NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 4, 1999

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, colleagues. It's my honour to call to order this Thursday, February 4, 1999 meeting of the Standing Committee on Natural Resources and Government Operations.

Before I introduce our witnesses, let me introduce Richard Rumas, who will be our clerk for a very long period, we hope. We had a very capable clerk last year, Marc Toupin, but near the end of the year he was pulled off on some other assignments, and then we had an interim clerk. So it's very nice, Richard, to have somebody we can count on week in and week out, although we were capably served by Marc Toupin and Susan Baldwin. Welcome.

I had word from Mr. Duncan just before the meeting that he'd like to table or give notice of some motions. Maybe we'll just take a moment to receive those, John, so we can turn the clock on for the notice. Do you have them?

Mr. John Duncan (Vancouver Island North, Ref.): I don't have them in writing right now, but they're in preparation.

The Chairman: Okay. It will be at the end of the meeting then.

Mr. John Duncan: It's just a request for the public works minister and the natural resources minister to appear before committee for the estimates.

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The Chairman: Okay. I think we can consider that appropriately as notice of motion. Can we put that in the form of a motion? We're in translation anyway, so we'll take those as notices of motion. I'm sure there'll be unanimous consent, in any event. I think we'll just go ahead and make those invitations.

I'll inform you that on Thursday, February 11, a week from today, at 3.30 p.m., Ralph Goodale will appear on the consideration of knowledge- and technology-based industries in the natural resources sector, specifically with respect to climate change. But I am sure he will come back again to deal with the estimates. He was invited on a climate change topic for that date.

On Tuesday, February 16, at 12 p.m., Lyle Vanclief, the Minister of Agriculture and Agri-Food, will appear to give the government's response to the Think Rural report from the last Parliament, which will allow us to pursue certain rural questions we had talked about earlier.

On Thursday, February 18, at 11 a.m., we have David Oulton, who is head of the climate change secretariat. Some members, including Dave Chatters, had indicated an interest in getting an update on the 15 discussion tables under the subject of climate change. At the moment, we don't have a meeting scheduled for next Tuesday. Budget day is supposed to be in the week following, on the 16th. Our meeting is at noon and the budget will be at about 4 p.m., so there should be no problem there. So we have an opening Tuesday. We're working on some things, but it's possible that nothing will happen for next Tuesday. You'll get notice if something does happen. You'll get notice of those in due course.

Mr. John Duncan: Just as a clarification, are our Thursday meetings being moved to 3.30 p.m. now?

The Chairman: No. When we have ministers, we sometimes have to operate around cabinet meetings. So we can't always guarantee that we'll have ministers at the 11 a.m. sessions of our meetings. Those times are only in reflection of the fact that the ministers can't be available for 11 a.m.

Mr. John Duncan: Further to the 11 a.m. Thursday scheduled meetings, I understand there are negotiations going on right now in terms of moving some of the committees out of the heavy committee meeting slots of Tuesday mid-morning and Thursday mid-morning, and there's a suggestion this committee will actually lose its Thursday 11 a.m. slot to an earlier slot.

The Chairman: I'm not aware of that, but I thank you for bringing that to my attention. Richard and I will investigate with the government whip and see if that is happening.

Mr. John Duncan: Just for your information, the input I provided was that I thought a move to 8 a.m. was fine.

The Chairman: Eight o'clock in the morning. Thank you, John, for your probably lonely vote on that time slot.

The Clerk of the Committee: That's B.C. time.

The Chairman: It's B.C. time, yes. I kind of like the 11 a.m. slot myself. Of course all members sleep in until 10:45. Right. We're all up early, I know, but I have a lot of things to do at 8 a.m. So we'll be fighting for the 11 a.m. slot on Thursdays.

Mr. John Duncan: The last item I mentioned to you before the meeting was on correspondence. Can we make it regular practice that all members—

The Chairman: Yes. I think with the changes and difficulties in having our permanent clerk in mid- to late-fall, there may have been some correspondence that went out that didn't get copied for members. I think we've made up for that by now. But Richard, who is very capable, will make sure any correspondence that goes out under my signature, on behalf of the committee, usually pursuant to a resolution or a consensus on a subject, will be copied for all members. For the most part we've done that, but we may have been delayed a couple of times. If there's any more business, we can do it at the end of the meeting.

Let's welcome to the committee and thank for their patience Bruce Boyd, from Natural Resources Canada, who is a deputy director of the minerals and metals sector, with minerals, particularly; and Doug Paget, from Indian Affairs and Northern Development, who is chief of special projects in the mineral resources directorate.

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The subject of today's discussion is an examination of the Canadian diamond industry, which you probably all know has got off to a great start recently in the Northwest Territories. This is a very interesting subject from the little bit of reading and research I've been able to do.

Gentlemen, I'm not sure which of you wants to go first, but welcome to the committee. Please make your presentations around ten minutes each if both of you are presenting, giving members lots of chance to—

Mr. Doug Paget (Chief, Special Projects, Mineral Resources Directorate, Department of Indian Affairs and Northern Development): It will be just Bruce.

The Chairman: It will be just Bruce. Okay, take ten or fifteen minutes, Bruce, and then there will be lots of time for questions. Please proceed.

Mr. Bruce W. Boyd (Deputy Director, Minerals Division, Minerals and Metals Sector, Natural Resources Canada): First let me explain that DIAND is very much a partner in this file, since its jurisdiction covers all of the economic deposits of diamonds that have been discovered so far. Although I'll be presenting the deck—I hope everyone has a copy of it—Doug is very much an equal or superior partner in this.

If you'll bear with me just very briefly on the background, I'd like to say a little about diamonds just from a technical point of view. They're crystals of carbon in isometric crystal form. If you think of carbon in other forms like coal and graphite, which are a lot softer, it's this isometric or cubic crystal form that makes diamonds so hard. They can be made synthetically, and in fact the synthetic diamonds are preferred for industrial uses. The advantage for natural diamonds is that occasionally the size and colour are so wonderful, in terms of being large and beautifully white, that they're suitable for gemstones.

The diamond mines are created where the concentration of these rare gem diamonds exceeds one carat per tonne, more or less. This is about two parts per million. Natural diamonds are formed at very great depth and then molten rock from an even greater depth passes through the layers where the diamonds are formed and carries them close to the surface. In the process, some other minerals are carried close to the surface. Garnets particularly and some specific garnets tend to occur with the diamonds. The tracking of these garnets has led to the discovery of the diamond mines in Canada.

