Vol. 21, No. 4
Winter, 2003

TABLE OF CONTENTS

Collecting Orange Diamonds
by Robert Genis

Some people buy Warhols or Van Goghs.  Others scour the world for rare Ferraris or Maseratis.  The Winstons collect colored diamonds. Orange colored diamonds are viewed by collectors in a manner similar to those who quest for famous paintings and exotic automobiles.  Pure orange diamonds are extremely rare, beautiful, desirable and highly marketable.
 
The Pumpkin
On Halloween Eve in 1997 Ronald Winston, president and CEO of Harry Winston Inc.,  purchased a 5.54 carat fancy vivid orange diamond for $238,718 per carat at Sotheby's.  This stone is the largest and most famous fancy vivid orange diamond in the world. Winston wanted to call it "The Tangerine"  but his staff felt it needed a better connection to Halloween, hence the name Pumpkin.  According to Winston, "I am a connoisseur and collector of colored diamonds and I searched my entire life for a diamond with this distinctive bright orange color and saturation."  Winston is unsure of the origin of the diamond but believes it is "Central or South Africa." (Photo thanks to Harry Winston.)

The Pumpkin's Recent Travels
The Pumpkin was recently on display at the "Splendor of Diamonds" exhibit in Washington, D.C.  Other well known colored diamonds that were displayed until September, 2003 included:

* The Steinmetz Pink, a 59.60 carat fancy vivid pink flawless stone. It has never before been on public display.
* Heart of Eternity, a 27.64 carat fancy vivid blue diamond from South Africa.
* The Moussaieff Red, at 5.11 carats, is the world's largest known fancy red diamond. It was discovered in Brazil in the 1990s by a farmer.
* The Allnatt, one of the world's largest yellow diamonds at 101.29 carats.
* The Ocean Dream, the world's largest fancy deep blue-green diamond, 5.51 carats.

Previously, the diamond was worn by actress Halle Berry at the 2002 Academy Awards, where she accepted the Best Actress award for her role in the movie "Monster's Ball."

Pumpkin For Sale
The Pumpkin is for sale but Winston laments, "I am constantly torn between being a collector or being a jeweler...especially with the stones I love.  I guess I would reluctantly sell the stone, but I am not giving it away, and the cost will be in the millions."  As most in the colored diamond industry know, this is not a stone that could easily be replaced.

Why Are Oranges Orange?
The main reason for color in diamonds is the presence of impurity atoms or atomic structural defects.  What causes the color in orange diamonds remains a scientific mystery. Gem scientists used to believe the orange color was caused by nitrogen. Winston believes  the 5.54's color is caused by hydrogen.  Jim Shigley, GIA Director of Research, Carlsbad, states, "we tend to think of diamonds as pretty easy to understand since they are simple carbon.  However, the scientific reasons for color in colored diamonds are not always known.  The reason orange diamonds are orange is probably because of hydrogen or nitrogen.  Further, these diamonds are Type I not Type II." 

Rarity
How rare are orange diamonds?  According to Winston, "people don't realize the rarity of vivid orange diamonds.  I would say oranges are rarer than greens but not as rare as reds."  In other words, oranges are the second rarest color and even rarer than greens, pinks and blues.  On the connoisseur demand side, the only thing holding back the price of these stones is the fact that orange is not a primary color.  Collectors tend to covet reds, blues and greens before they consider an orange.


Secondary Colors
In an ideal perfect world, you should try to find an orange diamond that looks like a pumpkin, a tangerine or a citrus orange.  Oranges with modifying colors are commonly seen in the marketplace.  The vast majority of oranges have red, pink, yellow, green or brown secondary color or various combinations of these colors.  Brown is an anathema to orange diamonds similar to what grey is to green diamonds. Of course, the most abundant colored diamond is brown, however, "with brown diamonds you sometimes get an orange flash," Winston muses.

