Coloured gemstones market poised to increasefrom $2bn to R10bn in next decade

A sparkling future beckons for the coloured gemstones market, avers financial portal Safehaven.

It cites commenter Charles Kennedy, who believes that gemstone prices, which have been increasing steadily in the past decade, could continue to increase on the back of surging demand. “The price of emeralds, for example, has increased by 500% since 2010, according to Gemfields plc.”

Kennedy posits that, if current trends continue and strengthen, coloured gems could, from a base of $2-billion, displace diamonds’ market share and reach $10-billion in the next decade.

The global gemstone market is reportedly worth about $23-billion, with rubies, emeralds and sapphires currently accounting for only $2-billion. “The sector is dominated by governments and informal operators, who control 90% of the market; break-out operator [UK-based] Gemfields plc managed to seize 10% of the market share.”

Kennedy suggests that, with diamonds overvalued in the opinion of many people and new gemstone production coming on line in Colombia, Mozambique and elsewhere, the market could be poised for a shift.“The popularity in nondiamond stones has soared in recent years . . . yet, the sector, because it is dominated by informal operators and governments, suffers from under-capitalisation and a lack of technological expertise. Immense opportunities are squandered due to inefficiency.”

The platform cites Colombia as a case in point – the country has seen its emerald production plummet from a high in 2004, even as exports rose nationwide. “The country has suffered from decades of conflict over its rich resources, particularly its emeralds, yet it remains a key source of precious stones for firms like [Canada-based] Fura Gems, which can deploy technical expertise to tap into Colombian emeralds, which remain unparalleled in quality.”

Kennedy notes that, in the world of precious stones, diamonds dominate. Sales of diamond jewellery exceed those of every other precious stone, and diamonds make up more than 50% of global precious stone sales each year. Further, the idea that diamonds are intrinsically more valuable than coloured gemstones is a perception that persists.

However], in reality, some colouredgems are far rarer than diamonds. A black opal, for instance, goes for as much as $20 000/ct, which is twice as much as even the finest-cut diamond at $9 300/ct.” Kennedy adds that, while coloured gemscan only be mined, diamonds can be manufactured as well.

Further, at consumer level, tastes are moving away from diamonds and towards coloured gems. “Younger generations don’t attach as much importance to diamonds as their parents and grandparents, and, when they do buy stones, they tend towards coloured stones like rubies, emeralds and sapphires, according to one CNBC report,” cites Kennedy.

He states that, if the ‘diamond playbook’ used by firms like De Beers– which entails integrated operations and the large-scale application of technical expertise – is applied to coloured gemstones, “the profit potential could be immense”.