Interview of Dev Shetty, COO Gemfields


The London-based Gemfields PLC is the world's leading producer of coloured gemstones. Its Kagem Emerald Mine in Zambia is the largest in the world. This year Kagem crossed $100m in revenue. Since 2014 its exemplary new Montepuez Ruby Mine in Mozambique, atop a gigantic ruby deposit, has been generating great expectations. As of recently it has produced 8.6m carats of rubies; a recent auction netted $44.3m, a companywide record and thereby a total of US$195m since ruby auctions were initiated in 2014. Gemfields long-term plan is to meet 40 per cent of global demand with this one mine. In this interview, held at Montepuez with Dev Shetty, COO, Gemfields; Samit Bhatta gains insight into the company's plans for this wealth of rubies. India's jewellery industry no less than her discerning consumers, he finds out, stands to gain.
 
What would you say to an Indian gem-polisher or jewellery manufacturer, about the advantage in Montepuez rubies? What would you say to a manufacturer of colour gemstone jewellery who doesn't yet use Mozambican gemstones? What would you tell a retailer? And how would a customer react?
 
For any large-scale manufacturing to flourish, manufacturers or polishers need consistent supply, and confidence in that supply. Mozambique can supply confidence and longer production runs. For us to be able to say that only 10 per cent of the deposit will give 430 million-odd carats consistently over the next 21 years, which can be doubled or tripled, and my grandchildren can also work in years to come, says many things. Manufacturers can build their business on Mozambican rubies as they grow.
 
It's also not only rubies. With Gemfields, as we say, you can live in black and white, or in technicolour! So this is where the opportunity is: working with red, working with blue, working with green.
 
In terms of B2C clients and end-consumers, when the consumer walks through the showroom door, they need confidence that they are buying something in which they can trust. We come to the market with responsibly sourced rubies with a Mine of Origin certification initiative. We can give retailers that confidence, and they can pass it on to their clients.
 
Historically, coloured gemstones have been revered as much as diamonds – if not more so.  I think in recent times however the [colour gemstones] trade has been selling [to retailers] for the sake of selling. Retailers sell colour gemstones only after they sell gold, after diamond. For sales staff the easiest thing to sell is gold, for diamonds they have got a story and for colour gemstones they have no story. What we are trying to do is to build that story so that we can allow coloured gemstones to take their rightful place at the forefront of consumer demand once again.
 
What the salesman also doesn't know, is that his boss makes more margin in colour gemstones than in diamonds. That is the message we want to give to the boss; with proper training and knowledge on emeralds and rubies, sales staff can pass this story and insight onto the end-consumers. With consistent messaging and consistent supply, we will be able to help the trade, the retailers and the end-consumers.
 
Why should a diamond sightholder, a major manufacturer with a large business, get into ruby or emerald cutting and polishing?
 
If a sightholder has been focusing a lot on diamonds why should they go into colour? Well, because, in diamonds, if you see the price graph, rough prices have gone north and cut prices have come south: the margins are squeezed.
 
A diamond manufacturer can take the graph trajectory up by substituting the second and third gemstone in a piece with colour gemstones. The moment it does this it can increase its SKUs and give a better offering to its clients — without compromising its sight or its margin. This is why manufacturers enjoy working with us. We are not saying don't work with diamonds,  we are saying, complement them with colour.
 
This is compounded as a wise choice as at the retail level, there is increasing demand for coloured stones. Now, if a diamond manufacturer does not develop in this way, it's likely a competitor will. The coloured stone by itself doesn't sell. You have to add components. You have to add diamonds or gold, so it becomes a complete package. So you can either be a part of this or not — and people want to be part of it.
 
Some colour gemstone jewellery manufacturers are among the biggest suppliers to the top corporate retailers, not only in India but even the Middle East. These manufacturers have been doing great business for the last 15 years without Mozambican rubies. How can you convince these companies and their corporates Retail clients that now they should buy Mozambican colour gemstones?
 
The answer is very simple. The challenge is, if such a manufacturer has been buying 35m carats of rubies yearly, they are at present struggling to maintain sourcing the same quantity. Burmese production has collapsed significantly, the Thais are no longer producing, the quality of Nigerian rubies are on the lower end. Montepuez is the mine that can offer them a consistent supply for all qualities.
 
A major manufacturer that I have spoken with was, in the past, able to manage a certain portion of Mozambican rubies from informal channels. Now that the informal channel has also dropped, he has got only one single shop that used to buy from my clients; that is, my clients who are buying rough and cutting and polishing.
 
And if this manufacturer needs any support from us for marketing — because young millennial clients want to know the story behind their gemstones or colour gemstones or gold jewellery — we can offer them that kind of jewellery. We can even work on a three-tier programme, in which the Miner along with the polish Manufacturer, jewellery manufacturer and retailer can offer special collection-led programs.
 
Our whole objective is that our clients, get value, and see reward from a consistent, and responsible supply, in turn growing the industry.  This sums up our mine and market model: driving demand and ensuring consistency of supply. 
 
Retailers these days, even the very large independents, are worried about getting into the Gemstones business in a big way. They don't understand which mine to buy from, how to identify a real ruby or a real emerald from a fake stone. It's a big challenge. Do you have any plans for a mine-of-origin programme or certification?
 
We have a traded cut and polished platform. One of the important reasons we opened that programme was to build that level of confidence, not only for sales but to be able to say with [certainty] that the origin of a gem is Mozambique or Zambia. When we ran the programme with [the major retailer] Macy's in the USA, we did a quality grading, A, B and C, and extended it further such that thousands of emeralds were sorted into different sampling categories. We tied up with IGL [International Gemological Laboratory] and AGL [American Gemological Laboratories], and so are in essence, giving Macy's a certificate of origin. 
 
Will that be done in India as well?
 
Absolutely. The pilot programme that we ran in New York is now going to be sent into different locations.
 
As far as the future of Mozambican gems in India is concerned, what is the size of the Indian market for colour gemstones? Where do you see this going in, say, five years' time?
 
In five years' time we want everyone to be red!
 
If I have to give a serious answer, the beauty of this deposit is that it is producing incredible exceptional gems such as the 'eyes of the dragon', the top-quality premiums, the medium-quality through to commercial quality rubies. In short, in one deposit you find all type of qualities, which is very rare. 
 
When you produce everything on the spectrum, [almost] every segment has a market. We feel a lot of these segments, from medium-quality to commercial-quality, will be successful on the Indian and Chinese market. We have seen from the auction pattern that a lot of the Indian emerald-cutting and polishing companies are entering into the trade of buying Mozambican rubies, which means they will be filtering those products into the Indian market.
 
Regarding cutting and polishing, we are seeing that a lot of the Indian jewellers who buy emeralds are now trying to get into rubies. This means that they will also filter ruby products into the Indian market.
 
Our new marketing campaign, which launched in London, is segmented for the Indian, Chinese and European market. India is very important as far as the ruby is concerned.
 

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