Precious stones: the end of the tunnel? | EN

The crisis has impacted the whole global economy, the diamond sector, sensitive as it is to the slightest recession, suffered less than forecast. If the economy of the most important customer, America, crumbled down, new markets have taken over, mainly China and India where the crisis has hardly been felt The diamond market is in full up swing over there.

The diamond sector has nevertheless experienced a period of recession in 2009. The value of certain diamonds, which have increased a great deal, has gone down for the time being. Two important factors succeeded in limiting the damage, first the great producers have reduced their mining and then the banks have trusted the diamond dealers who had considerable debts.
Rio Tinto reduced its production, mainly in the mines of Argyle and Diavik in the Great Canadian North, down to 33%, namely 14,026 carts for the year 2009. De Beers reduced its sales by $ 6.89 billion in 2008 down to $ 3.84 billion in 2009. The first quarter of 2008 has experienced a considerable decrease of prices as well as of demand, a situation that changed in the course of the months to recover towards the end of the year with a 173% increased demand as compared to the first half year. De Beers has faith in the future announcing a new dollars 500 million investment in the Jwaneng mine in Botswana, which would have a productive period till 2025. The overall project is assessed at dollars 3 billion to be invested over the next 15 years. The De Beers Company, through the Diamond Trading Company (DTC) has increased the prices during the latest review dated February 2010. A 7 to 8% increase, which adds to the 3 to 5% of January. The De Beers Company plans to increase its production by 20% over 2010. The DTC's customers also hope for a r/se in their monthly quotas since there is shortage of nice goods.
Since 2011, the price of rough diamonds has been on a permanent rise. The cut diamonds are following suit, especially in the gemstones, the top of the range. Another positive point is that the diamond sector global liability to the specialized banks has gone down by dollars 13 billion prior to the crisis to dollars 8 billion currently in 2010, it was stilt dollars 10 billion. Trust is being built again, in the United States as well as in Russia. The De Beers production has experiences an important rise during the first quarter of 2010 with over 7 million carats against 1 million carat for the same period in 2009. According to the De Beers forecasts the 2011 production will be around 40 million carats.
For the other precious stones, mainly rubies, sapphires and emeralds, the market has known a period of considerable rise where the prices of rough gems (upper quality) have exceeded any and all forecasts. As regards the "commercial" goods, the sector has known various ups and downs, especially as regards the different processes to improve either the colour or the purity.
Rubies and sapphires have, since the beginning of times, known "improvements", coloured glazing or coating and later heat treatments. Grey, mat and bluish "geudas" sapphires originating from Sri Lanka, were "heated" in Thailand where the colour changed to a much nicer blue. The emeralds were dipped in cedar oil to bring out the bright green colour. These later years, the tears or glets have been filled with glassy epoxy products of the same refraction index as the precious stone, which makes them invisible for the consumer. A new process is the spreading of high temperature beryllium, which alters the colour of the stone.
Let us add a similar problem to diamonds: ethics. For several months voices have been heard against the social policy in Madagascar and especially in Burma, currently Myanmar. Kashmir is the traditional source of the most beautiful sapphires from those inhospitable mountains only accessible for a few months per year near Pakistan and the Mogok valley in Burma. The most beautiful sapphires, from intense blue to bright pink mainly originate from Kashmir and the nicest rubies from Burma, a region famous for those famous "pigeon blood", the main part of the traditional rubies do originate from this area. Myanmar produces approximately 90% of the market of top of the range stones. If, on the one hand, the country offers gems, it also produces, on the other hand, rubies o f a lower quality in the Mong Hsu region. A great part of the rubies with tears are already processes as rough stones, which makes the purchase (even for a man of the trade) a very risky business.
According to an article published in the Gems and Gemmology journal and written by R. Shor and R.Weldon, those rubies originating from Myanmar have been sold at exceptional prices: on 15 February 2006 a Burmese ruby of 8.62 carats sold at Christie's in Geneva for dollars 3.64 million. Although the nationalized production of the country is under the control of the military junta, the government authorizes some private exploitation in participation with the state and the Mogok and Mong Hsu regions. Since the sanctions of the European Union, of the United States of the ICA (Coloured Stones Association) against the Myanmar regime, many wholesalers and big jewellers have stopped purchasing the stones from this region. Since then about fifty mines had to close down, the exports, which in 2007 were 7.2 million carats, dropped to 6.5 million carats in 2008. Since then the safes to American and European buyers have gone down by 50%. Part of the production is exported, in spite of it all, illegally towards the neighboring countries.
