Insights into the gemstone industry worldwide and Kenya's position as a key supplier
The global diamond and gemstone market has witnessed significant changes and exhibited growth, on account of increasing disposable income, rising middle class population as well as demand from the emerging economies across the world.
Jewelry is the main driver for the diamond and gemstone industry. Demand is expected to outstrip the global supply due to lack of major discoveries and projected slowdown in several existing mines.
Until the 1940s, coloured gemstones and diamonds shared a stake of about 50:50 in the global jewelry market. From that time, diamond miner De Beers undertook an aggressive marketing campaign that resulted in the value and popularity of diamonds significantly outstripping those of other gems, which has largely remained the status quo ever since.
Nonetheless, over the past five years, the coloured gemstone sector has been growing at a compound yearly growth rate of about 18%, according to the United Nations commodity trade statistics database, with rough global imports for emeralds, rubies and sapphires currently amounting to approximately USD 3.3 Billion a year.
Geographically, the US continues to be the largest consumer of gems and diamond jewelry, followed by China and India. In India, diamond cutting and polishing is one of the major sources of revenue.
Certain markets have developed an affinity towards particular types of gemstones. Germany traditionally imports more Tsavorite, Tourmaline, and diesel coloured sapphires, whereas Asian markets such as India, Thailand, and Hong Kong have traditionally imported Rubies and Sapphires.
"The value of a gemstone is defined by its rarity, purity and hardness. The hardness of a gemstone determines the suitability of a gemstone to be made into jewelry."
Top-end consumers are usually knowledgeable about the products, which makes them natural ready buyers. Demand from this customer segment is estimated to remain strong. Nevertheless, mid-range customers are expected to form the bulk of sales. While top consumers look for investments in luxurious products, mid-range customers usually look for individualism in their self-presentation.
Higher quality gemstones from Mozambique are flooding the market at a lower price than the Kenyan Ruby. This has resulted in relatively lower demand for Kenyan Rubies.
Thailand's growing economic status could soon disqualify it from tax exemption when exporting gems to the US market. Cambodia, however, would allow continuing the free trading tax and could potentially overtake Thailand's gem export market to United States in the future.
Vietnam is rich in sapphire, rubies and spinel resources. The output at this stage is limited but high potential exists for more discoveries. Lao has sapphire deposits. Both countries may develop their gemstone industry.
Singapore competes with Hong Kong for the high-end gemstone and jewelry market. Most luxury brands hold their exhibitions in Singapore, which has also become a leading destination for high stake auctions.
Although South Africa is a leading African trading centre for coloured gemstones, there are no dedicated gemstone mines in operation, with South African based company African Gems and Minerals receiving most of its gemstones from several African countries, including sapphires from Malawi and rubies from Mozambique.
Tanzania produced and exported coloured gemstones to the value of $50.34 million in 2013. With improved mining, beneficiation and value-adding skill, Tanzania is likely to become the gemstones centre of Africa.
According to Ministry of Mining, Taita Taveta is considered the resource hub with regards to gemstones in Kenya, although different gemstones are indigenous to different parts of the country.
Notable export destinations for Kenyan gemstones include Bangkok and Hong Kong.