Pricing
According to Winston, vivid oranges are so rare they are "individually priced."  However, as a guideline,  carat-sized fancy vivid oranges are at least $100,000 per carat wholesale.  Fancy intense oranges range from about $35,000-$45,000 per carat.  Therefore, pure oranges are only selling for approximately 5X the price of similar quality yellow diamonds, even though they are more than 5X rarer.  Any secondary color creates discounts to these prices.  Most often, orange and brown are seen together.  When you see brown visually, or an orange diamond has brown on the grading report, the price drops dramatically.

Summary
Pure vivid orange diamonds seem to be as difficult to find as Osama. Winston closes, "only rare colors will grade fancy orange or fancy intense orange.  However, to get a fancy vivid orange is truly remarkable."  Collect these stones, if you can find one.

BOOK REVIEW
 
Gemsicuted
by Julian Robov
Xlibris.com
326 pages, 2001, $22.99

Julian Robov is a German-trained gemologist residing in Bangkok, who writes novels about the gem business. When I first got this book I was skeptical.  I always thought there was a negative reason why a book was self-published vs. the traditional publishing route.  The Bangkok Post has stated every gem dealer in Bangkok thinks he can write the Great Bangkok novel.  I was afraid this was going to be just another horrible gem dealer book from a man who should be selling or grading stones, not writing.

The title is confusing.  I assume it is a combination of gems and executed. The book has numerous editorial mistakes and mis-spellings.  Sometimes Robov's writing seems strained, but it is probably because he is a German writing in English. The first 100 pages or so shows Robov knows a great deal about the inside of the gemstone business.  Although the story takes a while to get going, eventually it becomes clear who the main characters are in the book.  In essence, they are all conniving to get a 37 carat unheated Burma ruby into the possession of a wealthy collector.  One of the twists in the book is that a synthetic 37 carat ruby is also traveling in the same gem circles.  The cast of characters include the Russian mafia, sex driven wives, mistresses and international gem dealers from the largest to the smallest brokers. The book revolves around the lives and numerous deaths of the people as they attempt to obtain the coveted 37 carat ruby. 

Some of the parts in the book seem unrealistic such as- most gem traders needed their stones graded at an unnamed gem lab in Switzerland to verify country of origin and treatments. Surely gem dealers who work in the business daily should know simply by looking.  Another improbable scenario is when two gem dealers buy a lottery ticket and win the British Lottery, which in return helps them to buy a 1/2 share of the 37 carat unheated Burma ruby.  But after all it is a novel!

Ruby aficionados will salivate when a dealer enters the largest ruby dealer's office in Bangkok and picks out a group of unheated Burma rubies over 20 carats as easy as going to the store for milk.  The main character also dreams of  being a pioneer and creating a three dimensional color grading system to communicate color to his international clients instead of them looking at the gemstones in his office lights.

The book really picks up speed in the second half. It becomes interesting and is packed with backstabbing and skullduggery.  Alliances and interests shift like sand. The chase for the 37 carat ruby turns the lives of these characters upside down.  It is hard to put down until you reach the violent  and unexpected conclusion.  In the end, I was pleasantly surprised what an excellent first book Julian Robov wrote.

This is a different type of gemstone book.  Instead of raw and boring facts like most gem books, you get a fictional story about the industry along with some interesting gemological information.  If you want to learn about ruby in a fun manner, buy this book. 

You can purchase this book on-line at Amazon.
 

Investing in Gems for Fun and Profit
By Pat Curry
Bankrate.com, Nov. 3, 2003

This article makes some interesting points regarding gem investing.  

I do not think Ms. Curry understood me that the price of a full American Gemological Laboratories (AGL) colored stone grading report with country of origin and treatments for a Burma ruby  or sapphire is about $330.  She has me quoting the price of a one carat Gemological Institute of America (GIA) diamond as $330.  Of course, one carat GIA diamonds are less expensive than $330. 


Finally, many financial planers or stock brokers keep telling people not to invest in gemstones because they are not liquid.  This is true-but most people consider real estate the best investment they have ever made and it also is not liquid.(ED)

In the 1980s, the heirs to a ranching business in Texas discovered they owed the IRS a million dollars. To pay the bill, they could sell the family business or sell off the gem collection their dad had stashed away for years. He had hundreds of gems. The family was fine with that option. They had always thought Warren Hancock was a little nuts anyway for spending all that money on colored diamonds.