The vast territory of the Canadian Shield has the potential for having the right diamond host rocks. Now, with this new technique of exploration, it opens up the whole shield to diamond exploration. This means the territory from Northern Quebec right through Ontario, Manitoba, Saskatchewan and Alberta into the Northwest Territories is potential diamond territory.

The kimberlite pipes that have been discovered so far in the Northwest Territories at Ekati are very small in area when you compare them with the mines in South Africa, Botswana or Russia. Very fortunately, these pipes appear to occur in clusters. In fact in the case of Ekati, they have five different pipes in their mine plan. For now just one of them is being exploited. It's called the Panda pipe or the Panda mine. The Diavik project, which you've probably heard of as well, is similarly based on several small pipes.

If we look at what this production could mean in the future, there's a table in the deck that shows the largest producers of diamonds in the world, as of 1996, and then an estimate of where we might be in 2005. On that basis, Canada would rank sixth in terms of volume, but we could be the fourth-largest producer of diamonds in terms of value. This puts us in a very influential position.

In December 1997 several federal ministers and two ministers from the Government of the Northwest Territories created a committee on the value-added aspects of the Canadian diamond industry, focusing on the Northwest Territories. The report of that committee was released as of September 1998, a little less than a year later.

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The committee consulted stakeholders, both here in Canada and abroad. Specifically, consultations were held in Yellowknife with the communities and mining company representatives. Experts from Antwerp were consulted. There was input gained from diamond-producing and diamond-processing countries, which are often different. Current and potential cutters and polishers in Canada were consulted. All of this came out in the Grey report, which is available. I believe the chairman has a copy.

The Chairman: I might just interrupt to say, colleagues, that the full reports are available in French and English, and you could contact Mr. Paget on your own. But you have been provided with the summary in both languages with your Library of Parliament research notes. So I would encourage you to get Mr. Paget's card after, if you wish the full copy in French or English.

That's the one you mean, I think, Mr. Boyd.

Mr. Bruce Boyd: Yes.

One of the key tools for the analysis was what we called “the diamond pipeline”. An example is in your deck, a simplified version that shows where the revenue is generated in going from a mined rock to the jewellery. What came out of that analysis was that the two big revenue-generating steps are the mining itself and the jewellery making, jewellery retailing especially.

The other part of analysis that took a lot of time for the committee was looking at Canada's laws and international agreements, and the potential impact these might have on any incentives that might be used to encourage value added.

One of the things that was quite remarkable after the exercise was complete was that there was some comparison made, and with the exception of security, the issues surrounding value added for diamonds overlapped with the concerns that were raised in cross-Canada consultations with small and medium enterprises involved in dealing with non-metallic minerals, and in fact there was a lot of overlap with the rural dialogue.

The concerns that were raised could be grouped, as they are in the deck: the lack of awareness among the small enterprises for federal programs and services; some limitations in the programs that made them hard to adapt to special circumstances of the small companies, which may be quite unique; and the lack of knowledge among these small companies about federal training programs. Just as an aside, this was one of the points in the committee's publication, to bring to the attention of any interested parties what training programs are available. So that makes up an annex in the report. Other issues included some lack of training for very specialized skills and some lack of recognition for apprenticeship programs and how we might help out there.

So these are things that have been brought forward that may be addressed. Another area was difficulties in immigration, to bring in specialists who have unique skills, and I think this one has been addressed as well.

One of the issues that is very common, which was a surprise to me, is that the financial institutions do not know much about diamonds or other non-metallic minerals, and they don't know much about the small companies. This is one of the things that was addressed by the committee.

There were six findings and recommendations. Four of those were very specific to diamonds, coming out of that exercise on value added as it applied to diamonds.

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One recommendation was to investigate further the excise tax on jewellery. DIAND has asked Revenue Canada for clarification on the guidelines and practices in applying that tax.

The second recommendation was to encourage diamond sorting and valuation in the Northwest Territories off-site from the mine. BHP, which as you know is the only mine so far operating, has agreed to this and is actually constructing a facility for diamond sorting and valuation at the airport in Yellowknife.

The third recommendation was to provide financial institutions in Canada with the report so they would have a little more information. DIAND has sent them the report.

The fourth was for Natural Resources Canada to lead in establishing systems to ensure the integrity of the Canadian diamond industry. The first step we have on that is the RCMP, with help from Natural Resources Canada, has organized a consultative meeting with industry, the provinces, and other interested parties in Yellowknife for February 15.

I would like to review where the value-added activities stand right now in Canada. To start at the mine, the Ekati mine employs over 500 people: 70% are northerners; 35% are aboriginal. This is far higher than the targets that were originally established. A report with the precise numbers is being prepared by BHP now for presentation to the Government of the Northwest Territories.

At the opening of the mine, BHP thanked 440 Canadian northern enterprises that had contributed to the construction of the mine. From the diamond pipeline analysis that I referred to earlier, it seems clear that in the long term, revenue from the mining stage will likely be three or four times as high as revenue from any other stages that are performed in Canada.

If we look at specifics, there are about 10 enterprises that are processing diamonds in Canada right now. Of these, two companies are significantly larger and more advanced. The first of these is First Canadian Diamond Cutting Works in Montreal. It has equipment for cutting, cleaving, and polishing diamonds. It has about 20 polishing wheels, to give an estimate of the size. It could employ about 25 people. Currently, it's got four experienced polishers and one apprentice.

The second company of this size is Sirius Diamonds Ltd. of Sidney, British Columbia. It has equipment for cutting and cleaving, bruting diamonds, and polishing. It is in the process of buying more equipment. It is also in the process of moving up to Yellowknife. The new northern facility will be largely for training and it will employ about 30 people in the near term, some who are experienced polishers and some who will be in training.

There are several other companies who are preparing projects, preparing plans for possible work in the Northwest Territories. In addition to these projects that are associated with gem minerals, there is another gem-mineral project going forward in Matane associated with CÉGEP à Matane. In that project, they are in the process of purchasing equipment and setting up a course for training polishers. That course will be directed by an experienced jeweller in Montreal.

The other area, apart from gems, is industrial diamonds. In Canada we have the raw materials, the energy source to make synthetic diamonds, which are the preferred raw material for use in industrial purposes. We do not have any production of synthetic diamonds in Canada so far. However, there are thirteen companies that are using diamonds for industrial purposes, for drill bits and abrasives.

