GemNotes

TANZANIA SERVES UP A MAJOR GEM FIND

Late last year, independent miners started to bring an occasional coffee can full of significant rough gems to dealers’ offices in Arusha and Dar Es Salaam, Tanzania. The dealers were delighted.

The new year arrived and the coffee cans continued, laden with alluvial chrysoberyls, sapphires, alexandrites, spinels, colorless topazes, occasional rubies &endash; even diamonds. That’s when the quantity began to suggest a significant new source of gems.

Dealers began to ask about the source, and fingers pointed south to the border with Mozambique in a region on the Ruvuma River better known for growing cashews. Not far off is the Songea and Tunduru region, a long-time source of sapphires.

“Without a doubt you can consider this to be the major find of the ’90s,” says Abe Suleman of Tuckman Mines and Minerals in Arusha. “It perhaps even surpasses Mong-Hsu.” (The Mong-Hsu find in Myanmar about five years ago is considered one of the most important ruby and sapphire finds of the decade.)

“We’ve seen cat’s-eye chrysoberyl crystals that would cut up to 25-ct. gems!” says Suleman. “Alexandrites of the finest color change were cut in my office, some of which weighed up to 8 cts. We have cut some beautiful chartreuse chrysoberyl and pastel sapphires.”

The new find is part of a massive orogenic formation known as the Mozambique belt. Production remains in its infancy; in fact, geologists are still trying to find the actual hard-rock source. “With so much material being found alluvially by panning in the river beds, it would seem that a much larger deposit of gemstones is in the future of the region,” says Suleman.

This could substantially increase the availability of these fine gems.

Foreign interests: The government has granted nine mining concessions &endash; all to larger companies, many with foreign interests. This could present problems for the thousands of independent small-scale miners who have descended on a 30-mile stretch of the Ruvuma River.

It also could mean much of the material will end up in other countries and not be sold in Tanzania, which desperately needs the revenue to continue its economic development. “Once again,” Suleman says, “other countries will be getting credit for a product mined in Tanzania.” Suleman believes Tanzania and Tanzanian workers should be the ones to derive “value added” by cutting and setting the gemstones into jewelry.

“If the large mining concessions take over, accessibility into the area by Tanzanians will be limited and prices will then be in the control of only a few people,” he says. “The Tanzanian gem dealer is dependent on the small-scale mines and miners. If this new find is in the hands of only a few, the fine gemstone market – especially markets in the United States and in Europe – will suffer.”

NORTH AMERICA’S UNTAPPED GEM WEALTH

North America may be a relatively untapped treasure trove of gemstones, one that will grow in importance as the world’s traditional gem sources become depleted. So observed John Sinkankas, one of the world’s foremost gem experts, in his speech during the recent JCK International Jewelry Show conference program.

Enormous areas of North America remain unexplored for precious stones, he said, and Mexico and Central America remain prime areas for potential finds. The less hospitable areas of Northern Canada and Alaska will be explored more slowly, but may also yield new gem sources.

North America already produces significant numbers of lesser-value gemstones, said Sinkankas, reciting a list that spans the alphabet from amber to tourmaline. But it could also be a major player in high-priced gems.

One highlight of his gem “tour”: the growing number of beryl finds, including those in the Wah Wah Mountains of Washington marketed by Kennecott Mining. The best of these stones look like red spinels with a slight purplish tinge. They trade at prices comparable to fine emeralds of similar size.

Explorations on an emerald deposit in North Carolina are under way, but results don’t look as promising there. The ore grade found thus far is too low to support a commercial mining venture.

In Montana, long-known corundum deposits have eluded successful mining ventures, but that may change. The famous Yogo Gulch sapphires are being mined again thanks to discovery of an extension of a gem-bearing dike. The gems are free of flaws and have superb color, though the majority are small, flattish crystals that prevent cutting of large stones.

Amateur miners are combing the river beds for sapphires in the southwestern portion of the state with increasing success. The Missouri River near Helena is particularly lucrative. It’s likely that production will increase dramatically as commercial mining companies buy up many of these areas. A big inducement: many of the colorless crystals that had been useless can now be heat-treated to clear out inclusions and produce better colors.

Meanwhile, the diamond rush in Northern Canada could be just the tip of an iceberg. Huge regions in the Northwest Territories, Saskatchewan, Alberta, Manitoba and even Quebec and Ontario are being explored by mining companies and prospectors hoping to find more diamonds.

In addition, large diamonds have been found in Central Alaska, Montana, California, Appalachia and from Virginia to Louisiana. These are now believed to come from local kimberlite pipes, not brought by glaciers.

Arizona remains the world’s leading supplier of peridot. A deposit on the San Carlos Indian Reservation yields select crystals up to 15 cts.

