. .



While gemstone exports from Pakistan are increasing the growth is insignificant compared to the large potential

By S. ASIF ALI BOKHARI, Director (EPB)
Dec 11 - 17, 2000

Gemstones have been valued and cherished for thousands of years in the areas comprising Pakistan. This is evident from the gem and jewelry belonging to the Indus Valley Civilization. Over many centuries, fabulous collections of gems and jewels were developed and refined in the sub-continent. Gemstones have been used as an object of personal adornment, as a symbol of power and prestige, as exchange in trade and commerce, as medicine for various ailments, as astrological tools capable of interacting ones stars to bring good fortune and ward of evil. In more modern time gemstones have been increasingly used in scientific tools and in industry. Pakistan had emerged as a new nation fifty-three years ago with no significant gem deposits known and with hardly any gem trade. But due to the efforts of public and private sector a number of important gemstone discoveries were made and gems trade gradually picked up. Today Pakistan is producing a number of gemstones. The most significant ones, being emerald, ruby, pink topaz, Lapiz Lazuli, Schorlite and Rose Quartz, Tourmaline, Moonstone, Chalcedony, Zircon, Appetite, Aquamarine, Gamet, Kunzite and Peridot, which has recently emerged on export map. Until few years ago Pakistan was unknown in the international gem market as a gem producing country.

The gemstones were smuggled out to foreign countries. For the first time the cut and polished stones from Pakistan was efficiently displayed in Tucson Gems and Minerals Show USA in 1981, since then the gemstone production has increased significantly. Pakistan is now one of the major source of supply of gems and minerals to the world.

Gemstones production in Pakistan

All gemstones except Amber and minerals are formed by the solidification and crystallization of solutions through millenniums. Diamonds, Kunzite, Sapphires, Topaz, Alexandrite, Rubies, Emeralds and Lapis Lazuli are all by this processes. To quality as a gemstone, a mineral must also posses durability and be able to withstood abrasion, scratches, corrosion, chemical effects and the bleaching effect of light.

JADE: is found in Gilgit and the Northern West Frontier Province of Pakistan. Jade is a loose description of two different minerals. Jadite and Nephrite. Jadite is the more precious of the two minerals and found in various colors including red, brown, white and black. The rich olive green is the most sought after jade has a very sound structure with intertwining crystals and is ideal for carrying.

FLOURITE: is found in Chitral, Dir, Hazara and Balochistan, with the largest deposits occurring in the northern part of the Koh-l-Mardan Range in Kalat. It occurs in discontinuous veins in nearly all types of rocks as clearable, granular and fibrous masse. The most common colors are green, yellow and blue, but it is also found in various shades of red or brown. Ranging from transparent to nearly opaque, it can be facet or cabochon cut.

TOURMALINE: OCCURS IN Chitral, Gilgit, Swat and Dir. It is formed in thin pencil like crystals and comes in a wide variety of colors controlled by the different metallic content. Golden, Yellow, Golden Brown, very bright line green and pink tourmalines offer a wide variety to the jewellers repertoire. It is usually transparent and can be facet cut.

RUBY: Deposits in Pakistan occur in the rugged and almost inaccessible territories of the hilly regions in the north making mining of this stone is extraordinarily difficult. The most extensive ruby deposits in Pakistan are located in the Hunza valley of the Gilgit Agency. The Hunza ruby is of a transparent deep red variety.

The Ruby owes its colors and rarity to a trace of chromium which settled in the mineral during crystallization. Chromium, as a rule, appears only in deeper levels of the earth and really rose to higher levels to combine with aluminum oxide to produce red corundum, known as the ruby. The gem has a gradation of colors ranging from light to deep red. It is seldom without inclusions; almost all rubies contain tiny crystals for foreign matter. Some have a glittering silver web of very fine futile needles which cabochon cut display a six pointed star. The stone being brittle is generally step-cut, whilst the 'star-rubies' are cut end cabochon. After Burma, Hunza is the only other region in the world that has produced "Blood Red" ruby. The Hunza Ruby belt is 100 k.m. long and only a small part has been explored. The prospects for developing larger and better deposits can be exploited.