They shipped off the lot to Sotheby's in New York, hoping that selling them might make a dent in the tax bill. Sotheby's picked out three and sent back the rest. On April 28, 1987, an agent allegedly representing the Sultan of Brunei bought the largest of the trio, a .95-carat red diamond, for $880,000, plus a 10 percent buyer's premium.

That set a world record of $926,000 per carat. With the sale of other two stones, Sotheby's was able to send the Hancocks a check that covered the taxes, along with some serious change left over. The Hancock Red remains a standard in the world of colored diamonds -- as revered as the Hope Diamond among gem collectors.

Hancock had bought all three diamonds from his local jeweler and paid retail prices for them, an investment of less than $20,000 combined.

Those are the kinds of stories that fuel the desire to invest in gems. But the people who live and work in this circle make it very clear: Buying gemstones should be something you do because you like them. It should never be a major part of an investment strategy.

"If you want a nice sapphire for your wife, you want to buy the best sapphire on earth," says Richard W. Wise, a graduate gemologist and author of Secrets of the Gem Trade: The Connoisseur's Guide to Precious Gemstones. "That's very nice and I'm sure your grandchildren will appreciate it. But if you buy it at Tiffany's and think you'll turn it over for a profit in 10 years, you're deluding yourself."

Financial advisor Fred Siegel of New Orleans tells people who call his radio show to inquire about investing in gemstones that they should stay away from them unless they already have enough money saved for retirement in a well-rounded portfolio.

"If you're taking care of that, fine, then it can be a nice investment," he says. "Gems have nice stories with them, and they're beautiful. Get a good gemstone and you have something of beauty. But it's not like a stock and some other things that you can tell the value quickly."

In fact, gemstones are about as far from stocks as you can get. Stocks, bonds and CDs are perfect markets, with known values at any given time and set prices; investors can buy and sell whenever the market is open for trading, Siegel says. Gems are an imperfect market, with a sale possible only when there is a willing buyer and all prices open to negotiation. Other imperfect markets include real estate, art and antiques.

"Does it mean you shouldn't invest in imperfect markets?" Siegel says. "Not at all. You either have to gain the expertise or get help from someone who is an expert that you really trust."  The expertise includes an understanding of how stones are bought and sold.

"The average jeweler will sell a stone for two or three times what he paid for it wholesale," Siegel says. "He'll buy a stone from an individual for half of wholesale. It makes it hard to make money unless you really know what you're doing."

As an investment class, gemstones and diamonds are considered hard assets, as are gold and silver. Hard assets as a group have a place in any investment portfolio, but generally not more than 1 to 3 percent, says Tom Cloud, president of Georgia-based Turamali, Inc., who has been investing in gems and jewelry since the late 1970s.

It's definitely not an investment you make with an eye toward turning a quick profit, he says. Like many other experts in gemstones, he says investors should expect to hold the stones for 10 years or more to see a return on their investment.

When you're shopping for a stone, it's important to understand that many colored gemstones have been treated and enhanced. That's perfectly acceptable, says Antoinette Matlins, a noted Vermont-based gemologist and author of "Colored Gemstones."

"Emeralds have been oiled for thousands of years; sapphires and rubies have been altered through heat at least since Roman times," Matlins says. "Treatment processes allow you to have a product formed by nature but improved for clarity or quality. Had we not begun routine treatment, no one but kings and queens and the world's wealthiest would wear them today."
Today, natural unenhanced rubies, sapphires and emeralds are among the rarest of all gemstones, Matlins says. If a seller says a stone is natural or unenhanced, make sure he has the certification to support that claim and make the sale contingent on an independent, third-party analysis. Walk away from any seller who won't submit the stone to a lab for a grading report.
In the United States, the most respected labs are the Gemological Institute of America, the American Gemological Laboratories and American Gem Trade Association Gem Testing Laboratory, she says. Many sellers will present their reports with the stone, but it's not uncommon for a buyer to then send the stone with that report off to another lab to make sure the stone in the report is the one that's being offered for sale.