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In addition to this, there is another project. The city of Thetford Mines, Quebec, is trying to put together a project to perhaps sort, treat and prepare industrial diamonds. This is at the feasibility study stage, and it probably would have to be based on imported material for the first few years at least. The main reason for this is that BHP is not in a position to sell a lot of industrial diamonds at this stage—and I can go into the details of that later if you want me to.

The other area in which I think there was some interest was how the first sales of Canadian diamonds went. The sales occurred just last month. They were based on the production from the first mine for October and November, 1998. All of that production was sorted in Antwerp and was sold in January. There were some 68,500 carats sold for $8.5 million U.S. That comes out to an average price of about $124 per carat. That's marginally higher than BHP had expected—although just very marginally—and this is a very good sign. It means that the diamonds are for real, and that Canada will be taken seriously.

The last part of my talk is on the next steps that we foresee. Several departments are following up on the recommendations of the committee on value-added for the Canadian diamond industry. In addition, the value-added potential for minerals and metals in general is being pursued by Natural Resources Canada, together with Industry Canada, under the resource innovation initiative. Much of this will apply to diamonds, as well as to other minerals.

A consultation report on minerals and metals was released last year, and there will be another report shortly. Based on these consultations, strategies and initiatives will be developed with industry to create jobs and add to the value-added sectors of the economy, with which we expect to be including rural and remote communities.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Boyd. I think it's very interesting that the estimate of one committee study was that Canada could become a player with up to 10% of world production. I think that leads us to why we are doing this, and to the suggestion that I think first came from Mr. de Savoye: that in general in the mineral sector, we are not doing maybe enough for the processing. We chose diamonds as an example of that very dilemma, so we thank you for that presentation.

Mr. Duncan, please.

Mr. John Duncan: If I understand the mining so far, both Ekati and Diavik are BHP. Is that correct?

Mr. Doug Paget: No. The Ekati mine is BHP. BHP is an Australian company that has joined up with a Canadian company called Dia Met. The second one, the Diavik mine, is a joint venture between Aber Resources, which is a Canadian junior, and RTZ, Rio Tinto, from London. So they are two totally different companies.

Mr. John Duncan: Okay, so BHP is mentioned throughout the document as sort of being all encompassing because that's the mine that's currently operating.

Mr. Doug Paget: Yes.

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Mr. John Duncan: When one reads here that BHP is setting up a sorting facility at the airport in Yellowknife, am I reading too much into the fact that it's at the airport if I suggest that this is almost like an orientation toward shipping out sorted-out product, not necessarily leading to much value added?

Mr. Doug Paget: I think their decision to go to the airport was based on a number of factors, one being security. It was an area that was easy to secure, and it's easy to get the diamonds into that area from the mine.

BHP's original intent was to have all the sorting done at the mine. One of the things we said was that it didn't matter if the facility was in Yellowknife or Hay River. When we helped them build this facility in a community in the Northwest Territories, we allowed it to be considered part of the mine. They can write it off as they would if they were doing it at the mine. That encouraged them to move to a community.

I think the vast majority of the diamonds will leave the country at first. There's not the market for them here in the country. They've stated that they will sell in Canada, to Canadian companies, as that market builds up though. If somebody from Antwerp also wanted to come over to buy here, they would do that, too.

Mr. John Duncan: As far as the two companies mentioned here—First Canadian Diamond Cutting Works and Sirius Diamonds—are concerned, do they have working arrangements with BHP at this point?

Mr. Bruce Boyd: Sirius Diamonds has a contract with BHP, but all of the diamonds that they purchase actually pass through Antwerp for the time being. Although they have a purchase arrangement, there's a final sorting done in Antwerp, and then they come back.

First Canadian Diamond Cutting Works hasn't been able to come to a commercial arrangement with BHP. They've been in negotiations for quite some time, but they're having trouble coming to an agreement.

Mr. John Duncan: If all the diamonds go through Antwerp, why would Sirius move to Yellowknife?

Mr. Doug Paget: It think it's just that BHP is not set up to sell through the Northwest Territories at this point in time. After a while, they will be. Their marketing is done through Antwerp. They're selling where most of the diamantaires are, and it's their intent to eventually move it back. The stuff they would be selling to Canadians would be sorted out in Canada and would be sold here.

Mr. John Duncan: Does Sirius plan to have its facility in Yellowknife at the airport as well?

Mr. Doug Paget: As far as I know, yes. My understanding is that Sirius is quite close. I think they're actually building it as we speak. And BHP is hoping to have its facility open by the middle of next month. The next evaluation will hopefully take place at the site.

Mr. John Duncan: I think that sort of finishes me for the moment.

The Chairman: We can always come back to you if you'd like, John.

Mr. John Duncan: Okay, thank you.

The Chairman: Roy, and then Pierre.

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman.

Gentlemen, thank you for your information on the diamond industry in Canada. I have a number of questions.

Could you tell me how competitive we are internationally in terms of diamond mining costs in Canada? Where are we on the cost curve? Do you have any idea?

Mr. Doug Paget: I think we're fine because diamonds are so valuable. I don't think there's a problem with our position, but I really don't have the numbers. In fact, I don't even think I've ever seen them. BHP is having no problem.

Dr. Bruce Boyd: If I could add to that, I believe the managing director of the mine in Botswana made a statement about running the Canadians out of the market. In fact, the mine in Botswana has quite low costs, so the Canadian mines are not going to be the cheapest. Part of that is due to the location, but they are nowhere near the high end of the cost curve either when you look at the value of what's coming out.

Mr. Roy Cullen: I wanted to talk about what part of diamonds is a commodity. If it's a commodity, part of it is a commodity price. Obviously you're trying to move into more value added. Then where you are in the cost curve is important in the sense that your margins might be less if you're on the high end of the cost curve when you're dealing with commodities. But it sounds as if you're saying we're in reasonable shape there.

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If you look at diamonds as a commodity, or the part that is a commodity... Maybe you could clarify what parts of diamonds are commodities and whether there are any big major selling groups that control the supply. We see that in other major commodities. Are there any major selling groups, and is supply controlled?

Mr. Doug Paget: The main selling group is DeBeers through the Central Selling Organization. It's been estimated that at one point they handled as much as 80% of all the diamonds that were moved in the world. They're the largest diamond mining company, and they also buy diamonds from other companies and market them through the CSO in London. The CSO is the Central Selling Organization.

