At the biannual congress of the International Colored gemstone Association (ICA) held in Tokyo in June, Santpal Singh Chawla of SS Agencies in Bangkok was elected to the ICA’s board of directors for a four year term. Here are excerpts from his speech to ICA delegates:
It is both an honor and a privilege for me to address you today. I’m pleased to report news and trends in our industry as seen from Bangkok.
I’ve been asked to tell you about current trends in the Thai gems industry, especially regarding the supply of gemstones and relevant cutting information.
In 1982, Thailand’s exports were less than $200 million in gems and jewelry. Last year, exports totaled $1.8 billion, nine times the value of 12 years ago. And the marker remains healthy. Last year’s sales grew almost 10 percent compared to 1993.
One of Thailand’s main competitive edges is its low cost of labor. …Relatively inexpensive and easily trainable, [Thai workers] are like gems in the rough—waiting to be polished to bring out their inherent value. Thai workers have a heritage of fine craftsmanship. They easily learn new skills and pay attention to intricate details. With in-house training, unskilled Thai workers become efficient in six to eight months. Our industry in Thailand is changing due to pressures and demands from world markets. I will report on our big three first—rubies, sapphires and emeralds—and then deal with other colored gems as a group.
Rubies
The ruby market has traditionally been Thailand’s mainstay. We are the largest exporter in the world. Prices rose dramatically from 1985-1991 due to high demand and low supply. Borai in Chanthaburi province and the Pailin area of Cambodia produced 70 to 75 percent of the world’s rubies from 1963 to 1993.
The opening of a single major new mine—Mong Hsu in northern Burma in 1992—made a dramatic impact on what had been a comparatively stable market. Today the ruby market is saturated. Prices have fallen—and demand is threatening to fall as well, because over availability of some qualities and sizes have reduced the distinctiveness of this stone in the marketplace.
Traditionally, the ruby has been a high-concept stone, a stone with a special feeling or mystique. It was seen as having a rarity and was difficult to find. But the new availability reduced both prices and profitability for many suppliers.
Thailand’s ruby exports have been steady at some $200 million annually for the past five years. At least another $75 million are sold to local jewelry manufacturers producing mainly for export. I do agree with other Thai producers who feel strongly that the ruby market has considerable scope for expansion with improved promotion for marker awareness and development.
Sapphires
The sapphire market is quite different from that of rubies. More than 50 percent of Thailand’s supplies come from abroad—especially from Sri Lanka, Australia and many parts of Africa. The market is strong because of the continued impact of long-term promotion in Thailand and abroad, especially through the Thai government’s Department of Export Promotion.
Thailand’s supplies of locally-mined sapphires in Kanchanabur (near the River Kwai) and Cambodian stones from Pailin are limited and falling in quantity.
A promising African mine in Madagascar has yet to produce significant quantities but we hope this will become an important future source of supply.
Emeralds
Emeralds are relatively new to the Thai market. Thai manufacturers and consumers are being educated to the emerald, but cutters don’t yet handle emeralds as well as rubies and sapphires.
The market is dominated by Indian and other traders who have relocated from elsewhere in search of lower overheads and ready markets. In Bangkok, they found what they were looking for –and more. Now Thailand has become an excellent source of finished emeralds. Better quality stones, especially Colombians, are entering the market for sale to wealthy Thais—and to an expanding export market.
Other stones
Thailand has cut and processed stones such as tanzanite, amethyst, aquamarine, peridot, topaz, tourmaline and tsavorite only since the mid-1980s. When diversification began, lower costs in Thailand meant that Thai producers gained competitive advantage over other centers, and this part of the industry grew dramatically.
Thailand attracts a steady flow of major and minor producers of rough from Africa and Brazil. We have become the world center for many kinds of rough. We’re user friendly, with investment incentives and no duties.
Summary
Currently, Thailand accounts for 12 percent of the total world trade in colored stones with some $465 million sold in this area alone. Thai producers and manufacturers would like the ICA to concentrate more on promoting the colored stone market—and looks to increased recognition of the ICA symbol as a sign of quality and reliability.
Thailand is primarily known as an exporter, but is should be noted that Thailand is also the world’s number two consumer of S-Class Mercedes Benz automobiles—and that wealthy Thais buy large quantities of 24K gold and increasingly more valuable stones and jewelry creations. Thailand is a market that’s growing, and a good place to do business.
