N.W.T. government announces tax break, funding for ailing diamond mines

The Northwest Territories government has announced several new policies aimed at propping up the territory's diamond mines.

The targeted measures are aimed to provide financial relief to diamond mines while low diamond prices, supply chain disruptions and potential U.S. tariffs wreak havoc on the industry.

Mining is the largest private-sector contributor to the N.W.T.'s economy, with the N.W.T. government saying its three operating diamond mines collectively account for about 20 per cent of the territory's GDP. All three N.W.T. diamond mines reported losses in 2024, and mining companies called for government support earlier this month

The measures include a temporary reduction in property taxes paid by N.W.T. mines to the territorial government — which should save the mines $11.2 million collectively — and allowing the Ekati and Gahcho Kue diamond mines to use around $4 million from a fund previously set aside for green projects to reduce mine emissions for general operations. They also include doubling the number of local diamond valuations this fiscal year so diamonds can get to market more quickly.

Finance Minister Caroline Wawzonek said Tuesday morning market instability has led to lower diamond prices in the past few years, which in turn has meant less income for mine companies.

"Given the state of the world economy and uncertainties, we certainly felt that there was an opportunity for us to step in," she said.

Diamonds mined in the territory must first be evaluated by government officials, before they can be sold on the world market, Wawzonek explained. By doubling the territory's capacity for valuation, the mines will be able to get their product out for sale sooner, she said.

"[The mines] can actually go out and hopefully solve their own problems by getting their product out to market," she said.

The government is also lowering property taxes to be equivalent to the highest rate for a residential customer who gets the same services, Wawzonek said.

"These measures respond directly to urgent economic concerns raised by industry leaders and
Indigenous development corporations," the N.W.T. government wrote in a news release announcing the policies.

"Without action, there is a clear risk of disruption to northern jobs, contracting opportunities, and the economic stability of communities that rely on the sector."

'Uncertainty doesn't do well for diamonds'

Wawzonek said the mines wrote a letter to ministers about the industry's recent challenges, and the government heard from some development corporations that depend on the mines as well.

She said they proposed versions of the policies the government just announced.

The measures announced Tuesday will be in place for a year.

She acknowledged the tax break will cost the government a lot of revenue.

"It's a lot, but the reality is ... you've got over 1,000 northerners currently employed directly at the mines, not to mention however many hundreds or probably thousands more in the supportive industries," she said.

"We know that the economy right now is in a pretty tough spot. The world economy is very uncertain. Uncertainty doesn't do well for diamonds."

She said the mines didn't talk to ministers about the possibility of laying off people or closing early.

As for whether the parent companies of the mines can afford to weather an economic downturn, Wawzonek said in reality, if an asset isn't performing well, there's no economic or commercial reason to keep it.

Wawzonek said the territory is attempting to ward off an economic shock.

"If there were to come to a point where there was job losses... the impact to our overall revenues will be far more significant and then that takes away our ability to fund different priorities," she said.