GemNotes

TAHITIANS TO PROMOTE BLACK PEARLS

The government of French Polynesia has launched a program to help the country’s 300 pearl farmers sell more black pearls in the U.S. and Japan.

The program is funded by a 10% increase in the country’s export tax on pearls (to $1.54 per gram), says Martin Coeroli, president of GIE Perles de Tahiti, which represents the leading exporters of black pearls.

Coeroli expects the increase to raise about $710,000. Of the total, $400,000 has been targeted for Japan, which takes 80% of French Polynesia’s black pearl exports. A promotional campaign hasn’t begun yet in the U.S., but $40,000 was allocated to organize the Black Pearl Association of the U.S. Salvadore Assael, president of the new association and the largest dealer of black pearls in the U.S., says the money is being used to help recruit members for the association and to study the potential market for black pearls in the U.S.

“This study will determine our promotion budget next year,” he says. Assael adds that he will put up some of his own money to promote black pearls and the new association.

Coeroli is optimistic: “Exports to the U.S. boomed in 1994, nearly double those of 1993, so we are expecting another strong increase this year.”

The export tax increase also will discourage sales of low-quality pearls because it’s a flat rate based on weight, not value, says Edouard Fritch, French Polynesia’s minister of fisheries. “Farmers will be discouraged from trying to sell low-quality pearls because they’ll be taxed at the same rate as high-quality pearls,” he says.

An enforcement program also will be instituted. For example, the government plans to open an export control office this year to inspect all pearls designated for export. Pearls that fail minimum quality checks will be confiscated and destroyed, says Fritch.

In addition, inspections will be beefed up at the country’s only commercial airport, located in Papeete, Tahiti. This is to prevent smuggling of poor-quality or untaxed pearls, says Fritch. “We will X-ray shipments leaving the country for pearls,” he says. “Certainly, we can stop smuggling because entrance to and from our country is very limited.”

The country’s major producers acknowledge that sales of poor-quality black pearls and overproduction have begun to undermine the image of their product as a high-value gem for connoisseurs. This, in combination with recession in Japan, caused prices of black pearls to drop anywhere from 40% for fine goods to 60% for lower qualities.

The government now is trying to stabilize production by limiting the number of new pearl farming concessions. CIE, which has organized about 95% of the nation’s producers, also will try to slow increases in production among its members, says Fritch.

Overall, French Polynesia produced and exported $80 million worth of black pearls last year.

ANGOLAN PEACE AND DIAMONDS

We may soon see more diamonds from Angola in the wake of a proposed peace settlement between the ruling MPLA party and the rebel group UNITA. But such an influx would add to the uncertainty gripping the diamond market because of unprecedented sales of Russian rough outside of the De Beers network.

The two groups signed a peace treaty Nov. 20, ending nearly 20 years of civil war but raising fears the nation may lose control of its diamond production. Following a cease-fire three years ago, many thousands of Angolans ventured into the country’s diamond areas to dig for stones. Chaos resulted when more than a half billion dollars’ worth of diamonds were dumped onto the market. De Beers was forced to buy many of the diamonds before they could undermine prices.

The flood of diamonds didn’t cease until UNITA, faced with the loss of a United Nations-mandated election, broke the cease-fire. Resumption of the war chased most of the diamond diggers from the fields and cut diamond production to a trickle.

Since then, Angola’s “official” diamond production – stones sold through government-approved channels – has amounted to about $2 million yearly. UNITA forces, which held some of the major diamond producing areas, reportedly financed their guerrilla war to the tune of $250 million by selling diamonds their soldiers dug up or purloined from old mine workings.

It’s uncertain how many Angolans will travel to the diamond fields now. The country’s rainy season, which usually extends through early spring, will prevent an immediate mass migration of prospectors. Even after the rainy season ends, say analysts, the short-lived nature of the 1991 cease-fire will make most Angolans skeptical that the current accord will hold. This could make many of them reluctant to get caught in a cross fire between groups who could resume warring in the diamond fields.