Canada's Oldest Diamond Mine, Ekati, Files for Insolvency Protection Amid Price Collapse and Rising Costs

The Ekati Diamond Mine, Canada's first and oldest diamond mine, is facing an uncertain future as its owner, Burgundy Diamond Mines Ltd., has filed for insolvency protection. The subsidiary operating the mine, Arctic Canadian Diamond Company Ltd., sought and was granted protection under Canada's Companies’ Creditors Arrangement Act (CCAA). This move comes as the mine grapples with a significant drop in diamond prices, exacerbated by competition from lab-grown diamonds, reduced demand from China, and the impact of U.S. tariffs.

Financial Strain and Market Pressures

Burgundy Diamond Mines stated that the CCAA process is intended to financially and operationally restructure Arctic Canadian Diamond Company amidst challenging geopolitical, economic, and industry conditions. Despite these difficulties, day-to-day operations at Ekati are expected to continue without disruption.

According to an affidavit filed by Brent Mierau, corporate secretary and head of finance for Burgundy and Arctic Canadian, the average price per carat for an Ekati diamond has plummeted dramatically. At the end of 2024, the price was $92 per carat. By December 2025, following the imposition of U.S. tariffs, this figure had fallen to $24 per carat, with the mine's last two sales averaging $27 per carat. This represents a staggering 74 percent price decline in under 12 months, rendering extraction commercially unviable. Revenue from Ekati sales dropped from over $600 million in 2024 to approximately $253 million in 2025, contributing to Burgundy's net loss of US$86.8 million in 2025.

Mierau's affidavit identified three converging factors contributing to the crisis:

• The rapid growth and increased affordability of lab-grown diamonds, which captured nearly half of the U.S. engagement ring market by 2024.
• A significant withdrawal of Chinese consumers from the natural diamond market.
• U.S. tariffs on Indian exports, which disrupted the critical diamond cutting and polishing supply chain based in India.

The conflict in the Middle East has also contributed to the mine's troubles by further depressing diamond prices and increasing fuel costs.

A History of Ownership and Restructuring

Ekati, which opened in 1998, has a history of changing ownership and previous financial struggles. Originally owned by BHP Billiton, it was sold to Dominion Diamond Corp. in 2013. Dominion itself filed for insolvency protection in 2020 during the early stages of the pandemic. The mine was subsequently sold to a consortium of wealth management firms that formed Arctic Canadian Diamond Co. Ltd. In 2023, Burgundy Diamond acquired Arctic Canadian Diamond Co. for $136 million, marking the fourth time the mine has changed operators and the second time it has entered insolvency protection.

Impact on Communities and the N.W.T. Economy

The financial distress of the Ekati mine has significant implications for the surrounding Indigenous communities and the economy of the Northwest Territories (N.W.T.). Under impact benefit agreements, Arctic Canadian owes these communities millions of dollars in annual payments. By the end of 2025, the mine was in arrears by approximately C$5 million for 2025 payments and an additional C$3.2 million for 2026, with total outstanding obligations nearing C$45 million.

The N.W.T. diamond industry, which at its peak contributed about a quarter of the territory's GDP and employed thousands, is in decline. Rio Tinto's Diavik mine ceased production in March 2026, and De Beers' Gahcho Kue mine is expected to close in the coming years. The potential early closure of Ekati could mean the end of a significant era for the region's economy, which has long relied on mining for employment and economic infrastructure.

N.W.T. Industry Minister Caitlin Cleveland stated that the government is monitoring the court proceedings and advocating for northern workers and communities, prioritizing people and directing residents to support programs. Federal MP Rebecca Alty also expressed concern for mine employees.

Future Prospects and Uncertainties

Burgundy Diamond Mines maintains its belief in the long-term viability of the Ekati Diamond Mine, citing significant undeveloped resources, including the large Jay kimberlite pipe, which could potentially allow operations to continue until 2040. The company is seeking to restructure financially and operationally, with bids for the mine expected by September 25, 2026. The court has approved additional interim financing, and protection has been extended until July 28.

However, the path forward remains uncertain. The company faces substantial liabilities, including the reclamation liability estimated at C$428 million, for which current security instruments appear to be approximately C$100 million short. The question remains whether a buyer will emerge willing to take on the mine's financial burdens and navigate the evolving diamond market landscape.