(Coloured gems – such as this rare 3.85 carat star ruby from londonde.com – are now very popular)
The coloured gemstone mining industry is going through a revolution, shifting irreversibly away from artisanal mining towards large scale mechanised production. This is being propelled by the increasing participation of larger mining entities and the enhanced formalisation of the industry. This has the effect of increasing the throughput of the distribution channel of coloured gemstones. A desirable by-product of this process will be greater transparency in the coloured gem industry over time, as both shareholder scrutiny and that from legislators and regulators tightens. As the International Coloured Gemstone Association former Vice President and industry insider Jean Claude Michelou recently asserted, there is likely to be “strong growth” in coloured gem production in Brazil, Russia, India, China and elsewhere in the near term. Coloured gems, akin to the broader jewellery market, show most growth around the ‘poles’ as the high and low ends of the gem value chain boom and leave the middle on a relatively flat trajectory. This view was articulated most recently by the GIA senior industry commentator Russell Shor, who has estimated global coloured gemstone sales revenues for 2017 in the range of $18-21 billion, including jewellery and mountings. The coloured gem market share comprises 1/3 ruby and 1/4 emerald and sapphire. Burmese ruby and Colombian emeralds are by far the strongest individual provenance performing stones.
(East Africa is now a rising star in coloured gem production, with rapidly improving technology)
Michelou drew particular attention to the changing face of the legal framework within which the Colombian emerald sector operates in recent years. The emphasis in Colombia has now pivoted toward attracting much needed foreign investment into the ageing infrastructure of the emerald mines in the region. Necessarily this involves setting standards and improving the ethics of what used to be a highly exploitative sector but one that has truly turned a corner in the past 5-10 years and cleaned up its act. Michelou also notes that new emerald and opal deposits are coming on stream in Ethiopia and potentially in Madagascar in the near future. Nigeria is also a little known gem producer with future potential in terms of the exploitation of significant reserves of pegmatite, tourmaline, rubelite and indicolite. Here attempts are also being made to develop the traditional artisanal practices into more organised, mechanised production. Of particular note are the sapphire deposits of Taraba state, due to enter commercial production this year under the auspices of a larger Nigerian owned and run company. According to Michelou “this is seen as a significant new source of sapphires in Africa.” The lifting of sanctions relating to the export of rubies from Myanmar (Burma) in September 2016 has also raised the prospect of sizeable increases in the availability of the much prized Mogok ruby.
(Gemfields Kagem mine in Zambia is now one of the world leaders in ruby production)
Michelou has previously stated that the global gem industry was “fragmented, opaque and unregulated.” However, he does recognise the fact that things are changing fast! New regulation is coming in, the availability of information in the internet age is expanding exponentially and larger, better financed international players are entering the market place for the first time. Gemfields are one of the leading high-end players in the new, sophisticated coloured gem market that is starting to emerge. Gemfields are the ‘De Beers’ of coloured gemstone production and as such they are seeking to raise the entire market, particularly in terms of emeralds and rubies. During the last half of 2016 Gemfields’ highly successful Kagem mine in Zambia produced over 10 million carats of rough emerald and beryl and they are in the process of significantly upgrading the wash plant at their Motepuez ruby mine in Mozambique to keep pace with growing global demand. At Montepuez almost 6 million carats of ruby and corundum were won in the latter half of 2016 as a direct result of the increasing investment and wider interest in coloured gem production. Gemfields have raised over $700 million in revenue since their first coloured gem auction in 2008, making them the first truly large international player in this arena and the omens are that more corporate entrants will join the party in the near future.
(Emerald production in the highly prized Muzo mines of Colombia remains buoyant)
Gemfields set the record for the highest-ever auction revenue in Singapore in June 2016, when they achieved 95% sales of their higher, medium and commercial stones from Montepuez for $44 million. It has been widely reported that part of the reason for the successes achieved by Gemfields relates to their consistent and “widely acclaimed” proprietary rough grading system and stock inventory control, resulting in reliable and quality transparent stones entering the market a rate that ensures the sustainability of their price. Allied to this, Gemfields have invested vast sums advertising and marketing coloured gems, helping to raise the value of the entire market sector in which they operate. Iain Harebottle, Gemfields’ CEO, asserts: “as consumers understand more about the origin and history of coloured gemstones, appreciation of them increases” and this in turn is leading to their rising popularity as engagement ring choices. Some industry insiders have referred to Gemfields as a ‘mining company that markets,’ and this focus upon a ‘mine-to-market’ approach right along the entire length of the supply chain is key to the profitable future of coloured gem production.
(Fabergé made their name with beautiful ‘eggs’ for the Russian Tsar & his family in the 19th Century)
This approach was aided by Gemfields’ acquisition of luxury jewellery house Fabergé in 2009, long renowned for showcasing coloured gemstones. Fabergé has seen a 53% increase in transactions at the same time as their price per piece has risen by 30% and they have launched their #SayYesInColour campaign to promote coloured gemstone engagement rings. Recent high jewellery coloured gemstone collections include: Pomellato’s Pom Pom jewels; Piaget’s Sunny Side of Life collection; Cactus de Cartier; and the new Bulgari, Louis Vuitton Chaumet and Chopard collections. As Iain Harebottle recently concluded: “the clear shift in consumer trends and the increased urgency with which so many of the world’s leading luxury brands are beginning to embrace coloured gemstones remain extremely encouraging and provide for a continued long-term positive outlook for the sector.”
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