The multibillion-dollar coloured gemstone industry is active in nearly 50 countries; contributing to the livelihoods of millions of people worldwide. Although it is difficult to obtain the exact number of coloured gemstone mines it is believed that there are between 200 and 300 globally, with approximately 80% of mined production attributed to Artisanal and Small-Scale Mining (ASM). Key gemstone mining countries, where many varieties of these gemstones can be found, include India, Myanmar and Sri Lanka, which are the historical centres of the global gemstone industry and have well established networks for processing and trading. Other regions that have recently emerged as key players in the industry include Kenya, Zambia, Tanzania, Mozambique and Madagascar.
The coloured gemstone trade plays a crucial role in the economies of many developing countries. However, the supply chains are extremely complex, often emerging out of countries with weak governance and engaging many different actors before reaching the end consumer. This complexity can obscure environmental, social and governance issues that occur along the supply chain. When problems are exposed they quickly attract media attention and are subject to increased scrutiny by environmental and human rights advocacy groups, investors and consumers.
The Myanmar Case
Myanmar produces some of the finest rubies, sapphires and jades in the world. However, the mining industry fuels the country’s controversial military, thus raising ethical concerns around its gemstones. In fact, a recent media campaign has been launched against the trade of gemstones coming from Myanmar.
The uncertainties surrounding the reform of the Myanmar Gemstone Law (2017) has proven particularly harmful for the country. The current framework is far from perfect: lack of transparency; failure to consider local communities; and an abundance of licenses that are often obtained in obscure ways. Furthermore, last July the new civil government suspended licensing until the completion of the reform, which in turn created instability for local traders and pushed many into the black market.
Private foreign companies have only one way to engage in ethical business: contribute to reform efforts in Myanmar. Partly because of the Rohingya crisis, the world has lost sight of the reform momentum that was building in the gemstone sector. In fact, the civilian administration has used membership of the Extractive Industries Transparency Initiative (EITI) to push for greater transparency in reporting. The move towards EITI reporting on beneficial ownership could be a game changer. Although the new Gemstone Law leaves much to be desired it is a step in the right direction. Companies have to be aware that individual and non-coordinated private initiatives from non-official institutions, rather than helping solve potential issues, often backfire, creating other issues such as illegal trading and increased poverty. Responsible investments are key requirements in this process and are drivers of effective sustainable development.
The Jewellery Manufacturing Industry
When a gemstone is purchased in certified auctions, it comes from a specific supply chain where practices and potential social and environmental risks differ. Some of these risks include: corruption, armed conflict, money laundering, child labour, forced labour and slavery, human rights abuses, infectious diseases, loss of biodiversity, and threats to ecosystems.
These risks are difficult to monitor because gemstone consumers do not have access to supply chain information. Yet, all actors in the supply chain from the retailer to the miner, wish to create products that have not harmed any child, financed any war, contaminated any river, or cut down any tree. Furthermore, they want their purchases to support livelihoods, develop economic and cultural exchanges and educate people to look after their communities, rivers and trees. This is the backbone of notions on extended producer responsibility.
To achieve this jewellery manufacturers have to work in the same direction as their partners towards enhanced transparency and traceability; ethical, social and environmental excellence; strong collaborative improvement (as opposed to exclusion); and last but not least towards fostering initiatives that unite luxury brands, large scale mining companies and small-scale producers with a common interest in catalysing positive change in the responsible sourcing of coloured gemstones. This collaboration has led to the creation of assessment tools with which to verify and monitor whether different actors in the supply chain respect common standards.
The Responsible Jewellery Council (RJC)
This high-level international association includes 1,100 member companies and is a recognised standards and certification organisation for the jewellery supply chain. Positive talks with the diamond industry have led to the inclusion of due diligence requirements in the Codes of Practice (COP) of RJC members, and a small panel of experts has worked closely with the Organisation for Economic Cooperation and Development (OECD) in the establishment of Due Diligence Guidance for the Responsible Supply Chains of Minerals From Conflict-Affected and High-Risk Areas. The RJC has recently moved into the coloured gemstone sector, starting with emeralds, sapphires and rubies and plans to expand to all stones within 2 years.
The Supply Chain
Gemstones are minerals formed by geological processes that happen deep within the earth’s crust and mantle. These processes shape how gemstones are formed, determining their individual characteristics, such as colour, structure, and durability. These features vary widely, resulting in over 130 different varieties of gemstones that can be categorised into several groups. One broad distinction is between those considered “precious” and those considered “semi-precious.” Diamonds, rubies, sapphires and emeralds are considered to be precious stones whereas the rest are deemed to be semi-precious, including some gemstones which are not “stones’” at all but other organic materials, such as corals or pearls.
