ICA Joins Certification Initiative for Colored Gems Apr 12, 2013 7:38 AM By Jeff Miller

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Source: Rapaport

Author: Jeff Miller

RAPAPORT… The International Colored Gemstone Association (ICA) joined a United Nations (UN) initiative to assist in developing a mechanism to trace and certify gemstones from their country of origin. The United Nations Interregional Crime and Justice Research Institute (UNICRI) in cooperation with the Vienna International Justice Institute and ICA hosted stakeholders in Turin on April 9 and 10 to review case studies and begin to establish governance for tracking and certifying colored gems.

UNICRI contended that the global colored stone industry, which accounts for $10 billion to $12 billion per year, is extremely fragmented with a high degree of opacity. The easy portability of these stones provide a lucrative stream of revenue for organized criminal groups, but with a certification scheme, the UNICRI would establish a tracking system for colored gems which would be tied back to improvements in environmental, social and security measures, according to the groups.

Participants included representatives of jewelry brands as well as government stakeholders from Brazil, Colombia, Kenya, Mozambique, Sri Lanka and Tanzania. Brazil and South Africa detailed case studies related to their colored gemstone industry and precious metals supply chain.

ICA’s president, Wilson Yuen, addressed participants as an industry representative. “In the present context, tracking gemstones from their geographical origin with a realistic approach is an opportunity for the public sector, the gems and jewelry industry and the civil society to address together social, technical and environmental issues as well as illicit and criminal practices threatening our sector. This will undoubtedly enhance the transparency of the distribution chain and benefit all the stakeholders from mine to market and build up consumer confidence,” said Yuen.

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Rare gemstones: Red Beryl

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Photo by Pala International

Red beryl is a red variety of beryl. It was first described in 1904 for an occurrence, its type locality, at Maynard’s Claim (Pismire Knolls), Thomas Range, Juab County, Utah. The old synonym “bixbite” is deprecated from the CIBJO, because of the risk of confusion with the mineral bixbyite (also named after the mineralogist Maynard Bixby). The dark red color is attributed to Mn3+ ions.
Red beryl is very rare and has only been reported from a handful of locations including: Wah Wah Mountains, Beaver County, Utah; Paramount Canyon and Round Mountain, Sierra County, New Mexico; and Juab County, Utah. The greatest concentration of gem-grade red beryl comes from the Violet Claim in the Wah Wah Mountains of mid-western Utah, discovered in 1958 by Lamar Hodges, of Fillmore, Utah, while he was prospecting for uranium.

During the late Cretaceous (100 – 65 mya) the younger ranges of the Rocky Mountains were created, and deep fractures appeared which reached deep into the crust. In course of volcanic activities (appr. 20 mya), five or more layers of volcanic topaz rhyolite lava flows covered areas in todays Utah. Then hot fluorine and beryllium-rich gases and vapors, rising through shrinkage cracks of the cooled lava, met groundwater resources near the surface. The water evaporated and left behind niches or miarolitic cavities and porous areas in which the remaining steam could react under low pressure and high temperatures (300° – 650° C) with the rising mineral-rich gases so that red beryl crystals could grow.

Red beryl is the rarest member of the beryl family. Unfortunately there is just a small production of gemmy crystals because of their rarity. Most faceted stones are under 1 ct, and most of them are more or less included or appear as opaque “bubble gum” quality. Nevertheless “bubble gum” colored red beryls are offered, sometimes in good quality.
Faceted, clean stones with a “stop-light” color over 1 ct are extremely rare and priced as such, reaching sometimes over $10,000 / ct (in 2007).
The largest, yet recovered red beryl crystal was 1.4 x 3.4 cm (54 ct). The largest faceted stone (not clear) weighs 8.0 ct. Nevertheless the usual size of good, faceted red beryl is only 0.15 ct!
K. Hyslop, CEO of Gemstone Mining Inc.: “There is only one red emerald for every 150,000 diamonds, 12,000 – 15,000 emeralds, and 7,000 – 8,000 rubies. Only one woman in 3 million can own a 0.80 ct or larger red emerald. These goods are really fit for royalty, only one woman in 50 million could own a large red emerald necklace.” (Source: “Red Emerald or Red Beryl” in The Gemstone Forecaster, Vol. 18 No.3)

Red beryl has been known to be confused with pezzottaite, also known as raspberry beryl or “raspberyl”, a gemstone that has been found in Madagascar and now Afghanistan – although cut gems of the two varieties can be distinguished from their difference in refractive index.
While gem beryls are ordinarily found in pegmatites and certain metamorphic stones, red beryl occurs in topaz-bearing rhyolites. It is formed by crystallizing under low pressure and high temperature from a pneumatolitic phase along fractures or within near-surface miarolitic cavities of the rhyolite. Associated minerals include bixbyite, quartz, orthoclase, topaz, spessartine, pseudobrookite and hematite.