LAPIS-LAZULI: is found in the tribal areas of North West Pakistan. It is of a brilliant blue color with golden specks caused by inclusions of iron pyrites. The structure of this opaque stone is extremely complex made upon from a number of different minerals the most important of which are calcite and lazurite.

KUNZITE: is found in Chitral and Gilgit. It comes in a variety of colors rose, pink, lavender, blue, purple and many other shades. This stone is transparent and is step cut.

GARNET: is the collective title for a certain family of minerals. They have the same basic structure but all are not of gem quality. The pyrope which is blood red, almandine which is purple and a grossularite which is green occur in Dir, Swat, Quetta and Kalat divisions. Garnets are one of the commonest gemstones widely used in jewelry. They can be facet-cut en cabochon.

Emerald on Earth

Emeralds are found on the five continents, but South America has become the world's most important emerald producer. After the rediscovery by the Spaniards of the pre-Columbian mines (Dominguez, 1965), Colombia assumed 60% of the whole world production estimated in 1986 to be 15 millions of carats (Mineralco, 1996), followed respectively by Zambia (15%), Brazil (10%), Russia (5%), Madagascar (3%), Zimbabwe (2%) and others (5%, including Pakistan and Afghanistan) .

EMERALD: The best known emerald deposits are found in Mingora (Swat). There are also lesser known areas in the Northern Regions, where emeralds are found. The emeralds found in Mingora occur in irregular custers or in quartz veins of metamorphic rocks. The Mingora emerald is transparent of a sea green color making it the most precious gem mined in Pakistan.

The emerald is a variety of beryl, incomparable in its beauty and depth. The basic material, a beryllium-aluminum silicate is completely colorless in its chemically pure state only a trace of chromium is sufficient to give the emerald its color which ranges from pale leaf green to sea green. Emeralds are sedum free from inclusions. Liquid or gas-filled cavities and mineral inclusion make each stone unique.

TOPAZ: is found in Chitral, the Gilgit Agency and Kalam in the Mardan district of Swat. The rich warm yellow and pink colors are particularly suitable for jewelry. The most favored cut is step cut. Pink topaz of Katlang is a unique stone unparalleled in the world. It is found only in Pakistan and if properly and correctly promoted in world market, its world market price can be tremendously increased.

AQUAMARINES: Occur in the Shigar Valley of Baltistan, Chitral, Kaghan and in the Neelam Valley of Azad Kashmir. The gem is transparent and ranges from sky-blue-to sea green in color. Like the emerald, the aquamarine belongs to the beryl group and has a hexagonal crystalline structure, but is always step cut.

PERIDOT: is an attractive green color gemstone and was known as Topaz in ancient times. A large deposits of Peridot has recently been discovered in Northeast of Naran of Hazara Kohistan. It is mostly yellowish green, takes a good polish, suitable specimens has faceted into brilliant stones of high quality.

Adding to Pakistan's enriched landscape, there is the availability of exotic turquoise in neighbouring Iran, and this coupled with the liberalizing of the economy in the Central Asian States may catapult Pakistan as an important global gems center.

Export Promotion Bureau has identified the gems sector as one of its priority sector which has a lot of growth opportunity. Pakistan inspite of having ample of gemstone deposits has not been able to capture the world market which is presently of US$ 2.2 billions. It is in these last three years that the Emerald mines at Mingora and Gujjar Killi, Ruby mines at Hunza and Nanji Mali, Topaz mine in Mardan have been auctioned to the private people. There are many difficulties in mining which are being now sorted out to facilitate better condition.

Profit in gem mining is subject to the existence of sufficiently enriched are, favourable mining conditions and availability of a reasonable infrastructure in the vicinity of the mining area. However, unlike other minerals, the mining of gemstones is not a very large mining operation involving relatively light equipment, which does not involve elaborate infrastructure. The investment in gemstone mining is thus relative.

Modest and its success mainly depends upon the richness of the ore remarkability of the stones and prevention of pilferage from the mines. Foreign investment and joint ventures in mineral exploration, mining, gem cutting & processing are being encouraged by the government.