The cost for the report starts at $100, plus shipping costs of the stone. For a 1-carat diamond, expect to spend about $330, with the cost going up with the size of the stone, says Robert Genis, editor of The Gemstone Forecaster, a quarterly newsletter for gemstone collectors and investors.

"That independent, third-party grading is the key to investing or collecting stones," he says. "If you look at all the auction catalogs where goods are selling for $100,000 to $200,000, they pretty much all have GIA or AGL certification."

The report won't tell you how much the stone is worth; that's the job of an appraiser. It will tell you what kind of stone it is, how much it weighs, how it's been cut, its color, tone and brilliancy, the imperfections in the stone on a standard grading scale, any treatments that have been done on the stone and the country of origin.

For detailed information on what the report data means for colored gemstones, visit the American Gemological Laboratories site. For diamonds, check out the GIA's tutorial. You can also learn about gemstone standards at Diamond Guide (click on the Buying Tools checklist), or check out the tutorial on gemstone clarity, color, cut and carat at the Pricescope Web site.

Much of a stone's value will be based on subtle color differences, Matlins says, that can change with lighting conditions. Before you buy a stone, look at it both in daylight and lamplight. Indoor light is the best light for viewing rubies because that light is at the high end of the red light spectrum. Buy a jeweler's loupe, a 10X magnifying glass that will help you detect noticeable flaws and polishing marks.

If you don't have the background or don't want to take the time to learn, you need a knowledgeable expert that you trust to make the assessments for you, much as you would a stockbroker or mutual fund manager for equity investments.

The people who don't want to take the time to learn about gems are in the minority, Genis says. Most of today's buyers are collectors with a passion for stones and want to know everything they can about them.

"Some of my clients would never part with these stones at any price," he says. "It's an addiction. They become obsessed. "
 

International Market Updates
Burma Auction
The state-run Myanmar Gems Enterprise (MGE) of Burma will hold the 41st annual gems exposition in March, 2004 to put on sale its gems, jade, pearl and jewelry through bidding and fixed prices.  Burma started these annual gem auctions in 1964, introducing mid-year ones in addition since 1992 to boost the country's foreign currency earning.  Since 1964, Burma has earned a total of US$ 431.98 million.   

Canadian Emerald's Value
True North Gems will use a public auction to establish a value for emeralds taken from its Regal Ridge property. The company decided to use a public auction to establish a value for its emeralds because of the complexities of satisfying requirements by the B.C. Securities Commission. It is also difficult to find a Canadian gemologist qualified to make an independent appraisal that does not already work for True North. The auction could be held as early as January. The format is likely to be a tender auction, whereby interested parties will be invited to view the emeralds and submit a price by mail. The quality discovered so far is only commercial. True North announced it recovered over 29,000 carats of gem and near-gem quality emeralds.

Canadian Blue Beryl

Canada's True North Gems has recently discovered some aquamarine or blue beryl. Strangely, they are attempting to market the stone as a new stone named True Blue rather than aquamarine.  In the rough, the stone is an intense blue color.  Since their main activity is emerald exploration, maybe finding another beryl is not surprising.  A high iron content is reported to be the cause of the intense dark blue color.

Afgem To Sell Tanzanite Business
African Gem Resources plans to sell its Tanzanite business for about US$25 million to a group to be called Tanzanite One.  After the proposed deal, Afgem would continue to operate its diamond business. Tanzanite One presently has 22.8% interest in Afgem. The company viewed the current rating of Afgem shares on the JSE Securities Exchange of South Africa as a liability to effectively raise capital for future expansion of its tanzanite mine and development of an international market for tanzanite. The  South African currency, the Rand, has been depreciating against the dollar recently and the gemstone business is  primarily a US dollar business.  Afgem reports the tanzanite business in Rand meant that the true performance of the business was affected by foreign exchange losses.  Tanzanite One will be listed on the London Stock Exchange in US dollars.

