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UPDATE AT 2026-02-11: Mountain Province Diamonds Inc. and its partner, De Beers Canada Inc., have suspended the Tuzo Phase 3 project at the Gahcho Kue diamond mine. This decision raises concerns in the Northwest Territories (N.W.T.), where the mine is a pivotal part of the local economy. Located roughly 300 kilometers northeast of Yellowknife, Gahcho Kue has historically supported the region’s financial stability. The pause in expansion efforts highlights growing worries about dependence on the diamond sector.
Mountain Province Diamonds owns a 49% share in the mine, while De Beers holds the remaining 51%. The companies announced the suspension following a comprehensive assessment of the project’s economic viability, citing a shift in market conditions.
Market pressures influencing the diamond industry
Recent trends regarding lab-grown diamonds have notably impacted the pricing of natural diamonds, causing a significant drop in their market value. This decline presents challenges for mining operations, particularly in the N.W.T., where diamonds contribute about one-fifth of the region’s gross domestic product (GDP).
Along with the rise of synthetic diamonds, external factors, such as U.S. tariffs on India—an important player in diamond processing—have complicated the mining landscape. N.W.T. Industry Minister Caitlin Cleveland expressed concern, stating that while immediate effects may be limited, the situation underscores the urgent need for economic diversification in the territory.
The impact of dependency on a single commodity
Minister Cleveland articulated a critical challenge: the N.W.T.’s economy is too reliant on diamonds. While the diamond industry has been a strong pillar for the region, the ongoing decline in natural diamond prices emphasizes the need for a more diversified economic base. Cleveland stressed the importance of pursuing varied projects across different sectors to protect communities and workers from fluctuations in the diamond market.
She stated, “The diamond industry has long supported the N.W.T. economy; however, the persistent downturn in prices makes it clear that we cannot continue to rely solely on this sector.” This viewpoint reflects a growing consensus among territorial leaders about the necessity of exploring new economic opportunities.
Future directions for the Northwest Territories
In response to these challenges, the N.W.T. government is exploring critical minerals as a potential avenue for economic growth. This approach may focus on developing smaller mining operations, moving away from the dependence on a few large diamond mines that have dominated the area.
Despite this recent setback, the Gahcho Kue mine was expected to operate until 2031; however, Mountain Province has not provided an updated closure timeline following the pause. Simultaneously, the Diavik mine, another significant entity in the region, is set to close next month, further highlighting the fragile state of the local mining sector.
Broader implications for the regional economy
As the mining sector navigates these transitions, the N.W.T. government forecasts a 3.2% decline in real GDP for 2026, building on past downturns. This anticipated contraction largely results from reduced investment and export levels due to lower diamond production and the upcoming cessation of oil extraction at the Norman Wells oilfield.
In her recent budget address, Finance Minister Caroline Wawzonek emphasized the urgent need for improved infrastructure in the territory, which has historically hampered efficient development and increased costs for essential services. She remarked, “The sporadic nature of our development leads to protectionist attitudes as we cling to the limited opportunities available.” This environment stifles innovation and prevents the region from reaching its full potential.
Mountain Province Diamonds owns a 49% share in the mine, while De Beers holds the remaining 51%. The companies announced the suspension following a comprehensive assessment of the project’s economic viability, citing a shift in market conditions.0