Peshawar is the most important export outlet for gems, a role it has played since the time of 'Alexander the Great. Recently, the war in Afghanistan has enhanced its export business and helped preserve its importance as a gem trading market. Most precious stones, which were previously being exported from Kabul, are now believed to go through. Most rough mined in Pakistan and Afghanistan are traded in Peshawar sold overseas by wholesalers. Buyers visit Peshawar regularly all the year and have no difficulty inspite of the negative portrayal of this area in the world media. There is a strong need for setting up of gemological institute to create confidence among the foreign buyers. Export Promotion Bureau is actively working on it.

Pakistan's present official export of rough gemstones for the year 1998-99 is US$ 7.8 million. Value of unofficial exports is estimated much higher than the official exports. Pakistan's major markets are USA, Hong Kong, Germany, UK, France, UAE, India, Thailand etc. the main reason why Pakistan has not been able to boost its exports is due to lack of value addition. Small units of cutting and polishing are established in all cities of Pakistan, but their quality is not according to the international standard. Technical know-how is the area which need looking into. The problem of irregular supply from the mines is also a major problem, which hinders the cutting and polishing units. The present world is demanding calibrated sizes of different shapes of oval, rounds, princess cut etc. The local market is also highly developed and on per capita basis, it is one of the strongest in terms of revenue generation in view of the importance given to jewelry in Pakistan.

The existing gemstone mines and potential deposits could be developed in the next ten years to make Pakistan a major supplier in the world markets, comparable to Colombia, Brazil, Zimbabwe, Zambia and Kenya. Official and unofficial exports of Gemstones from Pakistan, Kashmir, and Afghanistan are estimated to be in the region of US$ 20-25 million per annum during the last five years.

While gemstone exports from Pakistan are increasing the growth is insignificant compared to the large potential in the country. We need to increase not only the quantity of gemstones exported but also the quality. This can be achieved by developing a cutting industry in Pakistan to add value to the tough we export.

Leading Gem Producing Countries of the World

1 Pakistan

2 Australia

3 Ghana

4 Venezuela

5 Angola

6 Sri Lanka

7 Zaire

8 Brazil

9 Sri Lanka

10 Zimbabwe

11 Botswana

Major Import Markets

1 Australia

2 India

3 Switzerland

4 Belgium

5 Hong Kong

6 Singapore

7 Dubai

8 Sri Lanka

9 U.K.

10 U. S. A.

11 West Germany

Main Buyers of Pakistani Gems

1 Australia

2 Holland

3 Saudi Arabia

4 Belgium

5 Hong Kong

6 Singapore

7 China

8 India

9 Thailand

10 Gulf States

11 Italy

12 U.K.

13 France

14 Japan

15 U. S.A.

16 West Germany

From the above table it can be seen that the exports of precious and semi precious stones during 1999-2000 is of the value of US$12.96 million as compared to US$8.24 million in 1998-99. Thus showing an increase of 57.3%. Major buyers of precious and semi precious stones are: Germany, Hong Kong, USA, Thailand, Dubai and France etc.

Export of Studded Gold Jewelry

Similarly the exports of studded Jewelry is showing continuous increasing trend since 1995-96. The export of studded Jewelry during 1999-2000 amounted to US$ 15.059 million as compared to US$8.850 million in 1998-99, thus showing an increase of 70.16%. The countries in which an export of jewelry has increased are: USA, UK, Dubai and Germany etc.

Pakistan is extremely unfortunate to make any tangible impact on the gems international market, despite having one of the largest deposits of a variety of Precious and Semi Precious stones. The most important factor is an indifferent attitude in addition with haphazard manner in which no proper planning and meastures were taken.

Gems and Jewelry have become one of the major segment of Indian exports primarily at the cost of Pakistan. India's rapidly gem and Jewelry Industry could see exports reaching up to $ .10 billion by the end of this century, according to the Gem and Jewelry Export Promotion Council. This is due to the growing popularity of Indian designs in major markets.

The industry's diversification into mass production of Jewelry has given Indian companies experience in marketing jewelry through retail outlets in developed countries. It is hoped that Indian exports of gem and jewelry would reach the $ 10 billion mark by the year 2000 compared with targeted $ 7.3 billion for the fiscal year 1998-99.

The success, of course, did not come overnight and was only made possible in due course of time. Unfortunately Pakistan which is having a variety of gems has failed to make an impact on the world market.

Gems marketing

Commerce in gemstones is conduced on a person-to-person basis with no established set of prices either for rough material or for finished stones. Fluctuation in the supply of gemstones makes it impossible to set up a regular pricing structure.

