that shortens the mine’s operating timeline creates real concern for workers, families, northern businesses, and communities connected to this operation.”
The near-term impacts are expected to be limited, but Cleveland said the news reinforces a harsh reality the territory must contend with: “Our economic base remains too dependent on a single commodity.”
It’s been estimated that the diamond industry accounts for about one-fifth of the N.W.T.’s gross domestic product.
“The diamond industry has carried the N.W.T. economy for decades, but the extended, profound decline in natural diamond prices underlines the need to diversify our resource economy,” Cleveland said.
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“We need more projects, in more regions, across more commodities so that workers and communities are not exposed to the boom-and-bust cycles of any one sector.”
Territorial leaders have been setting their sights on critical minerals as a potential longer-term economic driver.
That would mean more, but smaller, mines than the diamond trio that has long anchored the territorial economy.
Gahcho Kué, one of three diamond mines operating in the territory, had been slated to run until 2031. Mountain Province did not provide a revised closure date in Monday’s release.
Rio Tinto’s Diavik mine is slated to close down next month, having reached the end of its productive life.
The Ekati mine, owned by Australia-based Burgundy Diamond Mines Ltd., has a plan that could see it operate as long as 2040, but it’s been under financial strain.
It asked the Australian Stock Exchange in September to suspend its stock trading until it can secure new funding and it undertook major staff cuts last year.
Late last year, Ottawa extended a $115-million Large Enterprise Tariff Loan to a Burgundy subsidiary so Ekati can continue operating.
The change in Gahcho Kué plans follows news of another pullback in the territory’s resource sector.
Imperial Oil Ltd. said late last month that it plans to wind down its Norman Wells oilfield later in 2026, years sooner than planned. Premier R.J. Simpson said it was “difficult” but “not entirely unexpected.”
In an economic outlook released last week with its latest budget, the N.W.T. government said real gross domestic product is expected to fall 3.2 per cent in 2026 to $4 billion, building on declines in the previous two years.
It said the predicted GDP drop is mainly due to a 5.8 per cent decrease in investment and a 4.9 per cent decrease in exports caused by lower diamond mine production and the end to oil production at Norman Wells.
In her budget address to the legislature, Finance Minister Caroline Wawzonek said the territory has long struggled with a “lack of foundational infrastructure that contributes to high costs and holds back efficient construction” of housing and other necessities.
“Sporadic development incentivizes protectionism as we each hold tight to the few big opportunities that come along,” Wawzonek said in her speech.
“This is inefficient, stifles innovation and keeps our collective opportunities from growing.
“This need not be our future.”
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