Over millions of years, gemstones formed within the earth’s crust move gradually closer to the earth’s surface. How close they are to the surface determines how they are mined. In fact, gemstones are found either in “primary” or “secondary” deposits. A primary deposit means that they are still located within the original host rock where they were first formed. Extracting these gemstones from their host rock is an energy, labour and capital intensive process. Such mines are found either underground or in open pits and often involve the use of explosives to shift large volumes of rock.
A secondary gemstone deposit is where the gems have already been extracted from their host rock through natural water or wind erosion processes and are later deposited in the gravel accumulations of river beds or in soft sedimentary rock. In contrast to primary deposits, these accumulations are easily accessed with low technology and small investments. Local communities can take advantage of these mineral resources using simple tools and processes such as hammers and picks to extract the gemstones.
Zambian emeralds come from an example of “primary deposits,” whereas rubies from Mozambique come from “secondary” ones.
From Gemstone to Jewellery
A typical gemstone supply chain is the following: Production (mine)-Cutting & Polishing-Trading-Jewellery Manufacturing-Retail.
Once a coloured gemstone leaves the mine it is traded and undergoes multiple processes that include: cutting, which is the process that transforms a rough gemstone into a sparkling gem; polishing, mainly performed by specialised workers who are trained in very specific aspects of the cut and polish processes and use more advanced manufacturing technologies; trading, involving commercial actors that play an intermediary role by bringing rough and cut gemstones (often directly from mines and processing facilities in remote areas) into the market; jewellery manufacture, performed by large retail chains that have manufacturing facilities with assembly-line style production that utilise high tech tools and equipment to facilitate the mass production of jewellery; and finally retail, where finally the gemstone reaches the consumer who demands more and more traceability across the entire supply chain.
The nature of the coloured gemstone supply chain means that there is a lack of publicly-available, verifiable and comparable data on coloured gemstone production, processing and trading at global and national levels, making the supply chain one of the most complex. Contributing factors to this complexity include weak regulatory oversight of the industry and limited communication between upstream and downstream ends of the supply chain, which in turn limits visibility and understanding of operational challenges and needs.
A gemstone may change hands as many as fifty times after leaving the mine, passing through traders, sorters, graders, cutters, polishers, other value-adding processes, brokers, manufacturers and retailers before eventually reaching the end customer. At times it is even difficult to certify the country of origin of a gemstone. This characteristically decentralised and informal nature of the ASM gemstone industry, traditionally founded in trust-based personal relationships rather than in transparent and accountable systems, is what hides many of the negative externalities of gemstones.
An Outlook on Some Mining Countries
The Ratnapura region of Sri Lanka. As illustrated in the images published in this Focus, mining activities are taking place in former productive agricultural land and near still productive rubber plantations.
In early 2014, Conservation International (CI) and the Responsible Ecosystems Sourcing Platform (RESP) initiated informal consultations on potential collaboration under CI’s Stewards Programme and in particular, on the development and implementation of Conservation Agreements.
Furthermore, the images published in this focus give an idea of the process behind the extraction of soil from the ground and how it is then put back as part of the current mine closure and restoration initiative.
Through improved restoration practices it is expected that soil productivity can be regenerated and thus provide sustainable uses and long-term socio-economic opportunities for local communities.
A spectacular emerald mine, Kagem, supplies more than 25% of global emerald production.
The mine of Kagem is full of craters, where, over a 5 year period, enormous tubs have been dug using explosives.
The business model is a win-win solution both for the private foreign investor and for local government. In fact, a private investor takes on all the investment risks with 75% of profits, whilst the remaining 25% remains with the local government. The foreign investor receives a 25-year licence for an area of 41 km2 with 890 workers, 80% of which are local people. Furthermore, the company commits itself to a long-term local Corporate Social Responsibility (CSR) strategy with a specific focus on education, health, agriculture, and recreational activities.
The Montepuez ruby mine is one of the biggest in the world and serves 2/3 of global ruby supply. Located 200 km from Pemba, here it is possible to find more than 500 qualities of rubies. The business model is the same as the one used in the Zambian mine where a private investor takes on all investment risks and 75% of the profits, whereas the remaining 25% remains with the local government. The foreign investor receives a 25-year licence for an area of 336 km2 with 1000 workers, 80% of which are local.
The company seeks to enhance local CSR programs and spends up to 1.7 million USD on building hospitals and gynaecological clinics, providing mobile hospital cars in the villages, and building government recognised schools.
Extractive Industries Transparency Initiative, https://eiti.org
Responsible Jewellery Council, www.responsiblejewellery.com
Ocse, Due Diligence Guidance for the Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, www.oecd.org/daf/inv/mne/OECD-Due-Diligence-Guidance-Minerals-Edition3.pdf