Mine to Market

Geology of Gems

Earth's Crust is a solidified layer that sits on semi-molten zone called the Mantle. Going down further you have more heat & pressure then come to Outer Core and Inner Core (molten core with solid, dense centre). On surface/crust consists of tectonic plates of rock, that very slowly move due to geological action.

Igneous rock: rocks formed when molten magna cools & solidifies either as it flows close to the surface or is forced out in a lava flow.

Metamorphic rock: undergoes changes due to heat & pressure (pr burial, friction, folding) without melting.

Sedimentary rock: rock that has eroded, redeposited or dissolved by fluid, over time.

Gem material can be found in all forms of rock. During this geological activity of heat & pressure, gem crystals grow. Often mix with other minerals, grow in veins or cavities within rocks. Can be mined by hand or machine and some are suitable for cutting into gemstones. If found within the rocks in which they formed they are primary deposits, eg: igneous rock called pegmatites are a rich source of gems in their primary deposit. Gems that have been dislodged or eroded out and found elsewhere are secondary deposits, eg: sediments deposited by running water that contain gems.

Geological and chemical environment affects gem appearance eg: colour depends on combination of chemicals eg: ruby has aluminium & oxygen & chromium. Gem deposits are rare as they need the right conditions and processes to form. Elements can cool into crystals from a melt or crystals can grow from a solution. Examination of minerals and their inclusions can give evidence of the environment in which the gem originated.

Weathering: washed downstream - host rock is worn away and durable gem material is washed into rivers and end up in gravel or the sea. In this way gems are rolled, broken and abraded, & crystals become more rounded. Fragile gems can be completely destroyed. Alluvial gems are found in river gravel, sea beds or lakebeds.

Sri Lanka has a wide variety of gems such as sapphire. most deposits are alluvial; Myanmar is famous for rubies found in alluvial sediments historically, but now also in primary deposits; Mogok, Myanmar, rubies occur in white marble; Columbia has emeralds; Brazil has orange-pink topaz and neo blue of he Paraiba tourmaline; Australia has opal; Menhenge, Tanzania has red spinel that are considered the best examples.

Mining

Takes place where economically viable sch as high rocky areas / jungle rivers / underground tunnels / open pits. Can range from individuals and small-scale community operations to large-scale industrial workings.

Ethics:

• mining mineral deposits can lead to corruption, injustice, war, depletion of resources, with little local community benefit
• 21st century consumer ethics have helped change the ethical paradigm in mining eg: 2001 Kimberley Process which is a certification scheme under which states implement rough diamond shipments and certify them as 'conflict free'
• private sector has started many initiatives to promote responsible sourcing / beneficiation / fair labour conditions / anti-money laundering policies / sustainable business practices in the coloured gem sector.
• 80% of the sector still relies on small-scale artisanal mining so these programmes are vital
• negative mining aspects are decreasing with global awareness of issues like environmental impact and health of local communities; companies and consumers are now more likely to consider these impacts
• safety & yields can improve with better training of miners eg: poor use of explosives to break up hard host rock can destroy large gem crystals, increased local education can change this behaviour
• initiatives in many countries aim for sustainable development eg: female empowerment policies /ending child labour / water management / clean energy

Gem mining stages:

• 1) clean, wash, sort. Crystals or roughs are removed from rocks or seived from sediment, cleaned and sorted. Cleaning and washing maybe on a large industrial scale. Associated materials, host rock bits, are removed mechanically or by hand using small tools = trimming.
• 2) separated into quality categories. Non-gem material is removed. Gems separated into cabochon and cutting qualities and sent to appropriate cutting centres
• 3) sold onto market. Roughs are sold from one-to-one barter to international auctions. Whether gems are cut before or after the 1st selling stage depends on the type of gem, the mine and other factors. Often traded to major cutting centres such as Thailand, India, Israel or Germany
• 4) cutting quality. Includes proportions affecting brilliance, light return, final orientation (considers crystal structure, colour variations & optical phenom. Can significantly affect appearance and therefore value. Poorly cut gems can be re-cut to increase desirability despite a reduction in weight
• 5) Gemstone Pipeline. The supply chain from mine to market and final customer. Most gems are on this but very valuable ones may go through a protracted process ie: through various dealers' hands before being sold to fi nal customer. Money changes hands at all stages and includes lab testing, retail and maybe back to second hand trade

Value

Now have improved access to info (internet, auction catalogues) so a wider variety of gem material is known to the public. Means some knowledge of gemm’y and how the market works is necessary for buyers.