At this point in time it's estimated they're down to about 50% of the market. The Australians are no longer selling through them.

Mr. Roy Cullen: They're not?

Mr. Doug Paget: No. They broke away a couple of years ago. They're now selling all of their stuff through Antwerp. The vast majority of their diamonds are sold through Antwerp and go back into India.

Mr. Roy Cullen: What are the projections in the medium to long term on the supply and demand for diamonds internationally? Is it looking positive?

Mr. Doug Paget: It's a bit rocky right now, with the Asian crisis. The U.S. is doing very, very well, and Europe has done better than was expected by the industry itself.

I guess there is a little bit of a glimmer in some of the Far East, but not in Indonesia, which was a major purchaser. I think DeBeers' sales are still way, way down from where they were two years ago, but they're sort of inching back up.

Mr. Roy Cullen: Okay. Maybe you could come back to the question of when a diamond is a commodity product and when it is value added, because in your presentation you talk about polishing and cutting and whatever. I'm not a diamond expert, but maybe I'll just add something to that. I notice you don't mention making jewellery. I'm wondering about it. The Canadian jewellery industry presented a brief and talked to a number of MPs. They'd like to see the excise tax off jewellery, because they contend there is a lot of jewellery smuggled into Canada. Their take on it is that in Canada we don't have the capacity because of our cost structure to add the jewellery-making value-added in Canada.

I know from my experience that in some of these countries in Africa and India they can make these precious stones into jewellery at a very, very small cost.

I'm sorry to complicate my question, but maybe you could talk about diamonds as a commodity. When you get into value added, what role will Canada play, if ever, in making jewellery? And would the diamond-mining industry in Canada have a different take on the excise tax on jewellery from that of Canadian jewellery retailers?

Mr. Bruce Boyd: I guess from a commodity point of view you'd say the rough diamonds sold by the mines are the last stage where you could talk about a commodity. In fact even at that stage they talk about every diamond being different and they put together packages that are assortments of diamonds. But the mining companies are interested in just mining and selling and they don't want to get into the very complex area of the next step, which is the cutting and polishing. And they are not even imagining envisioning getting into jewellery manufacturing.

On the other hand, if you look at what the potential is and you look at what's involved in mining, it involves quite a large number of people. But if we went down that pipeline and we had cutting and polishing and jewellery manufacturing and then jewellery retailing... One of the areas I was looking at was jobs. In New York there are about 450 diamond cutters and polishers. There are 9,000 people in jewellery manufacturing, 11,000 in jewellery wholesaling, and another 4,000 in jewellery retail.

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So if we go back to that diamond pipeline, you can see that the revenue and the number of people employed are very closely linked. This is as you'd expect. But to have jewellery manufacturing in Canada down the road could be very advantageous.

Mr. Roy Cullen: Who would pick up the lead on that? Would you work with Industry Canada in terms of creating a policy environment that would take it that much further, value added? Also, would we be cost-competitive on the jewellery manufacturing side? Then maybe you could come back to this question on the excise tax on jewellery and whether the diamond-mining industry would have a different take on what we do or don't do with the excise tax on jewellery, compared to the Canadian retail jewellers. My gut feeling is they would have a different take on it, but I don't know.

Mr. Bruce Boyd: The mining industry does not seem to take much interest in the excise tax on jewellery at all. On the other hand, looking at jewellery manufacturing in Canada, there is a decent-sized industry already. Whether or not it's competitive, it seems to be surviving. The third part of that was Industry Canada would be involved more at that stage of the process in looking at what could be done to encourage jewellery manufacturing.

Mr. Roy Cullen: Do you know if Industry Canada has set up a little think group, or is someone looking at that?

Mr. Bruce Boyd: That's included in their overall strategy on value added for minerals and metals. There's nothing specific for jewellery, although on the excise tax we did ask for some clarification. I'm not an expert on taxes.

Mr. Roy Cullen: Let's say we wanted to take these diamonds and work them into a big jewellery-making kind of activity, the people who are making the jewellery, if we were going to reduce or eliminate the excise tax on jewellery—which may or may not happen—might be opposed to that. Would they?

Mr. Doug Paget: I don't think the diamond mines would care one way or the other.

Mr. Roy Cullen: I'm not talking about diamond mines—

Mr. Doug Paget: Oh, I'm sorry.

Mr. Roy Cullen: —but if we take it further into making jewellery in Canada. Has the jewellery manufacturing sector made any presentations?

Mr. Doug Paget: They're very much opposed to the 10%. They made a presentation to the committee and sent a paper in. It was on their urging that we went to Revenue Canada and asked for the clarification. We have not received it back yet.

Mr. Roy Cullen: What are they very much in favour of?

Mr. Doug Paget: They're in favour of eliminating the 10%.

Mr. Roy Cullen: Do you mean both the retail jewellers and the manufacturers?

Mr. Doug Paget: Yes.

Mr. Bruce Boyd: On the subject of how big that could be, so far the jewellery manufacturing industry in Canada, as far as I know, is targeted for the Canadian market. In terms of the diamonds we'll be producing and the size of the market in Canada, definitely most of the diamonds will end up elsewhere in the world. We don't have a market big enough to take those diamonds. Whether the Canadian jewellery industry could be applied to manufacturing for export, that's a possibility, but in that case the excise tax wouldn't apply. They could recover it on export.

Mr. Roy Cullen: Okay.

The Chairman: Thank you, Mr. Cullen.

Mr. de Savoye, please.

[Translation]

Mr. Pierre de Savoye (Portneuf, BQ): Thank you, Mr. Chairman. I would have liked your presentation to give us a better breakdown or a better outline of the income spent to create jobs and therefore to pay wages versus that used to buy equipment and to pay interest, and what the profit is.

Unfortunately, I do not have this information before me. I will therefore have to work with hypotheses, which may or may not be accurate. You might then be able to clarify my understanding of this situation.

My starting point is a sentence from the briefing document prepared by the Library of Parliament. The document states that it is mainly at the extraction stage that most jobs are created in the diamond industry. The chart that you handed out seems to show the opposite.

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The first $26 come from mining and the following $74 from diamond cutting, jewellery manufacturing and retail sales. If I understand correctly, mining is equipment intensive. By contrast, the rest of the process is labour intensive. Unless I am not interpreting your chart correctly, you are contradicting what the Library of Parliament is telling us.