The more bourses, the merrier WFDB president says Thailand can support more than one
Eli Izhakoff wants to make one thing clear: he won’t play politics when it comes to the question of diamond bourses in Thailand.
“There’s no intrigue here,” he says. “The World Federation of Diamond Bourses is above that.”
Ever since the Bangkok Diamonds and Precious Stones Exchange opened at Gemopolis last year, speculation has flown about the future of other planned diamond bourses in Thailand. Plans for another bourse to be established at the Jewelry Trade Center by Henry Ho are already well underway, and a third bourse has been discussed by other figures in the Thai diamond industry. The big question was: If Izhakoff was supporting the BDPE, would there be room for another bourse in Thailand?
“A lot of people ask this question and politicize it more than it ought to be,” says Izhakoff, who has served as president of the WFDB for nearly five years. “We have basic rules—if you meet the requirements then you get in. There’s very little politics in it.”
After all, he notes, several diamond centers have more than one bourse: Antwerp has four, and London has two. How many bourses does Izhakoff think Thailand can support?
“I thing that Thailand is an important diamond and jewelry center. I think they can support several bourses..[if the developers] have the membership, the finance, and if they are serious.”
In Izhakoff’s mind, the controversy is all part of the country’s growing process.
“Thailand came onto the scene with a big bang, and when you have so many people, each one pushing in their own direction, this kind of thing occurs,” he says. “But in my opinion, it’s a very positive thing. These are all very strong people, and they certainly have the capacity to run a bourse.”
An idea mooted from some quarters is that Thailand should have a single bourse with multiple trading floors.
“I never suggested that,” says Izhakoff. “I don’t know that there’s a precedent. I am not excluding the possibility, but it’s an internal matter—it’s up to them to decide.”
As for the performance of the Bangkok Diamonds and Precious Stones Exchange, Izhakoff is pleased with what he has seen so far. “They’re doing a lot of positive things,” he says.
However, he says the new bourse and Thailand’s diamond industry as a whole has been hurt by the presence of the seven percent value-added tax (VAT).
“I feel that the VAT puts Thailand at a tremendous disadvantage. It’s a lose-lose proposition for them. If they want to be competitive…they can really grow if the government makes it easier.”
Izhakoff compares the situation in Thailand to one in America, where the government levied a luxury tax on pearls and diamonds. After gem and jewelry industry figures including Izhakoff went to the government and showed them bow the new tax had hurt their business, legislative proceedings were initiated and an act of the US Congress repealed the tax.
“I for one would be delighted to voice my opinion [to the Thai government] also,” he says.
Another question some have asked in whether the Thai industry is mentally ready for a bourse.
Izhakoff compares the situation in Thailand to that in Israel, where traders have the Mazal U’Bracha system and deals sealed with a handshake. It’s a way of doing business that seems perfectly suited for the bourse system, where disputes are all handled within the confines of the bourse, usually within one day. “You would be surprised by how efficient it all is,” he says.
“[In Thailand], they have their own way of doing business,” he says. However, he believes that though the local mindset will require some adjustments, by and large traders will see the advantages of the international bourse system and adapt themselves accordingly.
“By and large, the people I meet in the trade are good people, very honorable. Overall, I could say that about most of the people that I meet—maybe the other ones stay away from me.”
In the end, Izhakoff is positive about the future of the Thai industry and likes what he sees.
“No industry can rest on its laurels,” says Izhakoff. “You must constantly remain innovative, keep up with the progress. I thing Bangkok is doing that.” –DAVID SQUIRES.
International US diamond trade maintains steady growth
US imports and exports of cut but not set diamonds maintained their steady growth pattern through the first five months of 1995 when compared to the same period of time in 1994.
The American Diamond Industry Association reports that through May, 1995, American merchants imported 4.8 million carats of loose, polished diamonds valued at $2.1 billion. The data shows an increase of 4.5 percent in carat age and 7.1 percent in value over the imports of the comparable 1994 time frame.
The average price of these imported diamonds was $464 per carat, a 2.4 percent increase over the 1994 average.
Imports from Israel, India and Belgium accounted for 41.1, 26.5 and 24.5 percent respectively of the total value, and 20.2, 62.8 and 13.3 percent, respectively, of the total weight imported.
