‘Diamonds may have dominated the global gemstone market for many years, but we believe coloured gemstones will be the key growth area in this space over the next decade.’ Alison Turner, Edison mining analyst
How large is the gemstone market?
Coloured gemstones do not support trade on the same scale as diamonds, with US$16bn in rough diamonds produced yearly worldwide versus US$2–3bn in rough gemstones, excluding jade.
That is not to say diamonds are more expensive than coloured gemstones. In fact, contrary to common belief, data from Sotheby’s and Christie’s auctions show that per-carat prices for emeralds and rubies can exceed white diamond prices. In fact, a good deal of the diamond’s success can be traced back to De Beers’ seminal marketing campaign that resurrected the company’s fortunes after the Great Depression along with its diamond monopoly.
By comparison, small-scale artisanal mining makes up roughly 70–80% of coloured gemstone production. The fragmented market leaves few big companies to champion and actively market coloured gemstones, as De Beers did for diamonds.
The artisanal nature of the market also deters designers from using coloured gemstones in their ranges, fearing inconsistencies in supply common to small mines. That said, coloured gems are still a significant industry that is being increasingly marketed by larger companies such as Gemfields.
What are coloured gemstones?
Like all gemstones, coloured gems are minerals prized for their beauty and rarity, often in crystalline structures and sometimes organic in origin, such as amber and jet. In many coloured gems, the brilliant hue, which makes them sought after, is the result of impurities. For example, rubies and sapphires are derived from the same mineral, corundum.
In rubies traces of chromium absorb yellow-green light, giving them a red hue. In sapphires traces of vanadium tint them blue, whereas traces of iron create yellowish-green colours. Sapphires tinted any other colour than blue are called ‘fancy sapphires’. Finally, emeralds are a beryllium aluminium silicate mix that is colourless when pure, but chromium or vanadium lead them to reflect green light.
Where are coloured gemstones produced?
The breadth of stones in the coloured gemstone market, from the fluorite, spectrolite and labradorite extracted in the UK, Spain and Finland to Russia’s garnets and Madagascar’s tanzanite, makes a detailed account of all the different extractors time consuming. In general terms, however, coloured gemstones are extracted in large quantities in Asia, South America and Africa.
Narrowing our scope to semi-precious stones, Colombia, Brazil and Zambia produce most of the world’s emeralds. Historically, Colombia has been the undisputed leader in emerald production and still produces around 50% of the world’s emeralds. But Zambia has recently become an increasingly crucial producer, breaching the market with emeralds prized for their bluish-green colour, partly because they require less treatment than other emeralds.
As for rubies, after the discovery of massive reserves around 10 years ago, Mozambique is the largest player. Kashmir, Burma and Sri Lanka are major suppliers in sapphires, with Cambodia, Thailand, Vietnam and India are also significant extractors. There has also been increased interest in Australian sapphires, as production begins to decline elsewhere.
What are the risks inherent to the coloured gemstone market?
The artisanal supply chain of coloured gemstones is particularly susceptible to volatility.
For example, given the cash-based foundation of artisanal mining, in 2016 when Indian demonetised its currency, there were severe impacts on financial liquidity for the mid-stream coloured gemstone value chain.
The significant proportion of mines operating in countries with higher levels of political risk (such as Myanmar) can also add to supply volatility. In diamonds, De Beers’ dominance has allowed it to standardise procedures and develop the Kimberley Process, together with other diamond producers, to prevent conflict diamonds from entering the supply chain. However, in this regard, the gemstone market still lags.
Which companies are involved in mining coloured gemstones?
As an artisanal market there are many small specialist operations extracting coloured gemstones. For example, in Israel Shefa Gems recently found a stone with unique properties that it calls the Carmel sapphire.
That said, there are some notable players with strong and ethical track records in the market. Chief among them is Gemfields, which owns 75% of the world’s largest emerald mine, Kagem, and 75% of Montepuez, the world’s largest ruby mine.
Fura Gems is also notable and set to break into the Australian sapphire market after it struck an option deal with Richland Resources for its Capricorn project in the country’s northwest. This is in addition to its extensive ruby exploration project in Mozambique and its acquisition of the famous Coscuez mine in Columbia.
After its acquisition of the Regius group and its six licences in February this year, Gemrock is also a significant player and is the second-largest ruby miner in Mozambique after Gemfields.
Metals & mining research
11 July 2019