I will continue with my hypotheses. You have told us that the mine currently employs 500 people and has produced 68,500 carats for a value of $8.5 million US. By 2005, we should be at 10% of world production of rough diamonds, that is, 12 million carats or about 200 times present production, which is valued at $8.5 million US. A quick calculation brings me to $1.6 billion US.

Does that mean that there would also be 200 times the number of employees at the mine, a jump from the present 500 to 100,000? I do not think so. This seems to suggest that as production at the mine increases, job creation will happen at the processing stage, in cutting, jewellery manufacturing and retail. Those are the kinds of projections that I would have liked to see today, since the government has an opportunity and even a duty to ensure that it provides the conditions, which may mean tax changes as suggested by Mr. Cullen, or other initiatives to ensure that the impact of job creation will be mainly felt here.

You talked about mine income. I would have liked to know what portion of that goes to pay wages. On the other side, we want Canadians and Quebeckers to benefit from the development of this natural resource and not just for investors to make a profit, which is legitimate, with the raw materials being exported and jobs created elsewhere. How do you react to all that? Could you enlighten me? Thank you.

Mr. Bruce Boyd: We are talking about the total production in carats. About 10% of the production includes stones that are large enough to be cut here in Canada. Those who polish the small diamonds that remain earn only $4 to $6 a day. That is why there are 450,000 diamond cutters in India and only 450 in New York. At Ekati, for example, large diamonds account for only about 10% of the total production. For what we would pay one diamond cutter in New York, we could hire 125 in India. If our cutters used only the best stones from the mine, this would mean jobs for about 100 to 150 cutters.

Mr. Pierre de Savoye: There would be three times as many. You would triple your number of employees, which may be as high as 25 in Montreal and 30 in British Columbia and the North West Territories.

Mr. Bruce Boyd: We are already well along towards those numbers. There is room for maybe two or three other firms to start up in this area. I have no estimates regarding the other steps in the process, including jewellery manufacturing, where there is great potential. But if we want to create a large diamond industry in Canada, we need to export the diamonds for this first stage.

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Mr. Pierre de Savoye: Since India is doing this in any case, I agree. They are not using all these small diamonds with the 400,000 workers they have locally. It is a small export market. So you are telling me that the potential for growth in the processing stage has not really been assessed. We know there are opportunities, but you can't really put your finger on how much income could be generated by the various processing activities or what the potential export markets are.

Mr. Bruce Boyd: We have only concentrated on the first stage.

Mr. Pierre de Savoye: That is what I thought, and I am pleased to hear you say so. Thank you.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. de Savoye.

[English]

Yes, Mr. Paget.

Mr. Doug Paget: This is a great concern to the Government of the Northwest Territories. There's no question about that. They're very anxious to get the maximum value added. In about a month and a half they're going to have a conference or seminar in Yellowknife to try to bring jewellery manufacturers up there. They're only interested in what happens in the Northwest Territories, but they're actually going out and bringing Canadian jewellery manufacturers and international people in to see if there is a potential for that in the Northwest Territories. Of course, as Mr. Boyd just said, they'll be looking at the number of diamonds of the size they could cut that are available. At this point it's very small.

I think one of the things we've found, working with the local people, is the expectations are very high and they want everything right now. If I lived there I would too, but I think this is an industry that will build up over time. The cutting and polishing side will build up. I have no doubt that in a few years Sirius Diamonds will not be the only cutter and polisher in Yellowknife.

Mr. Pierre de Savoye: Do you understand my point? The question here is how can the government help this build-up happen as smoothly, efficiently, and soon as possible?

Mr. Doug Paget: That is why we'll be involved with this conference and working on that. It's the policy Mr. Boyd was talking about with the value-added market for all of them, not just the diamonds. The numbers are huge in other countries, but India is the only place where there are huge numbers of people.

[Translation]

Mr. Pierre de Savoye: Thank you.

[English]

The Chairman: Thank you, Pierre.

Mr. Keddy, please.

Mr. Gerald Keddy (South Shore, PC): Thank you, Mr. Chairman.

I've been following this industry fairly closely for quite a while and I have a bunch of questions. I don't know how you want to do this. I'd like to ask short questions instead of great big long ones.

The Chairman: Go ahead.

Mr. Gerald Keddy: I'd like one answer back at a time.

The Chairman: That's okay for the time being.

Mr. Gerald Keddy: There's only one comment I'd like to make to begin with. You're referring to the manufacturing base in India and the number of people it employs, but you haven't stated the fact that a lot of the diamonds in India are lower priced diamonds. A lot of them are Australian diamonds from the Broken Hill Proprietary Company and they have to find cheap labour in order to manufacture and put them on the market. They're at the lower end of the scale; they're a lower market stone out there in the world.

The diamonds we have in Canada so far have been very high-priced, good-quality stones. I use your numbers.

Mr. Bruce Boyd: That is a good observation. The 850,000 people working in India on all those small stones will be working on a lot of Canadian stones as well. In other words, although the Canadian production averaged out to $124 a carat, included in that was a lot of material that would not be cuttable or usable in Canada, in terms of trying to pay the wages. About 10% of the production might be big enough and white enough that it would be interesting to a cutter or polisher in Canada.

• 1200

Mr. Gerald Keddy: Thank you.

Mr. Bruce Boyd: So that's where the numbers come from.

Mr. Gerald Keddy: And I understand that. I just want to use these numbers here. In Australia they're producing 40 million carats for $400 million U.S. In Zaire they're producing 15 million carats for $400 million U.S. In Canada it looks as if we could look at 8 million carats at $800 million U.S. So we're right there with South Africa, with any of the major diamond producers in the world.

My fear, and as a parliamentarian I think it should be a fear we all have, is that somehow we might miss this opportunity, especially for northern Canada, and the NWT in particular, in all those pipes. It's estimated there are around 80 pipes, possibly, that might show some diamond production. If we had 10 of those, or a dozen of those, that we actually got a feasible mine out of, it would be a wonderful thing.

I do have some specific questions. I'm not going to ramble.

The diamonds that were shipped so far, was that mine sort? So they were sorted and graded in Canada, and royalties were collected here, or they were sorted and graded in Antwerp?

Mr. Doug Paget: Here.

Mr. Gerald Keddy: We have a disagreement there.

Mr. Bruce Boyd: There are two stages of sorting.

Mr. Gerald Keddy: Yes, absolutely.

