How do you view the global coloured gemstones industry
The reason and motivation for Gemfields existence is our passion for coloured gemstones. I have always noticed that what catches peoples attention in a jewellery store is coloured gems but when they purchase, they would come out with diamonds. Till 1940s, diamonds and coloured gemstones were selling at equal volumes. However, this changed with a lot of marketing and advertising around diamonds leading to a complete dominance.
The gemstone industry on the other hand has become extremely fragmented with small scale mining. This meant erratic supply in gemstones leading to equally erratic prices. One cannot depend on marketing if we cannot assure supply to the downstream industry. Rarity is important along with marketing and branding.
What has been Gemfields experience with mining and marketing of coloured gemstones
We have been quiet successful. We have got the Kagem emerald mine in Zambia spread over 45 sq.km. It is a world class mine with consistent supply and economies of scale. At any given point we have one years stock, which means that the downstream industry is confident of supply. We also do the grading which was never done before. Today, we have the mine going along with distribution & advertising and this is creating demand. In Kagem, we were earlier mining million carats a month but now it is at three million carats. Earlier, we sold at 50 cents a carat on a average but now it is $5 a carat.
We are now planning to double our production from three million carats to six million carats a month. All this is done in environmentally sustainable manner with ethical practices.
We have also acquired a ruby deposit mine spread over 300 sq.km in Mozambique. The country also has deposits of amethyst. In three to four years, we expect this to produce the same value as Kagem. We are also focusing on Sapphire deposits and it is available in countries such as Sri Lanka and Madagascar. We have 21 licences in Madagascar. All this works well within our portfolio and we will remain focused on premium gemstones of emerald, ruby, sapphire and amethyst.
How important is Indian market for Gemfields
It is an important market for Gemfields. Every 10 out 11 diamonds are cut and polished in India, because of the skills available. We want to do the same here and the costs are reasonable. India is growing market and coloured gemstones is integral to the culture. India is one of the areas of known gemstone deposits, which we are very keen on, but it will take some time.
The response in India for emeralds has been phenomenal. We believe that the Indian market could consume $200-300 million of rough emerald annually and with cutting & polishing, it could reach anywhere between $1-2 billion. For us, the market has grown 20% annually and the spending pattern is growing.
What about the marketing and branding initiatives
We are a mining company that markets. On behalf of the channel we help them through advertising. Our passion is to get coloured gemstones reach the final destination. We are also working on new campaigns for emeralds. It will describe something that is special, has beauty and quality.
The writer visited the Gemfields facility in Zambia at the invitation of the company