Tanzania

The State Mining Corporation (STAMICO) will conduct a massive campaign to educate miners on how to get good prices for their gemstones abroad. STAMICO believes it is important to cut gemstones locally to increase their value. The Deputy Minister for Energy and Minerals announced government plans to establish a gemstone cutting industry. A relatively small investment would be needed to set up a gemstone cutting company. Also, the Tanzania Women Miners Association (TAWOMA) was planning to set up a Tanzania Minerals Center (TMC) in Tanga this year. The TMC will serve as a national center to market minerals and gemstones from mines run across the country.  The Tanzanian Government views the mining sector as a way to significantly eradicate poverty.

Auction:
Switzerland
The 103-carat diamond, said to be the largest ever put up for auction, failed to sell because bids fell short of the $8.4 million asking price. Bidding stopped at $7.65 million for the stone, which had mesmerized jewelry dealers and collectors with its size and quality. It was discovered in the Premier Mine in South Africa. Designing and cutting the rough crystal took place in Johannesburg and New York and took 18 months to complete. Its sale by Sotheby's was meant to be the climax of a week of jewelry sales in Geneva.   A 100.10- carat pear shape sold for $16.5 million in 1995.

A 478-carat sapphire was sold by Christie's for $1.5 million.  This is slightly above $3,000 per carat.  It was bought by a anonymous telephone bidder.  The gem was first recorded in Sri Lanka in 1913 and its previous owners include Queen Marie of Romania, as well as an American jeweler.  The gem is said to be larger than a hen's egg and only two larger gem quality sapphires have been recorded, both in museums.   These results show the auction market remains weak due to the international economy..

Notable Quotes
"In economically troubled times, diamonds are more than a girls's best friend....they are an investors best friend.  When investors don't know what to do, they buy diamonds."
Francois Curiel, Christie's
Wall Street Journal, October 27, 2003


"Now economists see another cycle starting. With stocks and bonds up, folks worried about the sustainability of these markets are likely looking at art along with other luxury items like jewelry (up 8% this year) and private jets (up 25%).  Hard assets look more appealing."
Mark Zandi, Economy.com
Wall Street Journal, November 7, 2003

Collectors Corner
North Carolina Emeralds Sold

A matching pear of oval emeralds weighing 4.76 carats,  mined in Hiddenite, N.C., have been sold for $20,000 per carat to a private collector.  It took two years to mine the matching emeralds, which are being set into earrings.  The  most famous stone from North Carolina is the 7.85 carat Carolina Prince.  It sold for just over $63,000 per carat or $500,000. The Prince is considered to be one of the finest emeralds ever found in North America.

Gemesis Goes After Diamond Industry
Gemesis Corp. has launched an all-out attack on the diamond industry.  The diamond maker is partnering with nationwide retailers to market jewelry featuring Gemesis-made fancy yellow diamonds. Jewelry featuring Gemesis stones will be available in about eight different stores around the country by the end of 2003.  Gemesis has 23 diamond-making growth chambers, each weighing about 4,000 pounds and costing about $50,000. Each chamber produces about eight 3-carat rough stones per month. The Gemesis-made diamonds are virtually indiscernible from naturally mined stones. The gemstones are not look-alikes; they are actual diamonds, intrinsically and chemically.  Gemesis is inscribing every stone it produces bigger than 0.2 carat.  Gemesis plans to produce colorless and colored diamond colors as market demand grows for the product.

Victoria's Secret's Fantasy Bra
Every year Victoria Secret's creates an unbelievable bra for the Holidays.  We  have never heard of any of them selling and wonder what happens to them?  This year, Heidi Klum wore the 2003 Very Sexy Fantasy Bra at the Victoria Secret's fashion Show.  The bra and panty set is valued at $11 million and made from more than 6,000 gemstones, including a 70-carat pear-shaped diamond. The bra has a total weight of 2,200 carats of white diamonds, yellow-orange sapphires, rhodolite garnets and amethysts. The matching panty has over 3,200 diamonds and colored gemstones and weighs 200 carats.  It took over 375 hours of work to make the set.