Sri Lanka, better known with dealers as Ceylon, is one of the most ancient sources of rubies and sapphires. The most important region is Ratnapura. The sapphire, from Ceylon are famous for their "cornflower blue", a light bright blue, but the country also produces a great quantity of "geudas". If in the past, such cheap goods used to be purchased by the Thais for heating purposes, l was pleased in the 1990s to have heating techniques imported above 7,500°C thanks to Belgian electric ovens. Currently, the geudas are heated and cut on site and Sri Lanka exports nice intense blue stones. Let us not forget the famous orange Padpardscha. Unfortunately the production of gems fell by 472,961 carats in 2006 to 156,486 carats in 2007. But the prices have increased by nearly 19%. Thailand, where rubies and sapphires are known as Siam, used to be one of the most important producers in the past century. The rubies are darker, but of good quality. Since industrial exploration in the 1980s, production has increased considerably. But the country is also known for the cutting of coloured stones or diamonds. In 2008, Thailand exported for nearly dollars 255 million of cut coloured stones, of which 46.7% sapphires and 40.62% rubies. The country's export increased by 50% worth between 2007 and 2008, unfortunately 2009 experienced a recession and export dropped by nearly one third.
Australia used to be the biggest exporter of cheap sapphires of a dark blue to black colour, as from the end of the 20th century. Production, estimated at 13,000 kgs in 1995, dropped 15,500 kgs in 2005. Governmental restrictions regarding environment as well as the recession, strongly reduced production.
Madagascar, or the paradise of precious stones, is an important producer of sapphires of any and all colours. The most important part is exported to Thailand to be cut. Around 10,000 minors are working on small concessions. The production of sapphires represents, according to statistics sources between 25 and 40% and according to others, 50% of the global production. Unfortunately a great part is exploited and exported illegally. The country also produces rubies near the Eastern coast discovered in 2000, which triggered a rush to the sites. Another site was discovered towards the center, a little bit more towards the north which entailed a rush of over 40,000 minors towards the region. The rubies are good quality ones, requiring no heating. The government fries to monitor the impulsive rushes to the sites and sometimes even forbids exploitation following violence’s or illegal exploitations in the natural reserves.
Vietnam has been a new corner amongst the ruby producers since the end of the 1980s. The main regions are Luc Yen, more south Quy Chau and Tan Huong. The rubies are small, but of a bright red. The biggest part of the production is purchased by the Thaïs. Cambodia and Laos with the main Païline mine, near the Thai border, which, following the exploitation by the Khmer regime had been given a bad reputation. Another mine is HouayXai. The production is mainly exported to Thailand and Australia. China produces sapphires similar to the Australian one, namely dark, in the Shandong and Fujian provinces, but the potential is important according to a governmental survey Currently the production is essentially for the internal market and tourism.
Greenland has a production of sapphires and rubies, but they are small and without much importance on the global market. On the other hand, Tanzania produces nice transparent top of the range rubies that may, compete with the Burmese ones. Seeing the global economic situation, the precious stones sector is experiencing a few difficulties on the Western markets. The prices, however, remain stable and rather show an up trend, especially when we are talking about good quality. The forecasts are optimistic overall. There is a fly in the ointment... two in fact: on the one hand, Japan, the 3rd importer of diamonds, precious stones and jewellery. Let us hope that the country is going to recover soon from the natural and ecological catastrophes. On the other hand, northern Africa that is living a social revolution, Tunisia, Egypt as well as Morocco are important average quality precious stones importers.
Let us add, to conclude, a new interesting initiative from France and Sri Lanka. Under the name of "Fair Gems Process", the coloured precious stones sector is, in a way, following the diamond sector with its "Kimberley Process". The fundamental difference is that the certificate will follow the precious stone (just as it was in the 5th C project) and the stone will therefore be traceable form the mine to the consumer (we will come back to that).