Mining, Gemstone
SIC 1499
NAICS 212319
The global gemstone industry is engaged in mining, developing mines, and exploring for gemstones such as diamond, emerald, ruby, sapphire, amethyst, aquamarine, and others.
The gemstone mining industry comprises two distinct segments: diamond mining and the mining of all other kinds of gemstones, such as ruby and emerald, referred to collectively as colored gemstones. The diamond industry is highly structured and characterized by large corporations and highly mechanized mining operations. Though sub-Saharan Africa dominated diamond mining through the twentieth century, by the early 2000s its total output was surpassed by the combined production of Canada, Australia, Brazil, China, and Russia. The colored gemstone industry is highly fragmented and characterized by small organizations and a great variety of mining operations with little mechanization. Important deposits were being worked on all the continents except Antarctica. According to MBendi Research, the global diamond market increased more than 250 percent since the late 1970s. Global diamond production reached 150 million carats in 2003, of which 80.9 million carats was gem quality. Australia ranked first in total diamond output, while Botswana ranked first in gem diamond production and value.
In terms of dollar value, by far the most important market for gemstones is the manufacture of jewelry. Measured in terms of volume of production, however, the industrial use of diamonds predominates. The demand for gem-quality stones fluctuates with the economy, although in the case of diamonds the price is maintained at a high level by the mechanisms of the diamond cartel led by De Beers. The price for some kinds of colored gemstones, such as rubies, is also affected by the availability of the gems.
One of the major problems facing the industry in the first decade of the twenty-first century was security. Diamond theft and illegal smuggling were practices that particularly plagued emerging countries. Export totals of Pakistani precious and semi-precious stones, for example, fell from US$3.76 million in 1991-1992 to US$2.17 million in 2000-2001, and the Pakistan Newswire suggested that smuggling may have contributed to this decline. Mining operations in Colombia and adjacent lands worried about safety issues due to the presence of gang-like drug cartels. And in many diamond-rich areas of Africa, militant groups have seized control of diamond operations and used proceeds to finance armed insurrections.
The gemstone mining industry is both widely dispersed and highly diverse. Gem mining operations are scattered unevenly throughout the world, on all the continents except Antarctica. Many of the most famous and most valuable deposits are found in the poorest and most inaccessible regions. Members of the industry include some of the largest and most powerful corporations in the world as well as individual "treasure hunters," both legitimate and illegitimate.
The products of this industry are also quite diverse. The island country of Sri Lanka, one of the most important centers of the industry, produces 55 different kinds of precious gems, yet there are many varieties that are not found there. In retail trade gems are generally divided into diamonds and colored gemstones, and this division holds throughout the industry. The diamond mining industry is highly developed and tightly structured, while the production of other gemstones is chaotic and in many places quite primitive.
Not including organic substances such as pearl and amber, which are sometimes classified with them, gemstones are defined as natural crystalline minerals that are rare, hard, chemically resistant, and beautiful. For thousands of years, they have been the objects of exploration, speculation, and arduous labor, as well as the subject of myth, legend, story, and song. In modern times some gemstones, particularly diamonds, have proven to be very valuable in industrial applications. The chemical composition of gemstones is in most cases the same as other, non-gemstone minerals. For example, diamond is chemically the same as graphite, and ruby and sapphire are chemically the same as corundum, a mineral that is used as a cutting and polishing material. The difference between gems and other minerals is the size and regularity of the crystal structure. Gems were formed millions of years ago when the necessary conditions of heat and pressure enabled the formation of very large crystals. Growing knowledge of the conditions in which gems were formed has enabled much more scientific exploration for gem deposits in the nineteenth and twentieth centuries than was possible in previous centuries.
Diamond is the premier gemstone. It is the hardest substance found in nature, 140 times harder than the next hardest gem, and this characteristic has made diamond an indispensable material in many industrial applications. Diamond powder is used to grind and polish other very hard substances in many industries. Fragments of various sizes are embedded in saw blades and drill bits for uses from dentistry to drilling oil wells. Because of its resistance to extremes of heat and cold, thin slices of diamond are used as tiny windows in space probes. Wire is drawn through a hole drilled in a diamond when the diameter of the finished wire must be precise and highly consistent, as in the filaments for light bulbs.
Gem-quality diamond is the most valuable mined substance and the most sought after. The value of an uncut diamond, or "rough," is determined by its size, color, and clarity. Most diamonds are yellowish, but the more nearly colorless stones are more valuable. The rarer colored diamonds—blue, pink, green, purple, brown, yellow, and black, called "fancy"—are often extremely valuable. Frequently diamonds have internal flaws such as enclosed minerals that lower their value. Most diamonds are small, fractions of a carat (a carat equals 0.2 grams), but occasionally very large gems are found and, if they have good quality otherwise, are extremely valuable. The largest ever found, named Cullinan, weighed 3,106 carats, about 1.4 pounds.
Africa was the historic leader in global diamond production through the twentieth century, producing half the world's supply. By 2004, the continent, according to MBendi Research, had produced more than 75 percent of world diamond value to date, worth an estimated US$158 billion. But by 2002, total output (including both industrial and gem-quality diamonds) from five non-African countries (Australia, Russia, Canada, Brazil, and China) exceeded that of Africa. Even so, Africa remained a significant supplier, with 12 of the 19 leading diamond producing countries located on that continent. Botswana ranked first in production of gem-quality diamonds, followed by Australia, Russia, Congo (Kinshasa), Angola, South Africa, Canada, and Namibia. Brazil and China also ranked among the top ten, but the vast majority of their output was industrial quality diamonds.
In 2005, Angola announced that its national mining company Endiama would double its diamond output in 2006. In the 1990s, when the country was engulfed in civil war, Angola produced between 3 and 5 million carats per year. After military conflict ceased, diamond production increased to about 6.5 million carats in the early 2000s. If the country reaches its target of 12 million carats per year, it will become Africa's third largest diamond producer. The Angolan government claimed that adherence to the Kimberly Process has rid the industry of corruption, but some analysts have expressed concern about continued human rights violations and other illegal practices such as smuggling.
There are about 200 varieties of colored gemstones, but only a much smaller number are of great importance in the gemstone mining industry. The others are either very rare or not suitable for making into jewelry. The best-known and most valuable gems are ruby, sapphire, and emerald. Other important varieties are amethyst, aquamarine, zircon, topaz, opal, ametrine, and tourmaline.
Ruby is generally the most valuable of the colored gemstones. The name comes from the Latin word for red, and the color varies from a fiery vermilion to a violet red. If the color is very light, the gem is called a pink sapphire. As with most gems, the more even in color and the more transparent the stone is, the more valuable it is. Large rubies, more than five carats, are very rare, and a large ruby that is of top quality may command a higher price than a diamond of the same size and quality. The most important sources for ruby are Myanmar (formerly Burma), Thailand, Sri Lanka, and Tanzania, although it is found in other places as well.
Sapphire is chemically the same as ruby, the difference being simply in the color. There are pink, violet, yellow, green, and colorless varieties of sapphire, but if the stone is simply called sapphire, it is understood to be blue. The most prized color is a pure cornflower blue. When indistinctly colored sapphires are heat-treated at high temperatures, they turn a bright blue permanently. A very desirable characteristic of some sapphires, as well as some rubies and other gems, is the presence of rutile needles within the crystal that reflect...
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