Buddha Crystal Unveiled
The world's largest crystal Buddha was created by the Cable Beach Club Resort and given to the people of Broome, Australia.  It is believed to be the largest crystal Buddha in the world.  The statue was hand carved from smoky quartz and weighs more than seven tons, is two meters high and took a team of stone masons six months to create.  The male Buddha sits on a lotus flower in a copper clad temple behind the Club and is surrounded by crystal gemstones in an ornamental garden. 
Jagger In Burma
Rocker Mick Jagger, 56, spent a one-week vacation in Burma free of the fans and paparazzi who usually chase him. Accompanied by a woman friend and a bodyguard, Jagger arrived on a private plane in November.  Jagger's women friend looked between 25 to 30 years of age.  Jagger spent a night in the luxurious, 102-year-old Strand Hotel in Rangoon, which costs more than $900 per night. The anti-tourism campaign of Burma is strong in Jagger's native England, but he is known for thumbing his nose at authority.  We wonder if he bought any gems or simply wanted to get away from it all?


Gemology Warnings

AGL Demantoid Warning
Garnet's best attribute is they are not heated, right?  If you read any gem book you will find this.  However, some Russian demantoids recently submitted to the American Gemological Laboratories (AGL) have been confirmed to be heated by a low to moderate heat.  Now this is not a type of "super fried" heat similar to what is done to Mong Hsu ruby, where temperatures reach 2000 degrees and changes the crystal structure.  These Russian stones are heated at much lower temperatures to improve the green and drive out the brown.  These stones are probably being heated in the rough.

AGTA Blue Sapphire Warning
The AGTA published some preliminary data on the unusual color distributions observed in some "heated" blue sapphires that are in the market place.  A 15 carat Sri Lankan blue sapphire was submitted to the AGTA for examination with an unusual color distribution.  When viewed in long-wave ultraviolet light these sapphires tend to fluoresce red in the areas that are light blue, i.e. the outer rims.  The AGTA is speculating some treatment other than "simple heating" had taken place.  This new treatment, if confirmed,  is not the common beryllium lattice diffusion. They also observed a few rubies displaying these "unusual characteristics." The Gemstone Forecaster's advice remains the same-do not buy an expensive colored stone without an independent grading report.
 
Gem Robberies
Museum Diamond Theft
Over US$1 million worth of diamonds were stolen from Antwerp's Diamond Museum on December,1.  Thieves smashed two display cases with a sledgehammer and grabbed diamonds  from the Art Deco Exhibition.  The theft was committed soon after the museum's opening at 10AM, with the thieves entering as normal visitors.  The whole operation took only a few minutes, fast enough to beat the alarm system.  Obviously, the robbery was professional and well prepared.  The stolen pieces were diamonds, which can be sold easily.  The thieves did not take the more artistic creations, which would be harder to sell.

Rapper's Bling Bling Stolen From Vegas
In October, recording artists Nelly and Michelle Branch were staying at the Aladdin Hotel and Casino on the Las Vegas strip.  They were attending the 2003 Radio Music Awards.  Thieves made off with rapper Nelly's jewels and stole Branch's computer, cell phone, iPod, cash and credit cards from their hotel rooms.   Nelly told police he lost more than $1 million in jewels. Branch criticized the hotel and said detectives are following up several leads, and said it was too soon to tell whether the burglaries were an "inside job."

Russia

In December an Israeli citizen arriving at Sheremetyevo Airport from Tel Aviv was arrested trying to smuggle in a batch of jewelry and precious stones . The suspect was arrested after customs officials discovered  2,560 diamonds, 19 emeralds, 13 rings and six pairs of earrings hidden in his packed undergarments. Preliminary estimates place the value at over $150,000. The diamonds might have been mined in Russia's North and sent to Israel for cutting. The suspect was a recognized expert in precious-stone cutting.

Bank Sued Over Safe-Deposit Box
This story proves it is smarter to keep your goods in your own safe.  According to court documents filed in Utah, on January 10, 2002, two teenagers stole Steven Hall's briefcase, containing the keys to the Halls' safe-deposit box and paperwork that included the bank's location and account number. The teenagers were allowed access to the safe-deposit box area at Brighton Bank, despite bearing no resemblance to the Halls in appearance or age.  A teenager forged Hall's signature, used  the stolen key to open the box and stole $200,000 in cash and two large emeralds.  Court records say Steven Hall routinely cashed checks, then counted and bundled the money before walking to the vault area with employees, whom he came to know on a first-name basis.  The family is suing the bank for negligence, breach of bailment and conversion and asking for $600,000 in addition to attorney's fees and costs of the suit.  