Mr. Doug Paget: For valuation, for royalty purposes, we sorted them here in Canada. Our evaluators, the company we had hired, came in, sorted them, valued them, and put whatever value they felt they should be sold for. Then how BHP handled them after that was they took them to Antwerp and sorted them into their sale sorts, which are very different from sorting for the purposes of—

Mr. Gerald Keddy: I want to clarify the sorting and the grading. Probably the one thing we can do is make sure that we do have a sorting and grading facility in Canada as soon as possible. And you correct me if I'm wrong, but as I understand it the mine sort simply takes a scoop of stones out of a pile of stones, and that's your average.

Mr. Doug Paget: I think—

Mr. Gerald Keddy: We're being rough, but a sorting and grading and valuation facility takes each stone, separates it into its grade, and this is before it's manufactured and we know what the actual value is.

Mr. Doug Paget: It's almost a combination. For valuation purposes, the numbers are so small right now because the mine's not in full production.

Mr. Gerald Keddy: We understand that.

Mr. Doug Paget: They're valuing all of the stones above a certain size individually.

Mr. Gerald Keddy: Yes.

Mr. Doug Paget: And the large numbers, the breakdown, is something along the lines of 30% of the stones are considered to be gem quality, 40% are near-gem, and the rest, which is about 30%, is the bottom end, the industrial diamonds. So all of the industrial diamonds will be lumped in a big pile and they'll take a look at that and say what they are worth. But for the bigger ones, anything over I think it is ten carats, and probably even smaller than that, about seven carats, they are actually looking at each individual stone.

Mr. Gerald Keddy: No, smaller than that, I thought.

Mr. Doug Paget: I can't remember. We don't have enough of them, anyway, at this point.

Mr. Gerald Keddy: You can never have enough diamonds.

Mr. Doug Paget: Not enough of the big ones.

At this point, the government evaluators come in and look at that and then BHP will take them and they will re-sort them for sale. Whether they do that here in Canada... And they may well end up doing that here in Canada, over time. At this point in time they want to do all of their work as close to the sale as possible. That way they hear what's going on with yesterday's sale by the CSO and then they can say that these sizes are going well, so they'll sort it this way. And that's the big problem, of course. It's not like gold or nickel or something like that, where on January 3 we knew that the price of gold was $286, so that's what they sold. They call it tweaking their parcels, and they'll make a little bit better here, or move a bit more of the ones that are selling into that.

Mr. Gerald Keddy: Thank you. I'll ask one more question and then I'll let everyone else take a turn—

The Chairman: That's fine.

Mr. Gerald Keddy: —and hopefully get another one.

The Chairman: We'll try to do that.

• 1205

Mr. Gerald Keddy: Getting back to Mr. Cullen's statement on the excise tax, we're jumping rapidly ahead here to a manufactured product coming into Canada, because the raw stones come in excise-tax-free, according to the book, I believe—

Mr. Doug Paget: No.

Mr. Bruce Boyd: No, not on diamonds.

Mr. Gerald Keddy: It reads:

A licensed diamond cutter can purchase or import rough diamonds or partially processed diamonds exempt from excise tax. Under the licence, when the cutter sells the goods of his manufacture to another licensed person, no tax is payable for the same reason.

Anyway, there's a full page in this book on excise tax. I'm not a tax person, and I'm not wanting to be, but it's obvious that we're talking about trying to promote this industry in Canada. Perhaps the first thing we could do is look seriously at whether or not we should have an excise tax on stones in Canada, period. And it's 10%, it's 4.5%, they say, of the value of the stone at the consumer's doorstep. If we want to promote this, maybe that's a good way to do it, so that the government can take a hard look at it, and through another method promote the sorting and the grading that will lead to manufacture. And the sorting and the grading tells us a very good value upon which we base our royalties for the stones.

My personal fear, and I think there should be a concern for all of us, is that we would see instances of mine sort and those stones being exported and sorted and graded someplace else, and the valuation taken—we take Antwerp's valuation, or we take the valuation in New York.

Mr. Doug Paget: No, we take the valuation here, and then the final royalty is based upon—if it's a non-arm's-length sale—the final sale. If it's an arm's-length sale, if DeBeers brings a mine in here in Canada, and sells its diamonds to the CSO, our royalties will be based upon the valuation done here in Canada, not on their sale price.

Mr. Gerald Keddy: You made a statement that there were no diamonds found outside of the NWT.

Mr. Bruce Boyd: No. There are no economic deposits so far found outside the NWT, but there have been diamonds found in Ontario, in northern Alberta, and in Saskatchewan and Quebec.

Mr. Gerald Keddy: Good point.

Mr. Bruce Boyd: And there are some aqua diamonds I was just hearing about yesterday in Ontario.

Mr. Gerald Keddy: When you look at the map, those pipes in the Lac de Gras area come from all the way across the northern part of Canada into northern Saskatchewan and northern Alberta.

Mr. Doug Paget: It's on the Canadian Shield.

Mr. Gerald Keddy: Thank you very much.

The Chairman: Thank you, Mr. Keddy.

Mr. Schmidt, then Mr. Fournier. We'll start with Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): I'd like to ask a question in regard to the industrial part of the diamonds. You answered part of my question, but roughly 30% of the diamonds produced or mined are industrial and used for industrial purposes. What is the relative cost vis-à-vis those diamonds and the synthetic diamonds?

Mr. Bruce Boyd: The value in sale?

Mr. Werner Schmidt: Yes.

Mr. Bruce Boyd: It's quite a bit lower than the synthetic. But if you talk about the cost for production, I don't know that anybody separated out the cost of production of the industrial diamonds from the gem diamonds because they're more or less a by-product, they're just recovered as a by-product of the gem diamonds. Because natural industrial diamonds tend to be odd shapes, and not already sorted, they're not as valuable on a per carat basis as synthetic diamonds, which can be made to order and have nice sharp corners.

Mr. Werner Schmidt: Does that mean then that the government in its policy formulation is directing all of its attention, in terms of value-added efforts, to the production of the gem or near-gem quality diamonds?

Mr. Bruce Boyd: No.

Mr. Werner Schmidt: Why not?

Mr. Bruce Boyd: Because the industrial diamonds are going to be there, and we are trying to include that in our overall policy on the value added for non-metallic minerals, and overall for metals and minerals in general. So things that could be done to encourage further processing in Canada we hope would apply also to industrial diamonds.

Mr. Werner Schmidt: No, I appreciate that.

