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Gemstone value chain?

pluedon

Rough_Rock
Joined
Aug 3, 2019
Messages
3
I was reading some material about gems and came across this article of National Geographic:

https://www.nationalgeographic.com/animals/2019/03/sapphire-mining-fuels-lemur-deaths-in-madagascar/

This part stood out:

“Murshid Mohammed, 29, is a dealer in Ambatondrazaka, the nearest substantial city to the CAZ and the main trading center for sapphires mined there. He says a high-quality blue sapphire of 25 carats from Tananarive costs him 300,000 Madagascar ariary—about $90.

A few months ago I saw a five-carat sapphire, cut and polished but not heat treated, listed online by a Florida jeweler for $19,600. Because of the way the international gem market works, almost none of the thousands-of-dollars-a-carat retail value of sapphires goes to the miners of Tananarive, and very little to local mine bosses like Asma.”

Could someone explain to me how a 90$ uncut high-quality sapphire turns into 19,600$? How does this process go exactly or where can I read more about it?
 

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chroman

Brilliant_Rock
Premium
Joined
May 18, 2015
Messages
936
There was a bit of a kerfuffle between Vincent Pardieu and the author of that article - there’s links on Vincent’s FB page if you want to go down the rabbit hole.
 

distracts

Ideal_Rock
Premium
Joined
Oct 11, 2011
Messages
4,764
I'm not sure exactly of the numbers, but there are a lot of people involved in the supply chain -

First the miners and mine owners, then the stone will get bought and taken usually to India (maybe Sri Lanka?) to be cut, then it will be bought by a gem dealer and taken to whatever country it will end up in, sometimes at this point it will be bought by someone else and precision cut (especially for things like sapphires, if they are precision cut it is often from a previously-cut stone rather than rough), then will be sold to a jeweler who will make that piece, to then sell to the consumer. So there is a long supply chain with everyone taking their cut along the way, the costs of moving the gems all over the world, etc. Usually the closer to the mine you are, the cheaper the cost of living is too, so as you move further toward the countries that consume the final product, the larger the markup has to be for anyone to make a profit. Basically, there are a lot of middlemen and the price you pay reflects that.
 

deorwine

Shiny_Rock
Joined
May 5, 2005
Messages
267
There was a bit of a kerfuffle between Vincent Pardieu and the author of that article - there’s links on Vincent’s FB page if you want to go down the rabbit hole.
I went down the rabbit hole. That was really interesting reading! (Not directly applicable to this thread as far as I could tell -- he was mostly talking about the lemurs -- but I enjoyed it a lot, thank you for the heads up!)
 

PrecisionGem

Brilliant_Rock
Trade
Joined
Jul 27, 2004
Messages
1,644
From my experience travels to Africa and buying rough, those numbers are not accurate. I have found prices in Africa, to be in most cases maybe 20% less than what I would expect to pay at the Tucson gem shows for comparable material. Sometimes even more expensive in Africa. I have never seen any sapphire, not even small poor colored heavily included stones being offered for $3.60 per ct in Africa. Maybe 25 years ago, but not today. The miners in Africa have cell phones and know what the material they have is worth.

I have know guys coming from Africa to Tucson to buy older stock African stones to bring back to Africa to sell at a profit.
 

pluedon

Rough_Rock
Joined
Aug 3, 2019
Messages
3
I'm not sure exactly of the numbers, but there are a lot of people involved in the supply chain -

First the miners and mine owners, then the stone will get bought and taken usually to India (maybe Sri Lanka?) to be cut, then it will be bought by a gem dealer and taken to whatever country it will end up in, sometimes at this point it will be bought by someone else and precision cut (especially for things like sapphires, if they are precision cut it is often from a previously-cut stone rather than rough), then will be sold to a jeweler who will make that piece, to then sell to the consumer. So there is a long supply chain with everyone taking their cut along the way, the costs of moving the gems all over the world, etc. Usually the closer to the mine you are, the cheaper the cost of living is too, so as you move further toward the countries that consume the final product, the larger the markup has to be for anyone to make a profit. Basically, there are a lot of middlemen and the price you pay reflects that.
What section takes the biggest cut? I think the cutting fase (if the cut it done right atleast) and the retail fase, but not sure.
 

pluedon

Rough_Rock
Joined
Aug 3, 2019
Messages
3
From my experience travels to Africa and buying rough, those numbers are not accurate. I have found prices in Africa, to be in most cases maybe 20% less than what I would expect to pay at the Tucson gem shows for comparable material. Sometimes even more expensive in Africa. I have never seen any sapphire, not even small poor colored heavily included stones being offered for $3.60 per ct in Africa. Maybe 25 years ago, but not today. The miners in Africa have cell phones and know what the material they have is worth.

I have know guys coming from Africa to Tucson to buy older stock African stones to bring back to Africa to sell at a profit.
Interesting. But in the article I posted they talked about a sapphire rush, this might bring down the price if there is lots of supply.

Are these gem tv shows where they go into Africa and buy some gem and sell for major profit abroad all fake?
 

PrecisionGem

Brilliant_Rock
Trade
Joined
Jul 27, 2004
Messages
1,644
Interesting. But in the article I posted they talked about a sapphire rush, this might bring down the price if there is lots of supply.

Are these gem tv shows where they go into Africa and buy some gem and sell for major profit abroad all fake?
Yes.

Quality rough is never cheap, and never hard to sell, doesn't matter where on the planet you are. The miners all know what the material is worth.

Here's a few pictures from a Tsavorite mine near Arusha Tanzania. The stones on the table represent a few days of work. Only the small pile to the right is of quality that could be cut, and 95% of that is cab grade. The few facet grade were offered at too high a price for the quality of the stones.

The last images is showing the entrance to the mine. The mine is a series of tunnels running about 200 yards underground. The works go in with bags as you see on the table, chip away at the pockets of color and fill the bags to drag out. The stones are then gone through in the light of day and roughly sorted.


TsavoMine.jpg TsavoMineRun.jpg TsavoMineHole.jpg
 

PieAreSquared

Shiny_Rock
Joined
Dec 18, 2014
Messages
164
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