Geologically gemstones are rare and a deposit may suddenly give out, causing supply to cease with little or no notice to the chain of dealers.

In the case of rare stones which find their way to museums and collectors rather than to finished jewelry, the supply is always likely to be sporadic and many established dealers in mainstream gemstones may not want to spend time and money on one of items which may take years to sell. This type of stone will appear quite often from amateur prospector.

By the time the stones reach the first of the dealers, they may have been graded for size and color. Some dealers will sell the rough rather then sending it to a cutter, this is one of the reason why collectors and museums find good quality crystal of gem minerals very difficult to acquire. Stones are priced per carat though exceptional items may be poled separately.

In the long term, gemstones prices do not fall but shot a steady if slow appreciation. This is because gemstones are a good hedge against inflation and are easily portable.

Most of the gemstones are currently available in the market originate from one or the other gem producing countries. However, most of the stones the best ones at any rate, eventually find their way to the major gem trading centers of the world. The most famous ones are:- New York, London. Amsterdam, Idar-Oberstein, Zurich, Colombo and Bangkok, Antwerp, Rajastan in India. Besides being large gem markets are also amongst the largest gem cutting centers in the world.

Government efforts to increase the exports of gems and jewelry:

Government has liberalized the exports by providing number of incentives. To give patronage to this industry, Export Promotion Bureau is regularly organizing Gems and minerals show in Peshawar since 1994. This show has been internationally recognized in the gems world. The "Gems Show was held from 1st to 3rd October, 1994 in which 66 foreign buyers from about 27 countries visited the show and spot sales worth Rs.10 crores were made, and orders worth millions of dollars were placed.

Under the Trade Policy of 2000-2001 the government has given lot of incentives to the manufacturers cum exporters by exempting custom duty on imported gems, jewelry on the following related items:

1. Jewelry casting powder.

2. Molding rubber.

3. Injection wzx.

4. Jewelry casting machines and accessories.

5. Rhodium plating solution concentrate.

6. Bright and chrome lacquering solutions.

7. Steel halls and pin (different sizes).

8. Diamond cutting tools (different sizes).

9. Alloy of silver.

10. Copper and zinc for mixing in 2 ct. gold mounts and findings of gold.

11. Silver and platinum jewelry.

12. Presently our export of cut and uncut precious and semi precious stones is negligible. To encourage this sector Government has reduced income tax rate from 1% to 0.5%.

Suuqestions/Recommendations

There is a great potential of export of gems and jewelry from Pakistan, but provided the same facilities are given to the exporters of Pakistan, which our neighbouring countries are giving to their exporters, like India. Thus we can surely fetch about 50% of world gems and jewelry market, while presently our share is only 0.5%. Gems and jewelry can play a vital role in the uplift of the country's economy. Indian exporters enjoy tremendous facilities from their government which we lack in, e.g. when Indian exporter gets an order he has not to pay from his own pocket, Central Bank of India finance 100% of that order. This loan is given free of charge only 1% service charges per annum is charged. Pakistan has also allowed this facilities, but refinance facilities are provided to our exporter, while paying 10% rate of interest and 1% services charge. Thus it is not possible for our exporters to compete with the Indian exports. It is therefore, suggested that the same facilities should also be provided to our exporters and all the barriers in the way of export of these items should be removed.

Equipment for cutting and polishing of precious stones:

Under the present export policy government has allowed duty free imports of all those equipments which are used in finishing process of gem jewelry. This will definitely boost the exports of these two items. But problem is that we do not have experienced cutters to use such imported machineries and that is the reason that our cutting and polishing of precious stones are poor.

Setting up of gems, gemological institute:

Export Promotion Bureau, N.W.F.P. Government of Pakistan and Commercial Exporters Associations of Rough and unpolished Precious and Semi Precious Stones are making collective efforts to set up the said institute. After setting up the institute proper training will be given to the workers for cutting and polishing of the stones by the experts. This will definitely increase our present exports and diversify the markets. The Jewelry Association with the active cooperation of Export Promotion Btureau, Ministry of Commerce and E.E.C. has been succeeded in establishing Gems Jewelry Training Institute in which training will be given to the craftsmen. If all the resources are properly tapped in this sector which is a nontraditional one, our export will definitely increase many fold.