Mr. Bruce Boyd: And nothing specific. Sorry.

Mr. Werner Schmidt: I didn't ask the question correctly, then, and that's my problem. The concern I have is where is the government placing its major policy emphasis? Is it on the total industry, or is it on the most profitable part? That's the issue as far as I'm concerned, in terms of manpower development, in terms of mining development, in terms of the whole evolution of the diamond industry in Canada. Where is the primary focus for the government?

• 1210

Mr. Bruce Boyd: I guess I'm not familiar enough with all of the government policies to give a good answer on that.

Mr. Werner Schmidt: We've had some pretty good questions asked here. Roy Cullen asked a question on the excise taxes, for example, and there was the question of developing a labour pool that will give the industry that kind of resource in terms of manpower. We asked questions about the infrastructure in terms of developing the sites for the people to produce the value-added materials. Where is our emphasis?

The Chairman: If I may interject, if the officials can't answer—

Mr. Werner Schmidt: Maybe we can get the answer later. I think it's a key policy question, a fair question.

The Chairman: Is there anything else, Mr. Schmidt?

Mr. Werner Schmidt: No, that's fine. Thanks.

The Chairman: Mr. Fournier, please.

[Translation]

Mr. Ghislain Fournier (Manicouagan, BQ): I would first like to thank the committee for its invitation and especially my colleague, Mr. de Savoye, who helped get me invited so that I could ask a few questions.

I would also like to thank the witnesses for their impressive presentation. It was very well done. However, it does raise a number of questions in my mind. The first was asked by my colleague; it deals mainly with diamond extraction, where most of the jobs are being created. With his relevant questions, my colleague covered the topic well, and I think that you have answered his questions.

I was rather surprised by the low level of production in Canada; that caught my attention because we are talking about millions of carats—eight million—which puts us in sixth place. In terms of value, we are talking about $800 million US, I believe.

I learned last spring that in Canada, especially in Quebec and fortunately in my riding north of Shefferville, there is a significant diamond deposit. I also found out afterwards that those responsible for exploration are having great difficulty because of very high costs. They do not have any government incentives to help them carry out exploration activities.

As you can understand, I would like to know if you intend to stop here or recommend that the government grant incentives, since Canada and Quebec are capable of producing more. In terms of production, we rank nearly last, even though we have the mineral wealth. I am taking the processing for granted.

We can take the case of aluminum, of which Quebec will soon become the largest producer with 14 aluminum smelters—we already have 13—and yet our territory does not contain, as I sometimes say, even a teaspoonful of aluminum ore. It is because of our electricity that we are becoming the number one producer of aluminum.

This is not the case with diamonds. We are told that the mineral wealth exists in the ground. Are we soon going to start promoting development that makes it possible to process the diamonds instead of exporting them? I think that every country would prefer to process its own diamonds to create more jobs at home.

Do you believe that Canadian governments could provide incentives to speed up diamond mining development?

• 1215

Mr. Bruce Boyd: If I may, I will answer in English.

[English]

There's a section in the report that deals with performance requirements that could be introduced to try to encourage that type of development. Apparently this gets into a legal area, where I'm not an expert, but it introduces limitations on what could be done.

[Translation]

If I could find the words in French for "performance requirements"—

Mr. Pierre de Savoye: Les exigences de la performance.

[English]

Mr. Bruce Boyd: But that really is the constraint if you try to target especially one commodity, one industry. So for a lot of the federal role, it's more general. I think this may partly address that other question, that this is why the initiatives, the resource innovation initiative is targeting minerals and metals in general and will have a more general application. I'm not sure if that—

[Translation]

Mr. Ghislain Fournier: On page 2 of your presentation, you say "Canada could account for over 10% of the value of world rough diamond production." You must not be sure if you are saying that it "could" account for 10%. Are you satisfied with that statement or do you think that we could exceed that goal of 10% of world production?

Mr. Bruce Boyd: That is certainly a long-term possibility, but it is a question of time.

Mr. Ghislain Fournier: I know, as you do, that we are training diamond cutters at the Matane CEGEP, and we are calling these people specialists and professionals, but do you believe there will be jobs for these people that we are training? We are training people to become skilled workers in this area. Do you think that taking the initiative to cut more and more diamonds here in Canada would be helpful to these people trying to develop this specialized skill? Will there be openings, will there be jobs for them?

[English]

Mr. Bruce Boyd: So far, the one Canadian mine that's operating has defined what it calls “qualified buyers” of diamonds. This is getting around to your answer. One of the criteria they had was they would like to have clients who have several sources of raw material.

So when you're looking for positions for the graduates of that college, then even at the college stage, and for graduates, you would be looking for people who would be in the industry but would be buying diamonds outside of and inside Canada, so that the limit would not be the size of the mines; the limit would be placed on the competitiveness of the enterprise. So that leaves it open.

[Translation]

Mr. Ghislain Fournier: I have one last question. We have been told that a new mine was operating quite near Yellowknife. If memory serves, nearly 400 million diamonds are being produced each year there. I am not clear on where these diamonds will be processed. Will it be here in Canada, or elsewhere?

Mr. Bruce Boyd: A very small percentage of the diamonds will be processed by Sirius, in the North West Territories, but the vast majority of the diamonds produced, even in the longer term, will be processed elsewhere, in Israel and India, and to some extent New York. Only the large stones will be processed in New York.

• 1220

Mr. Ghislain Fournier: Are you able to say, as I heard at a presentation last spring, that the best place in Canada for diamond processing to take place, from an economic standpoint, was near where the skilled workforce was located, that is, in Montreal? Is that your opinion or do you think it makes economic sense to send our diamonds, our raw resources, to be processed outside the country?

Mr. Bruce Boyd: The costs involved in shipping diamonds are very low. As a result, the difference in processing costs from one place to another lies far more in labour costs. Transportation costs for diamonds are minimal. There are many other factors that would determine whether Montreal, Vancouver or some other city in Canada had the best economic advantage.

The report contains some comparisons.

Mr. Ghislain Fournier: Do your plans include processing these diamonds here or are you concerned about that possibility? That is my last question, Mr. Chairman. Have you looked into this? Is it important to you that these diamonds be processed here? Do we have the capability? Do we have the potential to do this? Is it economically viable? Would it be a positive thing for us?

