Sponsors of the project have already submitted an environmental report to the Canadian government and consultations are on with the regulators, environment groups as also with the communities concerned.

Meanwhile, by the end of 1998 the Diavik project has established the following resources in four of the pipes under development, with encouraging grades.

The Diavik project which represents Canada's second diamond mine, is located some 30 miles east to EKATI, the first diamond mine in that country. Howver it will have a greater potential compared with the latter. According to independent analysts the Diavik mine may be able to produce 5 to 6 million carats of diamonds annually, whereas Ekati's potential is currently placed at 3.5 to 4.00 million carats perannum.

Meanwhile, the Ekati mine which was commissioned in October last by BHP Diamonds Inc and Diamet Minerals has already produced one million carats of diamonds by the end of April 1999. The quality of its diamonds is said to be very good.

The Ekati mine appointed some time back Antwerp - based IDH Diamonds for the sale of its diamonds directly in the open market. CSO had shown interest in the marketing of these diamonds, but it reportedly insisted that it would like to have all or nothing. But BHP, the giant Australian mining company which has 51 per cent stake in the Canadian mine had its own problems.

It has substantial business in copper, coal and other minerals in the USA. BHP could not jeopardise that business, by attracting the attention of the US Anti-trust authorities by trying to sell large quantities of these diamonds through the CSO. It has recently agreed to sell 35 per cent of the Ekati output to the CSO while the balance is being sold directly by it through IDH Diamonds inAntwerp.

Referring to this arrangement Nicky Oppenheimer, chairman of De Bears says: " De Beers has signed a three-year agreement in principle with BHP, to purchase 35 per cent of the run-of-mine production from the Ekati mine in Canada's Northwest Territories. The agreement which is expected to be in operation during 1999 recognises De Beers' central role and experience in the industry". The Ekati mine which has invested $700 million on this project has already started making direct sales of its high quality diamonds to some select private sales in Antwerp.

There are reports that it is planning to effect regular sales at an intervals of every five weeks to strong select firms. James R Rothwell, president of BHP Diamonds has said that "there is clearly a strong interest in a steady long-term supply of quality rough diamonds from a reliable producers". At one stage there were doubts whether the sponsors of the Eakati mining project would at all succeed in mining diamonds in climatically the most hostileregion.