Prestige jeweler Tiffany & Co. [TIF] moved mountains to stop a small underground silver-copper mine in western Montana. Yet it remains willing to rearrange a whole lake in Canada’s Northwest Territories just to grab trinket-grade diamonds.

Earlier this year Tiffany Chairman and CEO, Michael J. Kowalski, took out a full-page ad in the Washington Post scolding U.S. Forest Service Chief Dale Bosworth for signing off on the proposed Rock Creek silver-copper mine in northwestern Montana near the town of Libby. Revett Silver wants to burrow beneath the Cabinet Mountain Wilderness area.

Kowalski used the advertisement to make a spurious link between Rock Creek and the 1872 Mining Law. He infers that Rock Creek is a “particularly egregious example” of antiquated rules and a “perverse incentive for mining in wilderness areas, near scenic watersheds, around important cold water fisheries and in other fragile ecosystems – all of which are inappropriate for mineral development.” The Rock Creek claims are all patented, and the mechanisms of gaining access to public land under the 1872 law have been shut down since the mid 1990s.

Kowalski and Tiffany’s drew the expected plaudits from environmental special interest groups. Earthworks (formerly the Mo Udall-founded Mineral Policy Center), which has been partly funded by Tiffany’s, dashed out a fawning press release simultaneous with Tiffany’s ad, “applaud(ing)” Kowalski for the “leadership, vision and business sensibility of Tiffany & Co. on this issue.” Earthworks President, Stephen D’Esposito, noted additionally “that there are some special places that should never be mined.”

At least 16 other green NGOs – in short, everyone but PETA and ELF – swiftly boarded the Tiffany tribute train.

Mike the ripper

While Kowalski and many of his green patrons were ripping the American mining industry, Tiffany’s was ripping open Lac de Gras in the Canadian north. And it wasn’t with mere ink and newsprint, but 11 Komatsu 218-tonne haul trucks, 2 Hitachi EX-3600 35-tonne excavators, 1 LeTourneau 35-tonne front-end loader, and 4 Komatsu 90-tonne HD785 haul trucks, scooping up 2-mil tonnes/year of lakebed to get at 8-million carats/year of jewelry-grade diamonds-in-the-rough.

Tiffany’s is a joint venture partner with Rio Tinto [RTP] and Aber Diamonds in the Diavik Diamond Mine and has a contract to buy $50 million worth of diamonds-in-the-rough every year through 2013.

The mine is powered by 5 Cat diesels each generating 4.4 megawatts/hr of electricity and supplied by 18 million liter diesel storage tanks. Supplies are brought to the mine on a newly-constructed runway by Lockheed C-130 Hercules and Boeing 737 transports, or hauled to the site over a 350-km ice road that terminates in virgin wilderness 210-km south of the Artic Circle.

Tiffany’s Executive Vice President and Chief Financial Officer, James N. Fernandez, sits on Aber’s board of directors – and for good reason: Tiffany’s owns a 14.9% equity interest in Aber, which it happily paid C$104 million ($72m) for in 1999. Enthused mine-basher Kowalski in a Tiffany press release covering the deal: “We are excited about this unique sourcing opportunity, which is consistent with our vertical integration strategy. Diamond jewelry represents our largest product category, and ongoing growth will require us to secure an increasing quantity of the highest-quality diamonds. This agreement with Aber is intended to ensure Tiffany a steady supply of diamonds at competitive prices.”

The arctic mining deal with Aber grew lucrative for Tiffany’s even before Diavik went into production last year. When Aber sold its interest in the Snap Lake project to De Beers in early 2001, the New York jeweler benefited to the tune of $5.3 mil via its Aber holdings.

Apparently, for Kowalski and cohorts, one man’s pristine wilderness is another’s cash flow.

Some of the diamonds his company will buy are inconveniently located beneath Lac de Gras’ waters. In order to access them and place them on the fingers and necks of the well to do, Diavik is building circular dikes in the lake around the outcrops. The first of the dikes is 3.9-km long and stands 10 metres above the lake level, reaching 28 meters down to the lakebed. More dikes will follow. Once the diked-up areas of Lake de Gras are pumped dry, open-pit mining will ensue, followed by underground mining where resources are conducive. When the mining is done the dikes will be breached and the fish will be allowed back in.