Tourmaline comes from opposite ends of the nation. California’s Himalaya Mine is the most consistent source of gem material, with some of the world’s finest bicolor specimens, while Maine produces some excellent greens but with less-consistent quality.

Numerous other gems are being – or could be – mined on the continent, including calcite, feldspar, fluorite, garnet, jade, opal and lapis.

“The future looks bright,” said Sinkankas. “Just when we seem to be running out of gemstones, prospectors get busy and look a little harder in different places. Lo and behold, they find more.”

ISRAEL: `SEND US YOUR MERCHANDISERS’

U.S. jewelry retailers interested in buying diamonds in Israel should broaden their buying horizons, according to Gerson Stschik, vice president of the Israel Diamond Manufacturers Association.

“You’re just sending your diamond buyers today, not your merchandisers,” he said during a seminar at the JCK International Jewelry Show in Las Vegas. “But you should send your designers and your merchandisers as well as your buyers. They should go into the market and see what’s available, seek the unusual. It’s all there.”

Stschik’s talk, part of an event sponsored by the Israel Diamond Institute, was one of a number stressing what the speakers said is Israel’s unique capacity to supply a complete range of goods of top quality at very competitive prices.

Stschik also lauded the Israeli industry’s strength in fancy cuts. He said computer technology, which to date has been focused almost exclusively on cutting round diamonds, will soon make major improvement in fancies. This will enable cutters to determine the best shapes more efficiently, to do a better job on larger stones and to provide calibrated fancies in numbers needed by volume users.

Ygal Hausman, newly elected president of the Israel Diamond Manufacturers Association, spoke of the importance of fancies, saying Israel now accounts for about 70% of such stones that come on the world market.

He stressed, too, the importance of technology in the growth of the Israeli diamond industry as a whole, noting the manufacturing efficiencies it produces make Israel competitive in price with almost any producer in any country.

These efficiencies allow the Israeli industry to tailor product for any user’s needs, Hausman said. “In the past, we specialized in large orders for large customers. But today, while we still provide the service for companies that want hundreds of carats, we also can take care of the jeweler who just wants two or three stones.”

David Bar-Haim Rutlinger, deputy director of the Israel Diamond Institute, urged jewelers to attend the International Diamond and Jewelry Fair in Tel Aviv from Jan. 7-10, 1996. He said about 120 diamond firms already have taken space and that the event will be the largest diamond show in the world.

COMPETING WITH JAPAN FOR DIAMONDS

Japanese retail jewelers pose substantial competition in diamond buying for U.S. jewelers, said Martin Rapaport, publisher of the Rapaport Report, during his talk on “You, the yen and foreign affairs” at The JCK Show.

“American retailers have to compete with Japanese buyers for the same goods in the same markets, but they [the Japanese] can pay more,” he said. Diamonds are traditionally traded in U.S. dollars, but the Japanese yen has appreciated from 108 to 82 per dollar, so Japanese buyers now have an almost 30% price advantage.

“The world was much different 30 years ago when American buyers took 80% of the world’s diamonds. It was easy to understand and control the diamond market then,” said Rapaport. “Today, it’s more complicated because demand is rising from other countries [including South Korea, Thailand, Mexico and Hungary], and Americans have a much smaller percentage of that market.”

Japan’s problems: The fact that Japanese buyers haven’t flocked into the market reveals two fundamental problems there:

  • Japanese jewelers and consumers have been reluctant to buy diamonds, causing profits to decline throughout the world diamond market.

  • The Japanese are uncertain of the yen’s lasting power against other currencies. “There were many [Japanese] wholesalers and jewelers who bought lots of diamonds when the yen was 100 to the dollar and now are stuck because their competitors bought at 80 to the dollar, allowing them to sell cheaper,” said Rapaport.

Many retailers in Japan have even abandoned their traditional suppliers in favor of Indian and Israeli dealers who fly in and sell to them door-to-door. These dealers, who also traverse the U.S., sell stones for up to 40% less than Japanese wholesalers, who normally take a substantial markup. Those wholesalers, meanwhile, are left holding expensive inventories.

What to do: So what’s the American jeweler to do?

First, be aware of these events and how they can affect you.

Second, be aware of other economic trends – such as interest rates and inflation – and how they can affect diamond prices. In the late 1970s, for example, inflation fueled speculation that drove up diamond prices substantially. Then high interest rates killed inflation and sent diamond prices crashing. Jewelers who weren’t prepared for the inevitable crash suffered.

But the U.S. market is consistent and strong, even if it’s not supported by a booming currency, says Rapaport. Jewelers must play to this strength by:

  • Establishing loyal ties with their suppliers.

  • Insisting that suppliers not offer “their goods” to new buyers who may seem more attractive for a relatively brief time.

  • Holding suppliers to very competitive prices if they have the expertise to go into the market themselves.

“Today the jeweler who is sharp and who knows the market can do well in the current diamond market,” Rapaport said.