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Physical Properties of Red Beryl
Mohs Hardness: 7.5 to 8

Specific Gravity: 2.63 to 2.72

Refractive Index: 1.560 to 1.576

Optical Character: Uniaxial/-

Birefringence: 0.005 to 0.009

Colour (General): Red, violet-red
Causes of Colour: Red, Mn3+ in octahedral coordination.

Fluorescence (General): Inert

Crystal System: Hexagonal
Inclusions in Red Beryl: “Fingerprints” made by numerous fluid inclusions

Jammu and Kashmir government floats fresh ‘global tenders’ for Kashmir sapphire

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Source: the Indian Express

Not giving up yet on its intention to tap the potential of the world-famous Kashmir sapphire gemstone, the Jammu and Kashmir government has floated a fresh tender to attract the attention of international and national players interested in its extraction.

“A fresh global tender has been floated to tap the potential of high-grade and world-famous sapphire (mined) in Kishtar belt of the state,” Minister for Industries and Commerce Sajjad Ahmed Kichloo told PTI.

The new tenders follow the previous offer inviting Expression of Interest which failed to generate much response as “only one major company had submitted the proposal for extraction of sapphire,” Kichloo said.

“We do not want to give the contract this way”. J&K Minerals Ltd, a state government enterprise, yesterday issued a fresh global tender inviting parties with expertise in mine-planning, exploration and mining of gemstones to undertake exploration and exploitation of sapphire through a joint venture.

Sapphire from Paddar Valley in Kishtwar district is famous the world over for its unique peacock-blue colour.

The minister, also a local MLA from Kishtwar, is keen on the project and hopes that the Paddar sapphire would soon make a return to markets worldwide. “We are going to speed up the process to ensure the exploitation of this sapphire wealth,” Kichloo said.

JKML holds a mine lease over an area of 6.65 square kilometre on GT Sheet 52/C at Paddar, at a height of 4,327 meters. Following the 45-day deadline for answering to the tender, a list of parties will be prepared who will be issued a Request for Proposal to submit their technical and financial bids.

Kichloo said that the companies will be assessed for their financial and technical capabilities as well as past experience given that the state government is keen to have them mining conducted along the most scientific lines.

The sapphire from Paddar is renowned for its unmatched clarity and transparency and is mainly used in jewellery.

The minister said that the two-decade long militancy in the state, extreme geographical conditions and a lack of resources have till date hampered the commercial exploitation of this valuable natural reserve, which was first undertakenm in Paddar in 1885.

“Their colour holds up in all kinds of light, which experts describe as a magical property when compared with other fine sapphires such as Burmese stones which lose their rich colour in the evening light,” said officials at JKML.

The presence of microscopic inclusions in the stone gives it a magical ‘velvety’ effect, creating a soft yet strong colour like peacock blue. The price of pure sapphire can easily cross USD 100,000 for a carat, making it the most expensive in its category.

JKML goes for extraction during two months in the summers and has extracted over 8,000 gm of raw sapphire, known as corundum. Sold in auctions, these have attracted buyers from as far as South East Asia in the past two years.

Diamonds: Driven by market forces for the first time in 100 years

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Ce: Resource Investor

Author: Paul Zimnisky

Up until recently the diamond industry had a structural flaw — just one player controlled it. De Beers was the diamond industry, and diamonds were synonymous with De Beers. However, over the last 25 years, a series of events led to the dismantling of the De Beers monopoly. Today, De Beers no longer has complete control of the diamond industry, and for the first time in a century, market forces, not the De Beers monopoly, drive the diamond market.

In the late 1800s after a massive diamond discovery in South Africa, a diamond rush was born, and businessman Cecil Rhodes bought as many diamond mining claims as he could, including farmland owned by the De Beer family. By the turn of the century, Rhodes had accumulated enough properties that his company accounted for the majority of the world’s supply of rough diamonds. He called his company De Beers Consolidated Mines Limited.