Of the top eight import trading partner, Russia, although accounting for 0.8 percent of the total amount, showed the largest percentage gain over 1994 with a weight increase of 273.7 percent and a value increase of 356.8 percent.
’97 ICA congress slated for Brazil
During the 1995 ICA Congress in Tokyo, the board of directors of the International Colored Gemstone Association selected Brazil to host the 1997 ICA Congress.
“We are very happy that the Brazilian members have invited us to their country for the 1997 ICA Congress,” said ICA President Paolo Valentini of Italy. “We are looking forward to their warm hospitality and I am sure that they will make it an unforgettable experience for us.”
The 1997 ICA Congress will be held in Belo Horizonte in the state of Minas Gerais, the most important gem producing region of Brazil.
This will be the seventh edition of the ICA Congress: earlier meetings were held in Germany, Thailand, Sri Lanka, the United States, Israel and Japan.
Aussie sapphires hit jackpot on QVC
Australian sapphires are hot in America these days. At least that would seem to be the case after a recent Australian sapphire promotion on QVC that was wildly successful. As the ICA Gazette reports, the scheduled four-hour promotion was so successful that almost everything sold out in the first two hours.
While many stone dealers don’t find Australian sapphires particularly alluring, it’s apparent that QVC viewers did: sales hit record levels, reaching $1.25 million per hour. The special included footage of mining in Australia.
All the sapphires used in the promotion came directly from an Australian mining company and was cut in Sri Lanka by a member of the ICA. One of the factors that may have contributed to the success: the sapphires used were better quality than is usually sold on television, as well as better quality than is usually associated with Australian origin in the trade.
Switzerland’s foremost watchmakers will gather in New York from Oct 31-Nov 5 for the Montres et Bijoux Genève show. The show will feature 12 of the top Swiss watchmakers, responsible for nearly 40 percent of the country’s watch exports by value. Throughout the event, skilled craftsmen—enamelers, engravers, watchmakers and chain smiths—will introduce the public to the secrets of traditional watch making as reflected in the exquisite timepieces on display
Stock float set for giant gold project
The massive Lihir gold project in Papua New Guinea finally went public in early September with details of its proposed float and October stock exchange listing in Australia and New York, Reuters reported.
Located in an extinct volcano in the South Pacific’s Bismarck Sea, Lihir is expected to be one of the world’s 15 largest gold mines once production starts in January 1998 with average annual output of 584,000 ounces for 15 years.
But project vehicle Lihir Gold Ltd is confident that continuing exploration elsewhere on the island will uncover further gold and boost current reserves of 14.6 million ounces.
At current prices, the known reserves are worth than $5.5 billion.
“There is a huge potential for further exploration on the island … and the potential for expanding the resource base is very, very exciting,” Lihir Gold’s managing director John O’Reilly told a news conference.
Lihir Gold is 40 percent owned by Southern Gold, which is in turn 75 percent owned by British mining giant RTZ Corp Plc and 25 percent by Canada’s Vengold Inc.
Papua New Guinea incorporated miner Niugini Mining Ltd, which discovered Lihirin 1982 on an island 700 km northeast of the Papua New Guinea mainland, owns 30 percent and the Papua New Guinea government and local landowners the other 30 percent.
Billed as the world’s largest gold float in 1995, the sale of up to 45 percent of Lihir Gold will raise $450 million towards the $673 million development of the massive deposit.
MJSA calls for vision award entries
A call for entries has been issued by the Manufacturing Jewelers and Silversmiths of America for the association’s American Vision Award.
This annual jewelry design competition recognizes the innovation and imaginations of independent and student designers from across the United States. Winners will be honored at MJSA’s Expo New York in March, 1996.
Competition entries must be renderings of completed jewelry in precious metals with or without gemstones. Awards will be given in two categories, professional and student.
Winners in both categories will receive a distinctive Steuben Glass award. The top student will also receive a scholarship/stipend.
The deadline for entries is Jan 12, 1996. Complete information and entry materials can be obtained by contacting the association at: One State Street, Providence, RI 02908-5035; or by fax: (1-401-274-0265.)
China confirms emerald deposits
Emerald was discovered in China at the beginning of 1992 at Da Ya Kou in Yunnan Province, reports ICA Ambassador to China Yan Yihong. The emerald deposit contains six ore bodies which are from 20 metres to 280 metres long and from 20 to 120 centimeters wide.
