Singapore-based gems & jewellery writer, RICHA GOYAL SIKRI, reports on the encouraging signs of recovery in the emerald sector, as demonstrated by the recent Gemfields auction in Singapore that achieved revenues of $22.4 million.
May 16th 2019, Singapore, 7 pm, Adrian Banks, product and sales director, Gemfields, approaches the microphone to announce the results for Auction 1 of Kagem mine’s premium grade emeralds. There is a feeling of anticipation in the air as bidders put their mobile phones aside, somewhat confident of their calculations. Adrian has everyone’s attention as he clears his throat and announces Chatree Gems, a Thai company, as the winner of the first lot. Fine quality lots have traditionally been won by manufacturing companies from either India or Israel, with Thai companies focussed primarily on the ruby and sapphire sector. In an exciting twist, auction 1 and 2 saw Chatree Gems winning three of the most beautiful lots of Zambian emeralds, including the top lot comprising two rare gems weighing a total of 62 carats, which set a new record price per carat for Zambian emeralds at a Gemfields auction. The two gemstones have been named ‘Green’ and ‘Ice’ in homage to the 1981 movie starring Omar Shariff and Ryan O’Neal.
Chatree Khaegthoop, managing director, Chatree Gems, explains their motivations, “We are very pleased to have won such fine material in our first emerald auction. We have been thinking of expanding our portfolio to include other coloured gemstones, and this result enables us to embark on a new direction in our business.”
The auction generated revenues of $22.4 million, with an alltime high average price of $71.85 per carat. Since July 2009, Kagem emerald auctions have resulted in $589 million in total revenue. With one-quarter of this amount spent on taxes, royalties, conservation and community projects, news of another successful auction is well-received by the Gemfields CSR team in Zambia.
Ninety-five per cent of Gemfields’ customers for Zambian emeralds hail from India, where the gemstone sector has been dealing with various regulatory and tax constraints, increasing pressure on liquidity. While results from different auctions are not directly comparable due to varying characteristics of the product offered, it is still interesting to observe the differences between the May 2018 auction, with $10.5 million in revenue (56% of lots sold), and the May 2019 auction, generating revenues of $22.4 million (80% lots sold).
Adrian Banks commented: “As the results of this auction show, we continue to see encouraging signs of recovery in the emerald sector. We thank our customers in India for their support and congratulate Chatree Gems of Thailand on participating for the first time in our emerald auction and winning three of the finest lots offered. The biggest issue Kagem presently faces is the 15% Zambian export duty imposed on emeralds since January 1st 2019. When combined with the pre-existing 6% mineral royalty tax, Zambian emerald exporters must now pay an effective 21% turnover tax on their revenues. By contrast, the world’s second and third largest emerald exporters, Colombia and Brazil, levy 2.5% and 2.0% respectively, bringing about a watershed shift in a tactical advantage. While the 15% export duty shuts the door on foreign investors and new entrants interested in the Zambian emerald sector, the financial impact is being acutely felt by incumbent producers like Kagem Mining Ltd. We continue to liaise with the key government departments in seeking a resolution and remain hopeful that a solution will be found.”