Has the environmentalist movement made camp with profiteers bent on tearing up the tundra just to weigh down the budgets and fingers of newly-weds? The gem-grade diamonds of the Canadian far north won’t be of any industrial use, notes diamond merchant Danny Clark of Coeur d’Alene, Idaho: “These rough diamonds are beautiful but they are useless in any industrial application that might further the cause of the Third World.”

Not today, thank you

Neither Kowalski nor Tiffany’s press office returned repeated telephone calls this week for comment on this juxtaposition of resource ideology. However, several environmental pressure group representatives who are signatories to the April letter to Kowalski, did, to a man (and woman) express confusion or ignorance of Tiffany’s new diamond source.

“Unfortunately we’re not dealing with anything like that,” said a Greenpeace USA spokeswoman reached at that organisation’s Washington, D.C. headquarters. Gerry (“We don’t give our last names for security purposes”), who answered the phone at that office. “We’re just not working on the mining situation.” Greenpeace’s USA president, John Passacantando (no security for him), “is on holiday for the rest of the month and is not reachable,” “Gerry” said.

Greenpeace Canada conveniently has no dog in the Northwest Territories diamond mining fight either.

“It’s just not something that we’re aware of,” said Andrew Male, Greenpeace Canada’s communications coordinator in Toronto. “In Canada we’re focused on energy and forestry.” However, he offered, “We just did some work with our Chilean office because Noranda is mining there, and Noranda is a Canadian company. If it’s(Diavik) an American interest it would be an American issue.” What an odd way to frame national interest.

Ditto signatory Sierra Club’s national headquarters in San Francisco. “We just don’t have a position per se on diamond mining,” explained media coordinator Christina Kreitzer. So now it’s the type of mining that’s an issue, not the mining itself.

Earthworks, which trumpeted Kowalski’s assault on Rock Creek, was equally befuddled.

“I was not aware of that. We don’t have a position on that,” said Earthworks’ research director, Alan Septoff, of the Tiffany’s venture. His boss, Earthworks President, Stephen D’Esposito, also is on vacation, Septoff said. However, he added half-comfortingly: “Earthworks doesn’t oppose mining, or open-pit mining, in general. Asked what sort of mining ventures Earthworks would support, Septoff said there were none. “There is no mining operation that we endorse as currently operated. We are working with various stakeholders at a variety of levels to improve the mining industry’s behaviour, but as for right now there’s no particular site that we endorse.”

That doesn’t stop Earthworks from taking money indirectly from mining operations it doesn’t endorse.

RSVP Cabinet Mountain

Francis Duval, the president of Revett Silver Co., is bemused by the Tiffany-Green romance, and by the subtle connections to his own company Kowalski is probably unaware of.

After Tiffany blind-sided Duval with the Washington Post advertisement back in March, Duval tried to call Kowalski to invite him to see the Rock Creek site first-hand. So did the Forest Service.

“I wrote him, and asked that he understand the facts before he rendered an opinion about us. We asked him to come tour the minesite. He never responded. A person should know something about a thing before they criticize it,” Duval said. “They should see how we live here. You should know what you’re talking about.”

Duval is loath to criticize his Tiffany detractor. “Rio Tinto is a hell of a good operator. If they comply with their permits, as we intend to do down here, it will be a good operation.”

“Hey, I guess if you want to drain a lake and mine the diamonds and do the necessary reclamation when you’re done and you get the permits, really, does it hurt the environment?”

With the last Bonnie Raitt, the last Jackson Browne, anti-mining concerts done, Duval reckons he will re-open the Troy Mine – part of the Rock Creek complex – next month, on 16th September, preparatory to mining the Rock Creek deposit proper. Output will reach a dozen million ounces of silver per year, for the next two decades – the approximate life of the Tiffany mine in Canada.

Which will be a good thing for Tiffany’s partners in Canada’s Far North. As it turns out, Tiffany pal Rio Tinto, through its American subsidiary Kennecott, owns 5% of Revett Silver. Read more here.


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