Table I                     Export of Gems and Jewelry
                               (Values in Million $)

Year

Precious/Semi Precious Stones

Studded
Jewelry

Gold Value     ($ Million)

(%+,-)

1989-90

7.750

2.338

10.088

 

1990-91

4.975

3.112

08.087

-9.84

1991-92

3.730

6.551

10.310

+27.5

1992-93

3.387

5.032

08.399

-2.01

1993-94

2.224

5.999

08.223

-2.55

1994-95

2.926

4.987

07.913

-02.55

1995-96

2.614

4.459

09.103

+5.84

1996-97

4.412

4.695

09.107

+0.04

1997-98

5.880

4.721

10.620

+16.48

1998-99

8.240

8.850

17.090

+60.92

1999-00

12.960

15.059

28.020

+63.95

 

Table II       Export of Studded Gold Jewelry from Pakistan
                         (Values in Million $)

Item

1999 -200
July-June

1998-99
July-June

1997 -98
July-June

Total

15.112

8.762

4.347

Australia

-

8

-

Bahrain

-

-

52

Bangladesh

9

-

-

Belgium

-

3

-

Canada

235

167

27

Dubai

6.018

2.445

840

Germany

62

27

5

Italy

17

20

-

France

3

24

 

Japan

-

-

3

Jordan

-

-

-

Kuwait

112

-

-

Malaysia

-

-

236

Netherlands

-

-

72

Saudi Arabia

38

-

-

Qatar

-

-

-

Singapore

81

117

12

South Korea

-

-

-

Oman

-

29

23

Thailand

28

-

-

U.S.A.

5747

3316

1778

U.K.

2709

4994

1206

Sub Total

15.059

8.650

4.254

Others

53

112

93

INDIA 'S EXPORTS OF GEMS AND JEWELLERY

.

1994- 1995

1995 - 1996

1996  - 97

1997-  98

Rs. In
crore

US $ in (M)

Rs. In
crore

US$ in (M)

Rs. In
crore

US $ in (M)

Rs. In
crore

US $ in(M)

Rough & Polished
Diamonds

12573

4021

15501

4662

14916

4235

16579

4493

Coloured Gem stones

442

14 l

488

147

481

l 37

4091

132

Gold jewellery

1519

486

1888

569

2636

748

3097

840

Pearls

15

5

19

6

13

4

15

4

Precious Metal
Jewellery other
then Gold

36

11

83

24

103

29

129

35

Synthetic stones

8

3

12

4

9

2

8

2

Costume / Fashion
Jewelry

20

6

16

5

21

6

12

3

Total

14,613

4,673

18,007

5,417

18,179

5,161

23,931

5,509

Sales to foreign tourists

24

8

32

l0

29

8

20

5

Total

14,637

4,681

18,039

5,427

18,208

5,169

20,350

5,514

SRI LANKA'S EXPORT AND IMPORT OF PRECIOUS AND SEMI PRECIOUS STONES

Type

Imports US$

Source

Exports US $

Source

Pearls

31000

Hong Kong. Germany Japan.USA

2806

South Korea

Diamonds

118 (M)

Belgium, Israel,
Switzerland

58 (M)

Vietnam,
Belgium

Rubies / Sapphires /
Emeralds
597000

USA, Isreal,
Switzerland,
Thailand

1.518 (M)

USA,
Switzerland,
Sweden

Semi Precious / Others

5.5 (M)

USA, Taiwan
Switzerland.

53.50 (M)

USA, Hong Kong,  Japan

GERMANY EXPORT AND IMPORT OF PRECIOUS AND SEMI PRECIOUS STONE

Real Pearls or cultured Pearl, Precious Stones or Ornaments Stones Precious metals and associated things, Fantasy Ornaments, Coins

Years

Export

Import

Values '000'
DM Balance

1997 (Dec-Jan)

4240640

6918600-2677960

.

1998 (Dec-Jan)

4888619

7800686-2912070

.

Tradina Countries: France, Italy, Spain, USA, Japan, Egypt, Saudi Arabia, Hong Kong, Brazil, Canada, Pakistan, Israel, Taiwan, Iran, Singapore, China, India.