Ethical Emeralds
February 29, 12
By Danielle Max and Vinod Kuriyan
When it comes to ethical behavior in the jewelry industry, the emphasis is usually placed squarely on diamonds thanks to the work of the Kimberley Process Certification Scheme (KPCS). The gold industry has also come under the critical eye of the No Dirty Gold Campaign, which seeks to end destructive mining practices. When it comes to the colored gemstone industry, however, there is no overall monitoring to ensure fair and ethical practices.
Part of the reason is that each type of stone is basically a separate sector unto itself. This point was emphasized by Jean Claude Michelou, the International Colored Gemstone Association (ICA) vice president. He said at last year’s ICA congress, in the the gem-rich country of Brazil, that part of the difficulty in creating any ethical initiatives is the lack of any centralized marketing and market price control for the many types of gems, which come from hundreds of countries with myriad cultures and standards. In addition, he pointed to the fact that 80 percent of production is carried out by artisanal miners in third-world countries as a force working against the establishment of such initiatives.
But that does not mean that individual suppliers are not trying to create some sort of ethical program. Chief among them is London-headquartered Gemfields, a leading colored gemstone producer that is especially renowned for its emeralds and which prides itself on its transparency and ethical and environmental stance. And, with an upsurge in the price and popularity of emeralds, it is a strategy that seems to be working for the company.
 Image: Gemfields |
Transparency
Gemfields emphasizes that it is the first mining company to produce emeralds that are completely traceable from mine to market. Via its partnership with dealers and manufacturers, the company tracks and monitors its emeralds all the way down the pipeline to the consumers. It offers certification of full disclosure directly to its clients.
The company says each stage of production is carefully monitored and guided to ensure the most ethical, socially responsible and environmentally-friendly operating standards. As part of its push towards greater transparency, the company is working to ensure the full disclosure of any treatments a stone might undergo before it reaches the end consumer. Such is its emphasis on disclosure that Gemfields says it will stop sales of rough to any gem cutters who do not practice full disclosure. Whiile this sounds good in theory, in practice it is not so easy to enact.
“Once it leaves the cutting and polishing firm, there’s not much we can do to ensure that the emerald continues its journey with full disclosure,” says CFO Dev Shetty. We encourage our clients to sell their polished only to those retailers they know will abide by our requirement for full disclosure. But at the end of the day, it is the retailer who decides whether or not full disclosure should accompany the emerald across the sales counter.”
To ensure that these standards continue, the company is working towards an exclusive warranty system that will certify mined rough. This will guarantee that its emeralds are ethically mined and uphold fair-trade practices while remaining in accordance with stringent environmental, social and safety standards.
“We live by the motto that when you keep secrets, the only person you’re fooling is yourself. As a publicly listed company, Gemfields sees significant benefit in being fully transparent. Our doors are always open,” said CEO Ian Harebottle at the ICA Congress. “We continuously publish our results and corporate strategies. We’ve initiated and support a process of warrantees throughout the pipeline. And, we encourage and support certification.”
Ethics
With ethical behavior playing a larger and larger part in many consumers’ purchasing decisions, Gemfields places a great deal of attention on its social corporate responsibility program. The company is the 75 percent owner of the Kagem mine in
“We strongly believe that working with the communities is crucial to improving their welfare. Thus we make efforts to engage the local community in our projects. The sense of ownership of the infrastructure constructed gives the community an additional incentive to preserve and engage in other development projects,” states the company’s website.
Gemfields gives financial support to a number of schools located near the mine. As well as providing infrastructure, including school buildings and donating books and stationary, it has also solved basic issues such as transportation of teachers to three local schools. Before they received the bicycles, the teachers had to walk more than 15 kilometers to reach their schools.
The company constructed the Nkana Clinic, located 32 kilometers from the Kagem Mine. It continues to support the clinic by donating drugs and medicines, furniture and medical equipment and assisting with maintenance. Kagem is also
In the process of starting an HIV/AIDS program at the center, a vital project as some 10 percent of the population is infected with the disease.
 Image: Gemfields |
Environment
As well as helping the local people, the company tries to work, as much as possible, in harmony with the environment. “Respect for the environment is central to our approach to sustainable development. Instead of simple tree-hugging, the latest cutting-edge technology is used to minimize the impact on our natural surroundings and to conserve the environment,” it says.
“Nobody in the world mines and sells emeralds the way we do. The mine area had already been worked by artisanal diggers by the time we acquired it and was a mass of open pits. We flooded these pits and made them fish reservoirs. For our current operations, we back-fill our waste – we don’t haul it out of the mine but dump it in a part of the mine that has already been worked, thus filling up the deepest parts. We also plant trees after we’ve dumped our waste,” says Shetty.
Along with taking care of its immediate environment, the company is also an active partner in the “Emeralds for Elephants” campaign. After a successful outing in London, the venture was brought to India when the company sponsored an auction of a collection of exclusive elephant-themed emerald jewelry at Mumbai’s famed Taj Mahal Palace hotel.
Some $150,000 of the $750,000 raised at the auction was donated to the World Land Trust and the Wildlife Trust of India’s conservation projects in India. The two organizations work to create a network of wildlife corridors that will allow elephants to follow their regular migratory routes while minimizing human-elephant contact and conflict.
Auctions
While its ethical and environmental activities are laudable, and deserve to be emulated, the company’s chief aim is to sell emeralds. To do so, Gemfields has changed the way it does business, offering its production at regular auctions – a method that has led to an impressive increase in sales and prices. This organized approach and consistency of supply, says the miner, has helped rejuvenate the emerald industry.
The entire production is sorted into 200 grades and sold at the regular auctions. High-value material is sold at auction in
At its March 2010 auction, Gemfields sold 22.8 million carats for $7.2 million or $0.31 per carat. Fast-forward to November 2011 when an auction of 9.8 million carats of low-end emerald rough netted $11 million, delivering $1.12 per carat.
The last high-end auction took place in Singapore in July 2011 and realized $31.6 million for the 740,000 carats sold. This translated to $42.71 per carat – a staggering 870.7 percent over the $4.4 per carat at the July 2009 auction. It was also a strong 63 percent over the $26.2 per carat at the last auction in
Despite its impressive price performance, Harebottle does not believe that emeralds have begun to achieve their true value. While emeralds are 20 times rarer than diamonds, the green stones do not enjoy anywhere near the kind of value perception of diamonds, which is something Gemfields is working hard to change.