As De Beers maintained a hold on the worlds rough diamond supply through the first quarter of the 20th century, financer Ernest Oppenheimer began accumulating shares of De Beers whenever available, and reached a controlling stake of the company by the mid-1920s. Under Oppenheimer’s control, De Beers further expanded into every facet of the diamond industry, intent on monopolizing distribution. De Beers successfully influenced just about all of the world’s rough suppliers to sell production through the De Beers channel, gaining control of the global supply not produced by De Beers mines. The cartel was born, giving Oppenheimer the power to influence diamond supply and thus diamond prices.

The De Beers distribution channel, named the Central Selling Organization or CSO, (later changed to Diamond Trading Co. or DTC), had the power to sell what, when, and where they wanted to. In order to buy from CSO, membership as a “Sightholder” was required, which was completely the discretion of De Beers, as was the quality and price of the product being sold. No negotiation between the CSO and Sightholder occurred, all transactions were take-it-or-leave-it. In order to maintain a stable but rising diamond price, De Beers had the power to stockpile inventory in a weak market or raise the prices charged to Sightholders, and then in an excessively strong price environment (with the potential to damage demand), De Beers had the excess supply on hand to release to the market when needed, repressing disorderly price increases.

To keep the system intact, it was necessary for De Beers to maintain control of the world’s rough diamond supply via purchases through CSO. In the second half of the 20th century, as new world class mines were discovered in Russia, Australia and Canada, it became more and more difficult for De Beers to purchase all global production. The biggest risk to the survival of the cartel was for mines to begin selling directly to the market, thus bypassing De Beers.

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Source: WWW International Diamond Consultants Ltd, Economic Times of India, and Authors analysis.

Russia (present day the world’s largest diamond producer by value) began producing diamonds in the mid-twentieth century. At first, the Russians agreed to sell production to De Beers keeping the cartel intact. However, this quickly became extremely costly to De Beers as the Russian mines produced greater quantity and lower quality stones than anticipated. This prompted De Beers to commence the ”Diamond is forever” marketing campaign, transforming the image of diamonds to a proxy for love, expanding demand of lower quality stones to a new middle class American market, in an effort to absorb the new supply. Another challenge emerged in 1963 when Anti-Apartheid legislation restrained the Soviet Union from dealing with a South African company. But the final blow to the arrangement came during the Soviet Union collapse in the 1990s, when political chaos and a weak ruble further separated Russia’s production from De Beers.

Shortly after losing control of Russian supply, the Argyle Mine in Australia, at the time the largest diamond producing mine in the world by volume, broke away from the DeBeers supply chain. Over the next few years, other mines followed suit, as new world-class mines in Canada sold supply independent of De Beers.

The emergence of new supply distributed outside of CSO meant that De Beers, was forced to hold back from selling large portions of its own inventory and to purchase excess supply from its new competitors in the open market, in an effort to maintain control of the market. By the end of the 1990s, De Beers’s market share had fallen from as high as 90% in the 1980s to less than 60%. De Beers no longer had control of the market in 2000, when the company announced a shift in strategic initiative to focus on independent marketing and branding, rather than generic diamond price control.

However, the monopoly officially ended in 2001, when several lawsuits were filed in U.S. courts alleging that De Beers “unlawfully monopolized the supply of diamonds, conspired to fix, raise, and control diamond prices, and issued false and misleading advertising.” After multiple appeals, in 2012 the U.S. Supreme Court denied final petition for review, and a settlement in the amount of $295 million with an agreement to “refrain from engaging in certain conduct that violates federal and state antitrust laws” was approved.

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Source: WWW International Diamond Consultants Ltd, Gem Certification & Assurance Lab, Price Scope, and Authors analysis. Price constitutes various qualities of rough and polished diamonds, and shows diamond price deviation from starting basis of 100 beginning in 1987.

Shortly after losing control of Russian supply, the Argyle Mine in Australia, at the time the largest diamond producing mine in the world by volume, broke away from the DeBeers supply chain. Over the next few years, other mines followed suit, as new world-class mines in Canada sold supply independent of De Beers.