[English]

Mr. Bruce Boyd: For me personally, it would be important to have a competitive industry, whether it was dealing with diamonds or something else. I think there is a tremendous number of opportunities for a large number of minerals and metals, in addition to diamonds, in Canada. So I say yes, I would like to see it done here. I would like to see a lot of other things done too.

The Chairman: Thank you, Mr. Fournier and Mr. Boyd.

Mr. Duncan is next, and then I think we'll probably conclude with Mr. Keddy. He had a short question.

Mr. John Duncan: If you want to go with Mr. Keddy first, go ahead.

The Chairman: Okay.

You've been offered the chance to go ahead, Gerald.

Mr. Gerald Keddy: Thank you, sir.

Mr. John Duncan: You're welcome.

Mr. Gerald Keddy: Part of the argument for the whole value-added aspect of the diamond industry is the portability of the stones. I think most people around the table understand that it is guessed or estimated that roughly 40% of the stones on the world market are black-market stones that have been stolen from mines. That may be high, but it's an incredibly large number.

Obviously, the fewer hands they pass through, the less opportunity there is for that black market and the greater the potential to have a very secure or closed system. I think that's the best argument.

There's a big argument for security, and that's the best argument we can make to manufacture our stones here. It doesn't matter if you take a handful of stones, if they're in a briefcase and you fly to Antwerp or to Israel or to New York with them, you can take the polished stones just as easily. Whether we develop the timeframe to develop the technology and the expertise is probably the question. I wouldn't think there would be a question that we could do it.

I have one last question... I lost it. I have too many notes written down here.

The Chairman: That's okay, Gerald.

Mr. Gerald Keddy: You guys go ahead.

The Chairman: John, do you want to bat clean up, then?

Mr. Gerald Keddy: Yes, you clean up. Ask my question if you think of it.

Mr. John Duncan: We've had a little bit of fun this morning. That's kind of nice, actually.

• 1225

It seems to me our provincial and federal governments are really good at creating policy framework and regulatory environments and so on for resource industries. Then when we get to the next step, which is sort of our value-added industries, that's not what Canadians are used to doing. So the question we're kind of struggling with here I think would lead to some of the lines of questioning we've had.

We haven't really talked about synthetic diamonds that much here, although it's come up in your presentation. And it's obvious we're a user of synthetic diamonds and we have people actually purchasing synthetic diamonds to further add value. I guess that's an obvious area where government could do something. Most likely the federal government would have the best opportunity to try to pull something together. I gather there's really nothing concrete to point to at this point, unless you can tell me otherwise. That would be my first question.

My second question relates to this excise tax. The more I hear about the excise tax, the more complicated it sounds in terms of its being a complicated tax to keep track of and to impose. It's not only complicated for government, it's complicated for the people who have to pay the tax. It may indeed not have been that significant at the time it was put into place, but it may be a very counterproductive tax at this point. It may be something that's killing and stifling value-added opportunities in a rapidly expanding opportunity field.

I'll ask for your comment on that. But more specifically, I'm going to ask if this committee can receive a copy of the report your joint committee received from the jewellery industry on excise tax. I think you mentioned it.

Mr. Doug Paget: The Ernst & Young one? I'm pretty sure that's what it is. I'll be glad to make a copy and get it back over.

The Chairman: Do you have it in both languages?

Mr. Doug Paget: I'm going to say no; I think it's only in English. We can check. I apologize; I know mine is in English only. I can see if we can get a copy through Ernst & Young if it's possible. I wouldn't be surprised if it was available.

Mr. John Duncan: Is it a thick one?

Mr. Doug Paget: No it's not. It's quite thin, actually.

Mr. John Duncan: So we could translate it.

The Chairman: Well, what we can do is get the English, give you yours, get a translation, and give it to the other members interested in the French copy.

Mr. John Duncan: Right. The further request attached to that is the committee made a request to Revenue Canada for clarification. Could we get a copy of your request as well as a copy of the eventual response?

Mr. Doug Paget: I'm not sure, but I think the request came over as an e-mail from me.

Mr. John Duncan: Have you been answered?

Mr. Doug Paget: No, not yet. They opened my e-mail, I know that.

Mr. John Duncan: For our purposes, how long ago would the request have been made?

Mr. Doug Paget: It would have been about a month ago. The report, you'll notice, is dated September 1998, but it didn't come out until December or early in the new year. It was one or the other.

Mr. John Duncan: Well, we'd like a copy of the eventual response.

Mr. Doug Paget: Absolutely. They'll be sending it back over. I'm not sure if it's coming to me or to my ADM, but it'll be coming back over.

Mr. John Duncan: Great.

The Chairman: And I'm wondering if it would be helpful... I know on a couple of occasions the Jewellers Association made presentations to the finance committee in their prebudget process that outlined their perspective on that. Would that be of interest to you as well, John?

• 1230

Mr. John Duncan: Sure.

The Chairman: Richard, I know if we ask the clerk of the finance committee... It may not have been this last fall, but I have seen it in the last couple of falls. It would have a good summary of the jewellers' point of view on the tax.

Since there are no other questions, let me on behalf of everyone thank our witnesses.

Mr. John Duncan: They haven't answered my first question about synthetic diamonds.

The Chairman: You're on the ball. I was just testing you there, John.

Mr. Bruce Boyd: I'm not aware of any jurisdiction that's making a move to try to encourage synthetic diamond production in Canada. A major factor is electrical energy, which would fall under whichever province were involved. The other major raw material is graphite. There's graphite in Quebec and Ontario, and I'm not sure where else in the country. There are potentially suitable graphite deposits in a number of areas. As far as a program to encourage it is concerned, I would expect it might be provincially led because of the energy component.

Mr. John Duncan: Thank you very much.

Mr. Doug Paget: Mr. Chairman, one of the questions Mr. Cullen asked was about the cost of mining for these diamond mines. For the Ekati mine, it's going to cost between $22 U.S. and $26 U.S. a tonne. I'd forgotten it was in here.

The Chairman: It's in the Grey report?

Mr. Doug Paget: It's in the Grey report.

The Chairman: I will show him that. What page is it on?

Mr. Doug Paget: It's on page 8. I grabbed him as he went out and pointed it out to him.

The Chairman: He knows, okay. Thank you for doing that.

If I may, on behalf of all of us, I would like to thank our witnesses for appearing today. It's obviously a very interesting subject. I think we have got just below the surface. It's a new industry in Canada. And I wish for all of you that you have kimberlite pipes in your own ridings, the potential for diamond production.

With that, the committee is adjourned.