Most of the emerald produced from the deposit is of specimen quality, but some pieces have also been faceted. The emerald crystals are columnar in shape with a maximum length of 2.5 cm. Some have an irregular shape. According to spectral analysis, the emeralds contain both chromium and vanadium. Inclusions include quartz and tourmaline needles. Associated minerals include quartz, feldspar, tourmaline, biotite and calcite.—ICA Gazette.
De beers rough sales down 1.6%
Sales of rough diamonds by the De Beers Central Selling Organization (CSO) for the first six months of 1995 were $2,540 million, 1.6 percent less than for the same period last year. Compared to the second half of 1994, sales were 52 percent up.
Prospects for the retail diamond jewelry market remain positive in most parts of the world. During 1994, world retail sales rose by four percent in US dollar terms, to a new record level. The United States contributed strongly with an increase of seven percent. Although Japanese retail sales fell by five percent in yen terms last year, they were up three percent in dollars. Retail diamond jewelry sales in East Asia are still showing strong growth, and the region grew by about eight percent in dollar terms last year. In Europe, retail sales were mixed, with England, France and Italy showing signs of improvement, the preliminary indications are that 1995 retail sales are continuing to progress satisfactorily.
While rough diamond sales for the first half of 1995 have held up well in line with continuing growth in world retail demand, the CSO remains cautious about second-half sales.
First Half Second Half Full Year
1985 $837 million $986 million $1,823 million
1986 $1,214 million $1,343 million $2,557 million
1987 $1,560 million $1,515 million $3,075 million
1988 $2,201 million $1,971 million $4,172 million
1989 $2,317 million $1,769 million $4,086 million
1990 $2,477 million $1,690 million $4,167 million
1991 $2,084 million $1,843 million $3,927 million
1992 $1,787 million $1,630 million $3,417 million
1993 $2,543 million $1,823 million $4,366 million
1994 $2,580 million $1,670 million $4,250 million
1995 $2,540 million - -
Free trial access to GIA online
Anyone with a personal computer and a modem can new log onto GIA-Net, the Gemological Institute of America’s on-line education and information net-work. GIA is making complimentary “guest access” to the net work available.
The software is available on a self-installing 3.5” or 5.25” floppy disk for Windows or DOS. Amiga and Macintosh users may also use the GIA-Net system, but will have to provide their own generic communications software. The new software is now included in all GIA home study gemology courses.
For more information, a complimentary GIA-Net connection disk, or for technical support, interested persons should call GIA-Net at (1-310) 829-2991, ext 344.
Showing their stuff in Singapore
Shopping-crazy Singapore had another major attraction from Aug 2-5 when Jewels of Asia’95 was held at the Suntec Convention Cente in Singapore by Interface Expositions.
While trade attendance was not heavy, the Singapore public turned out in force, with jewelers reporting solid piece sales for large diamond jewelry.
Post-show statistics reported 1,959 trade visitors—71 percent of them local, with 22.9 percent coming from overseas. The United States, Belgium, India, Sri Lanka, Indonesia, Thailand, Burma, Vietnam, Canada, Hong Kong, Libya, Malaysia, China, Taiwan and Brunei were among the countries represented.
Non-trade visitors tallied in at a whopping 10,293—79.3 percent local and 20.7 percent from overseas.
The show featured 55 exhibitors from 12 countries, with the largest contingents coming from Singapore (26), Hong Kong (13), and Thailand (5).
Highlights of the show included the display of the Santa Maria diamond ship by Lazare Kaplan, as well as the famous, “Golden Turian” from Chantaburi, Thailand. Various seminars were also held, including speeches by Ken Scarratt and Garry Du Toit of the Asian Institute of Gemological Sciences (AIGS) as well as Tay Thye Sun of the Far East Gemological Laboratory in Singapore
“We are a new organizer and we hope our efforts will be recognized,” said fair organizer William Lee of Interface Exposition Associates.
The next Jewels of Asia fair will be held from Oct 27-29 in Kuala Lumpur at the Dynasty Hotel. Other upcoming fairs from the group include the three Jewels of Asia’96 fairs—in Singapore from Jan 5-7 and Aug 2-5, and in Jakarta at a date to be announced. Interface will also host World of Gems’96 to be held March 22-24 in Penang, Malaysia.