Gemfields’s report:HOST NATIONS ROBBED OF TRUE VALUE OF THEIR GEMSTONE RESOURCES

The coloured gemstone industry is at a very different stage compared to the diamond industry. Gemfields is one of few large-scale mining companies within the coloured gemstones industry and we strive to improve transparency and reporting across the sector.What prompted Gemfields to come out with the Global Emerald & Ruby Supply: Analysing Market Data report?
Gemfields is a world-leading miner of responsible coloured gemstones, and we launched Global Emerald & Ruby Supply: Analysing Market Data with the aim of furthering the understanding of the industry through more transparent and available data relating to international coloured gemstone supply. To our knowledge, it is the first report about coloured gemstone rough production

Why is there so little data about colour gemstones, when compared with diamonds?
The Global Emerald & Ruby Supply: Analysing Market Data report draws on data from a variety of sources – from production and extraction reports to export data. Challenges arise given the distinct lack of available data. The vast majority of coloured gemstones are extracted by artisanal mining, both formal and informal, for which scant reporting standards exist.

In addition, coloured gemstones often originate from countries that do not have strong reporting standards. The data that does exist can be inconsistent in terms of gemstone forms – for instance, rough versus cut-and-polished – and units of measurement, with some export and production data presented in terms of quantity (which can be stated in kilograms or carats), and some in value, (typically stated in US dollars), but rarely with both weight and value together.

This presents a significant issue, as gemstones vary tremendously in value depending upon their quality, which is, in turn, determined by subtle variations in factors, such as clarity and colour, as well as by their weight.

very different stage compared to the diamond industry. Gemfields is one of few large-scale mining companies within the coloured gemstones industry and we strive to improve transparency and reporting across the sector. Very often, the reporting categories for production and export data for diamonds are reported in a separated and individual category, whereas coloured gemstones are usually all reported together as one, which makes it much more difficult to understand the market of one specific coloured gemstone. This might have been logical in the past, when the value of diamonds was so much higher than that of coloured gemstones, but as we now see examples of emeralds and rubies being sold at auction houses for higher prices per carat than colourless diamonds, it seems time to rethink the reporting system of coloured gems generally.

How big is the global gemstone market?
According to an Edison (investment research company) report, published 19 May 2021, the trade of coloured gemstones sits at approximately $ 2-3 billion in rough gemstones, excluding jade. For emeralds the main three sources are Brazil, Colombia and Zambia, and some relevant production also comes from Ethiopia, Afghanistan, Pakistan, and Russia. For rubies, Mozambique, Myanmar, Greenland, East Africa and Southeast Asia dominate. India, China, US and Europe are all key consumers of coloured gemstones. Both India and Southeast Asia are prominent manufacturers for the sector. In fact, Jaipur is to emeralds what Surat is to diamonds: much of the world's coloured gemstone cutting and polishing happens in Jaipur. We would estimate over 90% of Zambian and Brazilian emerald rough is cut and polished in Jaipur.

What steps can miners take to improve the condition of host countries of gemstones
glaring issue in the coloured gemstone industry is the disparity in the value assigned to a gemstone, particularly in its rough form, especially within (or at the borders of) the producing country. With a 30-million-fold difference between the value of the highest and lowest value products mined at MRM (being $ 600,000 per gram and $ 0.02 per gram), this has profound implications for deposithosting nations.

What steps can miners take to improve the condition of host countries of gemstones?
A glaring issue in the coloured gemstone industry is the disparity in the value assigned to a gemstone, particularly in its rough form, especially within (or at the borders of) the producing country. With a 30-million-fold difference between the value of the highest and lowest value products mined at MRM (being $ 600,000 per gram and $ 0.02 per gram), this has profound implications for deposithosting nations.

Allowing the price to be set at the point of export from the host country inevitably leads to acute under-pricing, given how subjective pricing is. This, in turn, highlights the fact that official export data is likely to seriously understate the true value of the gemstones that leave a deposit-hosting country. Setting the value of rough gemstones at the time of foreign sale, rather than at the point of export from the host country, would remedy this. Gemfields has successfully implemented such a model and the impact is nothing short of revolutionary: balance of payments data published online by the Bank of Mozambique provides a useful “Rubies, Sapphire and Emerald”

category, reflecting Mozambique’s combined monetary inflows from these three gems since January 2011. Despite only mining one of the three gemstones (rubies), the commencement in 2009 of a well-documented “ruby rush” in the Montepuez area, involving thousands of artisanal and illegal miners, and the ongoing mining efforts of both artisanal and formalised mining operations in the Montepuez area, MRM’s production accounts for 94% of Mozambique’s official monetary inflows of rubies, emeralds and sapphires over the last decade (from January 2011 until June 2021)

Prior to MRM’s first auction in June 2014, and since January 2011, when the data commences, cumulative exports of rubies, sapphires and emeralds across all Mozambican producers totals less than $ 1 million. Cash exceeding $ 10,000 must be declared upon entry into Mozambique. The data makes it clear that, with the exception of MRM, Mozambique’s emerald, ruby and sapphire wealth has simply evaporated over the last decade.

What our initial research highlights is how far the coloured gemstone industry still has to go in reaching the level of transparency that end consumers deserve. Without knowing the journey each gemstone has taken, jewellery customers’ concerns regarding slavery, smuggling, child labour, tax avoidance and fair pricing at export cannot be allayed. We must seek a means of providing greater transparency. Gemfields has pioneered a more transparent approach and is calling upon others within the sector to help drive this forward. In July 2021, we launched the ‘G-Factor for Natural Resources,’ an uncomplicated indicator of the percentage of a natural resource company’s revenue that is paid to its host country government in primary and direct taxes, plus -- where the host government is a shareholder -- dividends. We published, our own ten-year contributions with around 18% and 26% of revenue flowing back to the Zambian and Mozambican governments, respectively, from 2011-2020. As a result of our efforts, today, more emerald- and ruby-derived value than ever accrues to our host countries. We would encourage all coloured gemstone producers to publish their figures.

And lastly, tell us about your offices in India and the role they play in one of the world's biggest jewellery producing and consuming nations.
Gemfields operates an office in Jaipur primarily to service its customers, but auction viewings are also facilitated from our well-located office, and this offers excellent viewing conditions. In 2016 with approval from the Kagem Board, Gemfields introduced a ‘Direct Sales’ initiative in Jaipur to seek out a larger number of appropriately positioned micro-manufacturing firms with a view to stimulating demand for the most commercial qualities of emerald and beryl, while, at the same time, supporting the creation of additional “next generation” auction participants. Smaller size/value parcels are made available for purchase out of Gemfields’s Jaipur office to a broader base of pre-identified/invited smaller-scale manufacturers operating within Jaipur.