'I think this mine is over' - little hope for Stornoway's 500 workers

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The Stornoway diamond mine, which closed suddenly on Friday, is highly unlikely to be able to reopen, Economy Minister Pierre Fitzgibbon said.

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“I think this mine is finished,” said Mr. Fitzgibbon during a press conference held in Candiac.

About 425 workers at the Renard mine, located 250 kilometers north of the Cree community of Mistissini, were abruptly dismissed. They learned the sad news on Friday morning from Stornoway chief executive Patrick Sévigny, the company said diary.

With more than $300 million in debt, Stornoway sought refuge from its creditors, just four years after it first filed for bankruptcy in the fall of 2019.

“Employees will be relocated, it’s very sad,” commented Mr. Fitzgibbon.

“The growing uncertainty (about) the price of diamonds in the short and medium term, as well as the significant and sudden drop in the price of the resource in the world market, caused in part by the cessation of the import of rough diamonds in India and the global geopolitical climate have had significant impacts on Stornoway’s long-term financial position, the company said in a statement.

“When we mine (diamonds) and export them in the rough, we are vulnerable to convenience pricing,” noted Pierre Fitzgibbon. That’s what happened with Stornoway.”

Around 75 Stornoway employees will remain on duty to monitor and maintain the mine, to facilitate a possible return to service.

High bill for Quebecers

The government held a 35% stake in Stornoway along with Montreal company Royalties Auriferes Osisko (35%), Caisse de dépôt et placement du Québec (15%) and Toronto firm Triple Flag (15%).

“The Caisse has supported Stornoway from the beginning and has supported the company through the various challenges of recent years. Given the current reality of the diamond market, the company has taken the necessary decisions”, said Kate Monfette, spokeswoman for the institution.

Quebec, the Caisse and the Fonds de solidarité FTQ have invested at least $800 million in Stornoway since 2014, including $400 million for the construction of the road leading to the Renard mine (see table).

In the first six months of 2023, Stornoway sold 938,000 carats at an average price of $148 per carat, bringing in nearly $140 million in revenue, according to Osisko’s public filings.

The largest diamond mines in the world produce several million carats per year, which allows them to have more advantageous production costs.

At the Renard Mine, few people have the right to handle diamonds. Here, a diamond that was worth $80,000 a few years ago.

Photo Francis Halin

An omen for the battery industry?

We should not expect Quebec’s investments in the lithium sector to follow the same trajectory as those made in Stornoway, argued Minister Fitzgibbon.

“Our strategy (…) to take our critical minerals and (transform them) in Quebec is very solid,” he said.

“With lithium, this will not happen, this (the insolvency of a mine), he added. (…) The lithium that we will extract in Quebec will reach the (battery) cells. I think we cannot have a better strategy.”

The government invested about $275 million in Nemaska Lithium and $20 million in Lithium America du Nord (Sayona). He asked the two companies to commit to processing the raw material in Quebec, but there is currently no factory in operation.