Anglo American Plc’s De Beers will flood a massive diamond mine located beneath a subarctic lake in Canada’s Northwest Territories after failing to find a buyer.
De Beers will begin inundating tunnels at its Snap Lake mine in early January, it said in a statement distributed late Thursday. In April, it put the site on care and maintenance, saying it would decide whether the mine could be made viable in the next year. The company hired Bank of Montreal as an adviser to sell it, but no agreement could be reached.
The rich diamond deposit beneath Snap Lake is in a remote area 220 kilometers (137 miles) northeast of Yellowknife. Since it opened in 2008, it has never turned a profit, plagued by engineering challenges related to keeping the site dry. It was originally expected to operate until 2028.
Allowing the mine to flood will preserve the mineral resource “until market conditions and improved technical methods make the kimberlite more economic to operate,” De Beers said in the statement.
But while reopening the mine in the future might be “theoretically” possible it would be extremely expensive to do so, Paul Gait, an analyst with Sanford C Bernstein said in by telephone from London.
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