New York
A masked thief made off with millions of dollars in precious gems from a Diamond District, right before Christmas on December,19. The thief, armed with a handgun, approached the owner of H and V Gems in a hallway outside the business at 62 W. 47th St. and forced her into a back office. There, in a safe, the robber found and made off with $4 million to $6 million in gemstones - mostly diamonds.  No shots were fired in the 2:15 PM incident, police said. The owner, whom police did not identify, was not harmed.

In The News

Australian Sapphire Industry Fights Back
by Dr. Pecover's, Executive Chairman of the
Australian Sapphire Corporation Pty Ltd.

This was published in November in The Inverell Times of Australia.  Dr. Pecover makes some excellent points regarding the world's sapphire markets.  When will the gem world finally tell the Bangkok heaters/treaters enough is enough and stop buying in Thailand?  (ED)

I read with interest your article regarding the conducting of a sapphire auction at Inverell. As you are probably aware, the New England sapphire mining industry is in a state of near collapse. This is due partly to the current low world demand for gemstones in first world countries, and to the competition from rough sapphire producing countries such as Madagascar, Africa and China.

However, in my opinion, one of the main reasons that the sapphire mining industry in Australia is in such dire straights today, is the fact that Thailand as a market for our stone is no longer the best place to sell Australian sapphire. This is due partly to the rise of new gemstone processing centres in other places like India and China, where large-scale value-adding is taking place, but is also due to the fact that Thailand is considered by many in the global gemstone business, to be a place where rip-off predominates over honest business practice. This is particularly evident in the beryllium diffusion of sapphire treatment scandal that has rocked the coloured gemstone business around the world this year. Many of the traders in the US and Japan, who bought these orange and yellow coloured altered sapphires for very high prices, have been left with large inventories that are virtually worthless. Thus, today, Thailand is well and truly "on-the-nose" with many gemstone traders in first world countries, because of the large-scale dumping of fake sapphires passed-off as natural stones, by unscrupulous Chinese/Thai traders. This has significantly contributed to a drop in the market for all types of sapphires marketed out of Thailand, leading to historically very poor gemstone market conditions in that country.

For the sapphire produced from the New England gemfields, this situation has been made much worse by the fact that hundreds of millions of dollars of fine Inverell blue sapphire has been acquired over the past 30 years, by visiting and resident Chinese/Thai gemstone buyers, at very low prices. These stones have been routinely taken back to Thailand, and then re-marketed to the US, Japan and Europe as top Thai, Cambodian or Ceylon sapphire. At the same time, Thai gem merchants have engaged in a concerted campaign around the world to promote the view that Australia only produces dark inky blue, very low grade sapphire. This campaign has been so successful, that everywhere in the gemstone world today, Australia is regarded as the home of cheap dark junk sapphire, even though the Inverell - Glen Innes area has produced literally tonnes of very fine Pailin and Ceylon quality equivalent blue gem sapphire.

The Chinese/Thai buyers that have come to Inverell for almost half a century have been able to acquire vast amounts of premium blue gem sapphire from struggling miner's by engaging in a variety of coercive business practices designed to cause deliberate economic hardship, as a means of lowering the value of locally produced sapphire. Any local sapphire miner reading this, will know precisely what I am talking about. Today, those same buyers are engaged in an even more concerted campaign to drive the value of New England rough sapphire to levels that are clearly uneconomic for virtually all local miners. Evidence for this can be seen in the recent demise of Great Northern Mining's sapphire operations, which grew out of the substantial exploration and mining business built by Mr. Tom Nunan.

