Canada has arrived in the diamond industry in a big way—and it’s about to get bigger.

Its first mine, Ekati, accounts for 6% of world production by value. In February comes a second mine, the equally big Diavik. Snap Lake, De Beers’ horse in this race, is scheduled to come on stream in 2006. With that, Canada’s share of the market could top 15%, making it a serious rival to South Africa for the title of world’s third-largest diamond producer, behind Botswana and Russia.

And that may be just the beginning. These mines are in the Northwest Territories, but there’s exploration in every Canadian province and promising kimberlites all over the country. The Great White North may have more diamonds than anyone ever dreamed. Crowed one Canadian trade publication: “Nothing short of an empire is under way.”

Big players. These big finds have attracted big players. De Beers now spends 40% of its exploration budget in Canada. Noted retailer Tiffany has a deal to buy $50 million worth of diamonds a year from Aber Resources—junior partner in Diavik—and is setting up a $3 million factory in Yellowknife, the Territories’ capital. Diamond giant Rosy Blue is negotiating to buy Arslanian Cutting Works, which has its own factory in Yellowknife.

The country’s diamond infrastructure is growing as well. There are already three factories in the Territories (Tiffany’s will be the fourth), two trade publications, and the beginnings of an association, the Canadian Diamond Council. The Northwest Territories has the lowest unemployment rate of any province in Canada, and its economy is growing eight times faster than the country’s as a whole.

Give ’em a brand. For American jewelers, the most interesting part of the Canadian story is the attempt to market Canadian stones as a brand. In a sign of how branding fever has swept this industry, there are six Canadian brands on the market already, and the opening of Diavik may spawn more.

These brands are offered by a range of organizations, including the Ekati mine—the first mine to market wholesale—and U.S. retailer Ben Bridge, which has a private-label Canadian brand, Ikume (a Native American word for “light”). The only players not marketing a Canadian brand, it seems, are Tiffany and De Beers, both of which claim they’re not interested.

These brands are trying something unprecedented—selling a diamond on the basis of its origin. The marketers think Canada will have a special appeal—and not just for Canadians.

First, there’s the mystique of the wilderness. “We want people to see these diamonds as pure and beautiful as the Arctic itself,” says Larry Wadell, president of Ben-Dor, which markets “Tundra Diamonds.” The brands have names like “Canadian Arctic” and “Glacier Fire” and are inscribed with symbols calculated to evoke Canada, such as maple leaves and polar bears.

Then there are the close ties between America and Canada. “In this political climate, people like the idea of something coming from this area,” says Oren Sofer of Beny Sofer and Sons, which markets the “Canadia” brand. “It keeps it ‘in the family.’ “

Finally, there’s the conflict diamond factor. Canadian diamonds are among the few that, prior to implementation of the Kimberley Process, can be certified “conflict free.” Some retailers even keep Canadian stones on hand in case the topic is broached.

But while the companies marketing Canadian diamonds happily mention the “conflict” issue when asked—and sometimes even when they’re not—they don’t want to promote that feature to consumers. One reason is that the topic is dying down. “When the Kimberley Process comes on stream next year, the issue of conflict diamonds should be over,” says Martin Irving, director of diamond projects for the government of the Northwest Territories, which has a diamond certification program. “It doesn’t make sense to tie your marketing to an issue that will disappear.”

Moreover, no one wants to give the potentially damaging subject more publicity. “Everybody’s handling the conflict issue with kid gloves,” Sofer says. “Retailers aren’t interested in any kind of ad or text that says ‘conflict diamonds.’ They don’t want to create a problem where none exists.” Most references to it are vague; Canadia, for instance, says its stones are “mined and cut under socially conscious and environmentally sensitive conditions.”

Canadian stones may also provide protection on another thorny issue. The NWT certificates guarantee the stones are natural and untreated. “These stones are being tracked like no stone in history,” says Stephen Ben-Oliel of Sirius Diamonds, which markets the “polar bear” stones.

So far, the initial response to Canadian diamonds has been encouraging. Steve Davolt, vice president of marketing for Ben Bridge, says the “Ikume” stones are selling not only in border states like Washington and Michigan but also in farther-flung places like Texas and Arizona, closer culturally to Mexico. “Canada is an interesting hook for consumers,” he says. “It’s just a great story to tell.”

And the Canadian story is just beginning. Canada is clearly becoming a major player, but could the country one day dominate the market? “From what I’ve seen, Botswana and Russia will always be the leading producers,” says Richard Molyneux, president of De Beers Canada. “But the world of geology is always full of surprises.”