The emergence of new supply distributed outside of CSO meant that De Beers, was forced to hold back from selling large portions of its own inventory and to purchase excess supply from its new competitors in the open market, in an effort to maintain control of the market. By the end of the 1990s, De Beers’s market share had fallen from as high as 90% in the 1980s to less than 60%. De Beers no longer had control of the market in 2000, when the company announced a shift in strategic initiative to focus on independent marketing and branding, rather than generic diamond price control.

However, the monopoly officially ended in 2001, when several lawsuits were filed in U.S. courts alleging that De Beers “unlawfully monopolized the supply of diamonds, conspired to fix, raise, and control diamond prices, and issued false and misleading advertising.” After multiple appeals, in 2012 the U.S. Supreme Court denied final petition for review, and a settlement in the amount of $295 million with an agreement to “refrain from engaging in certain conduct that violates federal and state antitrust laws” was approved.

Source: WWW International Diamond Consultants Ltd, Gem Certification & Assurance Lab, Price Scope, and Authors analysis. Price constitutes various qualities of rough and polished diamonds, and shows diamond price deviation from starting basis of 100 beginning in 1987.

The way De Beers did business, which revolved around the central concept of controlling supply in the market, was simply not viable in a more competitive environment, and De Beers could not maintain the monopoly. From 2000 to 2004 diamond prices modestly declined, as the De Beers stockpile was liquidated into new demand coming out of Asia. By 2005, the inventory overhang had been lifted allowing market forces to drive diamond prices for the first time in a century, resulting in unprecedented price volatility. Diamond prices made a new high in 2007, followed by a violent sell off in 2008 and 2009 before rebounding to another new high in the summer of 2011.

With a market share of less than 40%, in 2011 the Oppenheimer family announced a complete exit from De Beers, ending almost a century-long ownership of perhaps the greatest monopoly in history.

About the Author: Paul Zimnisky

Paul Zimnisky, has worked in the financial industry for almost 10 years, primarily as a buy-side equity analyst focused on the metals and mining space, and as an ETF arbitrage trader. Paul currently creates and develops new exchange-traded products. Paul has a finance degree from the University of Maryland.

China demand makes diamond too pricey

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Source: The Economic Times

Author: Sutanuka Ghosal

KOLKATA: India’s expanding middle class may now have to spend more to own a piece of diamond-studded jewellery. Prices of smaller diamonds (10 cents and 6 cents) have gone up due to a surge in Chinese demand.

Vipul Shah, chairman, Gem and Jewellery Export Promotion Council, told ET: “Prices of polished small diamonds (10 cents and 6 cents) have gone up 5% as demand for these categories has risen in China, Hong Kong and the other Asia Pacific regions. But demand for larger diamonds, known as sawn diamonds, has been sluggish as the US and Europe, the major consumers, are not purchasing them in big volumes.

Prices of polished diamonds may go up further as demand is increasing in the Asia Pacific region and supplies are not enough to sustain this demand.” The annual Global Diamond Industry Report says global consumption will help the worldwide value of diamond sales surge from £10 billion in 2011 to £17 billion a year in the next seven years. This boom will be fuelled by the rising middle class in India and China.

Demand from these nations is expected to soon surpass the US consumption. Vijay Jain, CEO, Orra, said: “Gold has witnessed a dramatic rise in price. But diamond has not seen such a huge appreciation . Though there is volatility in diamond prices, it is not as significant as gold. Therefore , the price hike in diamond is more acceptable to the consumer as it has been a steady rise.”

Bachhraj Bamalwa, past chairman of All India Gem and Jewellery Trade Federation, said: “Jewellers will now try to offload older stocks of diamond-studded jewellery before they introduce jewellery with new prices. By that time, consumers will get to know that prices have gone up and they will get prepared to shell out more.” Vinod Hayagriv, MD of C Krishniah Chetty and Sons, said: “If demand comes down, prices of diamond will fall. But that is not going to happen in near future.”

Companies are now looking at introducing products that are affordable to customers and yet have the look of an original high-quality diamond. The Orra CEO said the company has launched the Aquila range of diamond studded jewellery that have the look and feel of a one-carat diamond (100 cents make a carat). “Such items are being bought by aspiring middle class youngsters.

The industry will have to come up with innovative products at a time when diamond prices are rising. This has happened in gold too. Most jewellers have come up with lightweight gold jewellery with a heavy look.”

