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Gemfields Looks to Add Shine to the Diamond Industry

The recent record auction of ruby by Gemfields Plc from its priced Montepuez mine in Mozambique has given the company a new zeal to add some colour to the struggling diamond industry in India.

From: einnews.comDate: 2016-06-29 06:04:02Views: 502

The recent record auction of ruby by Gemfields Plc from its priced Montepuez mine in Mozambique has given the company a new zeal to add some colour to the struggling diamond industry in India.

The low demand for diamond in major consuming countries such as the US and China has hit the Indian diamond cut and polishing industry, which processes 14 out of every 15 rough diamonds sold in the world.

The margins of the industry were squeezed with rising cost of rough and falling diamond prices amidst weak demand.

Cut and polished diamond exports from India fell 14 per cent last fiscal to $20 billion leading to many small polishing units in Surat running out of business and laying down its employees. Subsequent to closure of many units, rough diamond imports also fell 16 per cent to $14 billion.

The challenges in the diamond industry seem to have come as blessings for the coloured gemstone industry. Gemfields, which is the world’s largest rough emerald producer, garnered $44 million (₹300 crore) in its recent auction by selling 1.5 million carats of ruby at an average price of $29.21 (₹2,000) per carat.

Dev Shetty, Chief Operating Officer, Gemfields, said the cutting and polishing industry in India can enhance its operating capacity by replacing diamonds with ruby as the technique used for processing both are the same.

“The working capital requirement to handle ruby will also be much lower as rough rubies are not as expensive as diamonds. The good demand for rough rubies at the auction is an indication that the demand is holding up despite concern over global economy,” he said.

The expected steady supply of rubies by Gemfields may now throw a lifeline to Indian cut and polish diamond industry which has been operating at less than 60 per cent capacity. An independent study has confirmed world’s largest ruby deposit of 432 million carats the Montepuez Ruby Mine to be mined over two decades. The study split the Montepuez mine's probable reserves into primary ore reserves of 253 million carats at a 114.9 carats per tonne and secondary reserves of 179 million carats at a lower grade of 7.07 carats per tonne. Interestingly, exploration programme has covered only about 36 sq km out of the 336 sq km licensed area.

 

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