Value is important but hard to define. Price reflects rarity and desirability but is also affected by:

• how much effort and expense is needed to bring the gem to market, ancillary costs inc. insurance, security, transportation, marketing
• complexity of the supply chain
• demand

Most gem selling companies have a reputation to uphold and will take care to treat their customers fairly. Many employ qualified gemm’t for in-house control.

Appraiser is a 3rd party expert who provides an estimate of value:

• types of value - insurance (cost replacement on like-for-like value) and estate valuation (what price sells for on the open market eg: at auction, possibly fairer)
• need to tell if the gem is natural/treated/modified
• check quality - colour / clarity / cutting / weight
• if gem is unsett is easy to weigh otherwise measure the dimensions and use a formula to calculate approx. weight
• use knowledge of the coloured gem and diamond price guides to suggest a suitable value – an opinion
• stone may go to lab for further analysis

Pricing guides - Rapaport Price List for diamonds and GemGuide for wholesale price of coloured gem stones, dia. & pearls.

Case study – blue gemstone ring: 1) assess gem for its nature – artificial , synthetic or natural. Any treatments. If unsure and may be of high value send to a lab 2) estimate weight in cts. Gauge quality. Check inclusions or external features that many decrease durability and desirability eg: fractures, chips, scratches 3) check resources to research current market value 4) ask customer about history and provenance, check for makers marks which could affect value

History: Sir William Petty (1623-1687) offered advice on buying diamonds. Value was partly lay in merits such as internal (size, colour, incl.) and external (war -portable riches, marriage of royalty). Saw it as a global market and if prices rise in Persia it should also rise in England. Price also affected if the countries in which they were mined had export prohibitions against them. These factors – political and cultural- still important today. Petty’s merits are still considered important.

Ethical issues

Ethical sourcing is increasingly important to buyers so more gem companies are able to offer more responsibility sourced gems. It’s not a clear cut issue. Developed countries trying to impose their ideas of correct social structures / accountability onto poorer gem producing communities can be seen as a form of colonialism.

Need for clear audit trails can have side effect of increasing bureaucracy on miners and creating new opportunities for corruption. Change takes time but need to increase awareness and encourage more support back down the supply chain.

Disclosure

Increasing development of treatments to improve gems has provided a wider variety of gems at a variety of price ranges. This brought other challenges. Important the customer knows what they are getting for their price. This includes treatment disclosure.

Important to customer confidence. Failure to disclose may lead customers to an incorrect perception of rarity and desirability.

Less ethical sellers may take advantage eg: 1) lead-filled rubies set in jewellery and sold at a high price may not be recognised until later when taken for cleaning or repair 2) small natural diamonds called ‘melee’ are mixed with identical synthetic stones and set in jewellery without disclosure. A significant issue and technology has been developed to detect this.

Will always be dealers who don’t disclose but can only keep abreast of developments in new treatments and syn. Do this through journals and CIBJO.

Traceability

Tracking = mine to market; Tracing = market to mine

Complex nature of global gem industry means there is often little info available on supply chains and how specific material is mined, manufactures and sold.

How we trace gems can increase transparency to better understand supply chain & help improve environmental and social impact.

Traceability technology can help answer questions like Natural? Treated? Which individual mine? What conditions were they mined under or cut?

Blockchain:

• digital ledger technology that can support the chain of custody by making documentation tamper proof & potentially provide new opportunity for traceability
• data is added to the blockchain with each recorded transaction; steps are verified and ownership attributed; info is timestamped encrypted and stored in a distributed and decentralised way
• provides record of gem’s journey from source to end consumer
• BC is only as strong as the data supplied and doesn’t replace robust standards involving production practices and audits. Does help reinforce claims by having evidence of product history
• BC technology is developing with Corporate Social Respon & other due diligence requirements. Can be used with supply chain management, such as identifying treatments or syn., and addresses consumer confidence issues

1) individual stone added to BC with supporting documentation (miner, date, location, photos, weight, measurements) and stone gets a unique ID number 2) gem cutter purchases the stone and new data on the cut & polish is added to BC 3) jeweller buys stone and mounts in ring for retail sale. New data again added to BC 4) consumer buys ring and documentation can be given to them. Their details can be included on BC for use of proof of ownership for insurance