Coloured gemstones are defying the downturn in price for diamonds as consumers look past cheaper man-made stones towards more personalised jewellery.
While the diamond sector fends off a flood of lab-grown equivalents and struggles with weak global luxury demand, the prices of other precious stones have held up on global markets.
Rings and necklaces studded with rubies, emeralds and sapphires are rising in value, helped by endorsements from social media influencers and celebrities such as Halle Berry and Kate Middleton, the Princess of Wales.
Mining and retail executives say consumer preference for unique and bespoke jewellery, as well as the growth in reliable, responsible supplies are likely to keep demand high until at least the end of the decade.
“Consumer preferences have changed substantially,” said Ankur Daga, founder of Angara, an online jewellery retailer. “Perfection has given way to individual, creative expression. The people that were looking at diamonds as an asset class are migrating to coloured gemstones.”
No benchmark pricing exists for coloured gems because of the uniqueness of each stone. However, Gemfields, the world’s largest miner of coloured stones, has tripled production at its Kagem emerald mine in Zambia to more than 30mn carats a years since 2009, and revenue from that asset was eight times higher in 2023, at about $90mn.
In Gemfields’s latest ruby auction — regarded as the world’s most important sale — in Bangkok in December, sales rose marginally over last year to $69.5mn. However, the average value per carat soared to $290 versus $154 a year ago.
Daga said wholesale buying prices for sapphires have gone up 12 per cent, emeralds 13 per cent and rubies 17 per cent on average each year since 2020 as supply struggles to keep up with red-hot demand.
“It’s not just one thing why there has been such a shift to coloured gemstones,” said Sean Gilbertson, chief executive of Gemfields, the world’s largest miner of coloured stones. “It’s fair to say coloured gems have bucked that trend [of falling commodity prices]. It’s one of the few mineral resources that have increased in price dramatically.”
The booming market contrasts with a marked downturn in the far larger market for diamonds, as mined stones struggle in the face of competition from lab-grown alternatives.
De Beers, the world’s largest diamond producer by value, sold $110mn of diamonds in its tenth and final sale of 2023, down from $417mn a year earlier, while India halted imports of rough diamonds for two months from October to protect its manufacturers from oversupply.
Sales of diamond rings in the US market have gradually dropped from 86 per cent of ring sales in 2020 to 82 per cent in 2023, said Edahn Golan, managing partner of Tenoris, a diamond analytics company, based on diamond transaction data collected from retailers. He said emeralds and sapphires had filled most of the gap.
Industry executives say natural gemstones’ imperfections are likely to keep the market strong for the rest of the decade.
Dev Shetty, chief executive of Fura Gems, a private Dubai-based gemstone mining group, estimates the coloured gemstone market will hit $5bn by 2030, up from $2bn in 2012. The natural rough diamond market has stagnated at $15bn since then, he said.
The depth of the diamond market downturn is, in part, because of its larger size. While some producers can try to constrict supply and manage stock levels, others keep producing large volumes.
The natural diamond market malaise has brought into question its ability to serve as a store of value and inflation hedge for investors, as it also faces a long-term challenge of a ready supply of lab-grown alternatives.
“The lab-grown element for diamonds is a newer phenomenon that consumers and the industry are just starting to get their head around,” said Kieron Hodgson, analyst at Panmure Gordon.
By contrast coloured gemstones have faced the same threat from as far back as the 1890s, when French chemist Auguste Verneuil created a synthetic ruby.
Some analysts argue the shift back to coloured gemstones could mark the start of a rebalancing towards their centuries-long dominance of the global jewellery market, before De Beers’s successful marketing campaigns reshaped the industry in the 20th century.
But others see hope that diamonds will also, in time, shrug off the lab-grown threat.
“Lab-grown gemstones are not something new,” said Kent Wong, managing director of Chow Tai Fook, China’s largest jewellery retailer. “Only very few of those went into making jewellery. A lot more have been used for industrial functions . . . such as lab-grown sapphire crystal smartphone screens,” he said, predicting diamonds would go the same way.
About 15 years ago, coloured gemstone supply came almost exclusively from informal mine sites that were often unsafe, tied to criminal activity and carried too many reputational risks for large jewellery brands.
While that is changing, some risks remain. The UK National Crime Agency in August charged Romy Andrianarisoa, the chief of staff to Madagascar’s president, in August for attempting to solicit a bribe from Gemfields, which the company did not pay. Her lawyer did not respond to a request for comment but Andrianarisoa has pleaded not guilty in London courts.
However, Shetty of Fura Gems says the industry’s biggest challenge is keeping up with demand, as production is still only about 20 per cent to 25 per cent of the 140mn to 150mn carats per year of diamonds.
“The gap of supply is so much between us and diamonds that there’s a lot of catch-up to be done,” he said.