De Beers Raises Prices 3% at $650M April Sight

Immagine

Source: RAPAPORT

Author: Avi Krawitz

RAPAPORT… The De Beers April sight ended last week with an estimated value of $650 million after ‎the company raised prices by an average 3 percent. Some boxes, including stones ‎above 5 carats and 1 carat to 2 carat goods, increased by high single digit percentages. ‎De Beers boxes continue to sell at an average premium of about 5 percent on the ‎secondary market. ‎

‎“There were some price adjustments but overall it was a positive sight and the changes ‎were measured,” said Nigel Simson, head of ‎beneficiation at De ‎Beers. “The market has ‎improved as the Christmas and Chinese New Year seasons provided a platform from ‎which to build in 2013. We’ve seen some positive signs with polished inventories coming ‎down.”‎

Sightholders expected a larger increase from De Beers and were therefore satisfied with ‎the changes made. One Antwerp-based sightholder said he was concerned the company ‎may opt to make consecutive increases by small increments rather than one larger ‎change at once.‎

Simson declined to speculate on future price changes stressing that De Beers reviews ‎prices before every sight after assessing various aspects of the market, including ‎polished and rough trends, and market liquidity among other factors.‎

Initial reports from this week’s ALROSA sale indicate similar increases of an average 3 ‎percent implemented by the company.‎

Sightholders noted that speculation in the rough market has calmed since the sight. ‎‎“People expected De Beers to raise prices by more than it did, which is why there was ‎speculation in the market in the last month,” one Mumbai-based sightholder said. “Now ‎that they didn’t increase by so much and they supplied enough goods to the market, I ‎don’t see why there should be speculation.”‎

He added that De Beers supply returned to normal levels after there were shortfalls in the ‎first two sights of the year. Rapaport estimates that De Beers sight sales fell 8 percent ‎year on year to $1.75 billion during the first three sights of 2013.‎

Still, sightholders who spoke with Rapaport News agreed that their biggest concern ‎remains the low profit margins they can achieve from manufacturing. One sight ‎participant reported that while healthy margins usually hold at 10 percent to 15 percent, ‎diamond manufacturers are currently gaining about 5 percent on their polished. As a ‎result, manufacturers are not increasing their output especially since the next two months ‎are traditionally a quieter period in the polished market, he added.‎

As a result, there are lingering concerns about further price hikes. “There are some ‎margins in the polished, though not enough,” said one sightholder. “They’re okay to ‎sustain a business if you have a strong business model and a solid balance sheet but I ‎think that any increase from now would be catastrophic.”‎

De Beers Chairman  ‎

Anglo American has not yet appointed a new De Beers chairman to replace Cynthia ‎Carroll who has resigned as Anglo’s chief executive officer (CEO). Mark Cutifani, former ‎CEO of Anglo Gold Ashanti, last week took over from Carroll as Anglo CEO with Carroll ‎scheduled to leave the company at the end of April. Anglo owns 85 percent of De Beers ‎with the Botswana government holding the remaining 15 percent.   ‎

* Picture: De Beers sorting facility in Botswana. (Courtesy De Beers).

Gemfields falls 27% as Zambia imposes ban on gemstones sales

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Source: MINING

Author: Cecilia Jamasmie

Precious stones miner Gemfields (LON: GEM), the world’s biggest emerald producer, said theZambia government’s ban on overseas auctioning of gemstones would hurt revenue at its flagship Kagem emerald mine in north Zambia.

Shares in the company plummeted as much as 27% on the news, hitting the steepest decline in more than four years.

“Gemfields believes that any outright limitation on selling emeralds in other countries could have the potential to materially constrain Kagem’s revenues,” the company said in a written statement Monday.

The company, which currently sells its emeralds at auctions in Singapore and India, produced 21 million carats of the precious stones from its Kagem mine last year. Gemfields said it has written to Zambia’s minister of mines, energy and water development to request clarification of the terms of the new measures.

Emerald production from Kagem has been sold exclusively outside Zambia since 2009, generating $160 million of revenue from 11 auctions abroad.

Kagem had revenue of $77.6 million in 2012, compared with $8.8 million in 2008, when Gemfields acquired the mine.

The ban would also affect Gemfields’ Kariba amethyst mine in south Zambia, in which the company has a 50% stake, the firm said.