In recent years, Canada has become the exciting new frontier in the search for diamonds — and in fact it’s produced what may be the oldest diamonds in the world. The Slave Craton rock formation, in Canada’s Northwest Territories, has yielded diamonds that are demonstrably 3.5 million years old. It comes as no surprise, then, that in modern times, diamonds giant De Beers Group has taken an interest in various diamond producing facilities flying the Maple Leaf flag, pouring millions of dollars into projects all over that nation. In late September, however, De Beers announced its plans to withdraw from a northern Saskatchewan diamond project, leaving the way clear for a competitor to take its place.

According to De Beers, it will soon be selling its 42 percent stake in the Fort a la Corne joint venture near the town of Prince Albert, joining two of its partners, Cameco Corp. and UEM, Inc., in relinquishing its shares to a fourth partner, Shore Gold, Inc. The De Beers stock, valued at some $180 million Canadian, will be purchased by a subsidiary of Shore Gold called Kensington Resources. In total, the takeover of the project will cost Shore Gold approximately $270 million, though it expects to recoup some of its costs by selling $170 million worth of shares (some 40 percent) to Newmont Mining, a subsidiary of Denver’s Newmont Gold and a significant stakeholder in Shore Gold. Shore intends to develop the Fort a la Corne project in conjunction with its wholy-owned Star Diamond project nearby.

De Beers’ decision was stimulated more by legal necessity than lack of interest in Saskatchewan diamonds. As of 2005, after the merger of Shore Gold and Kensington, De Beers and Shore Gold each held 42% of the joint venture stock. Shore Gold gained the upper hand over De Beers in October 2005, when it purchased the voting rights of Cameco and UEM for the next seven years, forcing De Beers into de facto minority status. After legal wrangling earlier this year over which firm would control the Fort a la Corne diamond operation, De Beers was shut out when the Canadian courts dismissed its claim that the deal was UEM and Cameco was invalid. This paved the way for the Shore Gold buy-out. In the wake of its court loss, De Beers plans to focus its energies on its operations elsewhere in Canada.

Ironically, there are no diamond mines in operation, as yet, anywhere in Saskatchewan; however, industy insiders believe that Fort a la Corne will start producing first, so the takeover bid could prove to be a brilliant move for Shore Gold. However, the same experts also point out that it will be years before the millions poured into the ground at Fort a la Corne actually start getting paid back in diamonds.

To De Beers, which controls 60 percent of the world’s diamond market, the Fort a la Corne loss is likely small potatoes — at least on its face. However, it was also struck a severe blow in February, when the European Union’s European Trade Commission ordered it to stop trading with the Russian diamond monopoly Alrosa, in a move intended to open up that diamond market to competition. If these two decisions represent the shape of things to come, then De Beers may be facing a steady erosion of its diamond market-share as the century progresses.