The great tragedy for Inverell today, is that there is virtually no sapphire cutting and polishing gemstone valuing-adding industry, associated with the town. This is extraordinary, given that the New England gemfields have been host to some of the richest sapphire deposits mined on Earth, containing some of the world's premier blue gem sapphire. In particular, the sapphire deposits occurring along the upper reaches of Kings Plains Creek, have probably been the richest sapphire deposits yet mined in the world today, with sapphire grades exceeding 50,000 carats per cubic meter, in some areas.

What many overseas buyers of Australian gemstones conveniently forget, is that this country is a unique location to do business, and to source high quality gems. Compared to most other gemstone producing countries, Australia is safe and convenient to visit, allowing buyers to easily acquire a wide range of stone for their on-going, day-to-day, business needs (particularly important for manufacturing operations requiring a steady source of supply). Furthermore, there are no restrictions on the export of rough gemstones from Australia, unlike many other gem producing countries such as Sri Lanka, parts of SE Asia, and China. Thus, in these ways, Australia stands in stark contrast to virtually every other place on earth that produces gemstones. The rule-of-law is enforced in Australia, making this country by far the safest, most reliable, and easiest place in the World today to explore, mine and source a variety of gemstones.

What is very interesting about the current sapphire exploration and mining situation in Australia now, is that because the buyers who have traditionally come here, are largely seen to be of little or no value to the future of the sapphire industry in NSW and Qld (and perhaps they never were, given their unconscionable behavior for all these years), for those miner's that are left, there is a growing realization that their only sustainable future lies in establishing Australian-based gemstone cutting operations that produce high quality premier material for marketing to top-end jewelers in 1st World countries; while at the same time reclaiming this country's "true-blue" Aussie sapphire heritage.

To this end, local government and business in Inverell, need to work together to establish a new sapphire industry based around local value-adding and Australia-wide tourist-based marketing of top-grade New England sapphire and sapphire jeweler. Only in this way will miners be encouraged to contribute their knowledge, resources and expertise to build a new and more sustainable gemstone industry in the Town and district. This is the trend today, in many of the world's gemstone producing areas, and particularly where large-scale gemstone resources are located.

I know, that from a geological perspective, there are still substantial sapphire resources left to be developed in the New England gemfields, and in eastern Australia as a whole. These resources can form the foundation of a new Australian-based sapphire cutting and marketing industry in Inverell that, if properly promoted, could attract visitors and jewelry manufacturers to the town from all over the world.

I commend these views to your readers, as a basis for helping to encourage the future establishment of a new, more advanced, sapphire industry for Inverell

Last British Company To Leave Burma
The Sydney Morning Herald, November 8, 2003
By David Jones in London

The international pressure on Burma is mounting.  The Burma Campaign UK will now go after gems. (ED)

The world's second-biggest tobacco group, British American Tobacco, has bowed to pressure from the British Government to pull out of Burma after international criticism of the country's human-rights record. BAT said it had agreed on the sale of its 60 per cent share in its Burma business to a Singapore investment firm after the British Foreign Office asked the tobacco group in July to quit the country, which is run by a military government. The remaining 40 per cent of the Rothmans business in Burma is held by the junta there. "The sale agreement follows the exceptional formal request by the British Government in July for us to reconsider our investment in the joint venture," said BAT's director of corporate and regulatory affairs, Michael Prideaux. The London-based tobacco group insisted the sell-off had nothing to do with the international campaign and was solely a response to the British Government's request.  Foreign companies investing in Burma have long been a target of Western human-rights groups who say the firms are indirectly supporting a regime guilty of human rights abuses. BAT entered Burma in 1999 when it took over the tobacco business of London-based Rothmans. After the Government's pressure in July, BAT had said it was reviewing its presence. The Government welcomed the move, saying it reinforced Prime Minister Tony Blair's message in June that trade and investment with Burma is not appropriate so long as the regime continues to suppress the basic rights of its people. BAT is the last big British company to pull out of Burma. The Burma Campaign UK welcomed the move and said it would shift its focus to campaign for a ban on imports of Burmese gems and timber into Britain and the European Union, which are an important source of income for the regime. "This is a huge victory," said John Jackson, director of the Burma Campaign UK.  "They had to be dragged out kicking and screaming but at least they are out. If a company like BAT can be forced out of Burma, any company can be."


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