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Coloured gemstones dominate today’s global fine jewellery market, sparkling in the windows of Bond Street, Place Vendôme and beyond. Rubies, particularly the deep red colour known as pigeon blood, are among the most prized stones, but supplies had become scarce until recent months.
This was largely because of a US ban on imports from Myanmar, one of the world’s most important ruby mining countries. But human rights abuses under the country’s military dictatorship had led to sanctions.
Yet demand remained high, especially in India and China, where red is regarded as a symbol of wealth.
The ethical conundrum continued until 2012, when Gemfields, a mining company specialising in ethically sourced coloured gemstones, acquired a 75 per cent interest in the Montepuez ruby deposit in Mozambique.
Gemfields held its first rough ruby auction in Singapore in June this year. Of the 2.03m carats on display, 1.82m were sold, generating revenues of $33.5m.
The auction took place over six days, with the floor-to-ceiling windows at the Singapore Turf Club allowing light to flood in, providing optimum viewing conditions.
John Guy, a senior analyst at Berenberg, says: “The number of companies placing bids at Gemfields’ inaugural ruby and corundum [the mineral name for rubies and sapphires] auction in Singapore was 1.4 times greater than the average number bidding for emeralds and beryl from Gemfields’ Kagem Zambian mine in April and November 2013.
“Increased interest in coloured gemstones underpins our view of a growing global appetite for high-quality and responsibly sourced gemstones.”
In line with Gemfields’ ethical policies, those invited to the June auction were vetted by Adrian Banks, product director, with each lapidary required to complete a questionnaire.
“It was essential for us that none of the hard work of bringing the material to auction was jeopardised by the next step in the process,” says Mr Banks. “We asked everything, from questions about the companies’ distribution channels, to their factory conditions, to ensuring they had the necessary funds to pay.”
Sixty-two lots were on offer, packaged in varying degrees of quality, with participants allowed unlimited viewing access over the first three days, then restricted to 45-minute time slots in the last three days. Closed bids could be placed at any point over the auction.
Ian Harebottle, Gemfield’s chief executive, is upbeat about the company’s first foray into the ruby market.
It has spent $34m at Montepuez, including acquisition costs, capital and operational expenditure, taking measures to limit the mine’s environmental impact (for example, no explosives are used) and supporting the local community alongside its ethical mining practices.
Mr Harebottle says: “[Conditions are] very dry, so one of our first commitments was to provide water. We have now dug eight bore holes, and built two schools, a market, a football pitch, and bought and leased tractors to the local farmers.”
He adds: “We’re doing our best, but striving to do better. I’m not saying it’s perfect, but the area is better for us being there.”
He has recruited a manager locally, while seeking outside help and advice from organisations including the World Land Trust.
Security is another problem. Garimpeiros, or unlicensed miners, operate illegally on the Montepuez site, which covers more than 300 sq km.
Unlike emeralds, which require deep bore holes, rubies are found at a depth varying from three to 10 metres, making illegal mining a tempting proposition.
What do these new supplies mean for those in the jewellery industry, or those in the market to buy?
The cutting and polishing division of Gemfields, headed by Gabriella Harvey, will track the progress of the rough stones that were purchased in June.
She will act as a fixer between the lapidaries and the jewellery houses, with the aim of ensuring that those who want to buy high-quality rubies will have access to a steady flow of stones, consistent in quality and size – exactly the gems in demand at the big jewellery houses.
Ms Harvey predicts that Mozambican rubies will be highly visible in jewellers’ displays by Christmas. A marketing campaign is planned, and another ruby auction will take place before the end of 2014.
Meanwhile, Gemfields is considering its next move. “I’d love to be able to tell the sapphire story too,” says Mr Harebottle.
“I call it the traffic light of colour – adding a third stone into our proposition. I’m looking at Madagascar and also Australia, but as with all these things, it has to be exactly right.”
