The Emerald Market
Over 75% of the world’s emeralds are mined in Zambia, Columbia and Brazil. Emeralds have long been one of the most in-demand and attractive of the premium-coloured gemstones. The emerald market has experienced some significant changes during the global covid pandemic, and the future indicates growing demand, higher prices, and a shift towards ethical sourcing.
Emerald demand before and during the pandemic
In the years before the pandemic, emeralds were a vibrant and steadily growing gemstone segment. Demand for emeralds was driven by a variety of factors including the emergence of new customers in China and other Asian markets, a growing demand for customized high-end jewellery and an increase in online sales. The increase in online sales is significant as it allowed new customers, often younger and from emerging wealth centres, to enter the high-end coloured gemstone market. With the onset of the pandemic, the drivers of emerald growth accelerated.
The emerald market became more online and more geographically diverse:
“At the Christie’s online jewellery auction at the end
of June (2020), an emerald-cut 28.86ct D-colour type-
IIA diamond (chemically pure, with limpid beauty)
went for $2.1m. During the sale, Christie’s reported
unprecedented digital engagement across 134
countries, with a 70 per cent increase in daily visitors
to the sale page compared with its online jewels sale in
June last year”
Source: Financial Times article “Gem Up – why luxury clients are reaching for fine jewellery” – Vivienne Becker October 5, 2020
The market became younger:
“Now…. younger buyers are coming to appreciate
jewels, with their multiplicity of meanings. According
to Sotheby’s, 25 per cent of its online bidders between
January and July were aged 40 and under. Annoushka
(Annoushka.com…leading online jewellery platform)
has also witnessed an increase in the number of
younger clients. “Online, we’ve seen a 25 per cent
increase in transactions by 25- to 35-year-olds, which
is now our fastest-growing age group. On Instagram,
where we know our customer is younger, we’ve seen
traffic to the site increase by 281 per cent year on year.”
Source: Financial Times article “Gem Up – why luxury clients are reaching for fine jewellery” – Vivienne Becker October 5, 2020
The growing demand for safe-haven investments
Emerald demand was also driven by the increased promotion and marketing of high-end coloured gemstones as tangible, high-value safe-haven investment. These safe-haven investments, designed to offer wealth protection in uncertain economic times and particularly during times of high inflation, allow investors to diversify away from more traditional investments.
“During the pandemic, discretionary spending has shifted away from luxury holidays, couture and high-end accessories to jewellery, diamonds and gemstones as a store of wealth, a hedge against possible inflation, an undeniable mood-lifter and a memento that can be passed down.” Graeme Thompson, worldwide head of jewellery at auctioneers Phillips – Source: Financial Times article “Gem Up – why luxury clients are reaching for fine jewellery”
Vivienne Becker October 5, 2020
“Diamonds reign supreme as investments, followed by the “Big Three”: emeralds, rubies, and sapphires. The highest price ever paid for a Zambian emerald—$1.04 million—was in December (2021).”
Source: Bloomberg: How to Invest in Jewellery: The Gems, Designers, and Eras to Know – As an asset class, luxury baubles have never been hotter. Here’s what you need to know to get in on the gem game. – By Kristen Shirley – March 10, 2022
The impact of the pandemic on emerald prices
While the global demand for emeralds was steadily increasing prior to the pandemic, this demand accelerated during the pandemic. However, the supply side of the emerald market experienced a covid induced contraction. Covid related restrictions disrupted emerald mining, production, and the traditional emerald supply chain. Mines were unable to produce as planned, cutters unable to work, traditional retail was curtailed, and buyers were unable to travel to tradeshows. This resulting supply deficit and imbalance in the emerald market led to a steep increase in emerald prices. This is best demonstrated via the results of the Gemfields emerald auctions during the relevant period.
Gemfields emerald auction performance before and during
the pandemic
Gemfields is a leading coloured gemstones producer. The company produces twenty five percent of the world’s emeralds and is listed on the Johannesburg and London Stock Exchanges (AIM). Gemfields owns the Kagem emerald mine in Zambia, the world’s largest emerald mine.
Gemfields markets and sells two grades of emeralds. High-quality emeralds which are the most premium and commercial emeralds which are more mainstream. The company holds several public auctions of these commercial and high-quality emeralds each year. Due to its adherence to the high reporting standards expected of a listed company, the results of Gemfields emerald auctions tend to act as the bellwether for the global emerald sector.
Between 2018 and 2021 the results of these emerald auctions reflect the changes that have taken place in the emerald market.
Revenue generated from the sale of high-quality and
commercial emeralds increased
Gemfields is a leading coloured gemstones producer. The company produces twenty five percent of the world’s emeralds and is listed on the Johannesburg and London Stock Exchanges (AIM). Gemfields owns the Kagem emerald mine in Zambia, the world’s largest emerald mine.
Gemfields markets and sells two grades of emeralds. High-quality emeralds which are the most premium and commercial emeralds which are more mainstream. The company holds several public auctions of these commercial and high-quality emeralds each year. Due to its adherence to the high reporting standards expected of a listed company, the results of Gemfields emerald auctions tend to act as the bellwether for the global emerald sector.
Between 2018 and 2021 the results of these emerald auctions reflect the changes that have taken place in the emerald market.
High-quality emeralds sales revenue generated via auction: Steady growth. CAGR of 4.9%
| Nov 2018 | US$ 28.4 million |
| May 2019 | US$ 22.4 million |
| Nov 2019 | US$ 27.2 million |
| Nov – Dec 2020 | US$ 10.9 million |
| Mar – Apr 2021 | US$ 31.4 million |
| Nov – Dec 2021 | US$ 37.8 million |
Commercial (mainstream) emeralds sales revenue generated via auction: Substantial growth. CAGR of 28.5%
| 30 Jul – 2 Aug 2018 | US$ 10.9 million |
| 18-20 Feb 2019 | US$ 10.8 million |
| 19-22 Aug 2019 | US$ 18.6 million |
| 18-21 Feb 2020 | US$ 10.9 million |
| 28 Jul – 11 Aug 2021 | US$ 11.5 million |
Emerald price per carat more than doubles for high quality emeralds over 12 months
- In December 2021, price per carat achieved at auction for high-quality emeralds increased to US$ 150.65. This is 2.5 times higher than the price per carat price achieved in December 2021 and over twice as high as the price per carat achieved in November 2018.
Price growth per carat for commercial emeralds also very strong
- Commercial grade emeralds also performed well. In August 2021 the price per carat achieved at auction was US$ 6.61 this reflects a 30% increase over 12 months.
High quality emerald auctions – More bidders in the room, more bids per lot, 100% clearance
- These auctions are held in Singapore or online. A comparison of the May 2019 and the Nov-Dec 2021 high-quality emerald auction results reveal the following:
- The number of companies bidding at the high-end emerald auction increased from forty- five to fifty-eight companies.
- The number of bids per lot of high-quality emeralds increased from eight to twenty per lot auctioned.
- In Dec 2021, all high-quality emerald lots were sold. In May 2019, only 80% of the lots were sold.
Commercial (mainstream) emerald auctions. More bidders in the room more bids per lot, close to 100% clearance:
- These auctions are held in Lusaka or online. A comparison of the May 2019 and the July-August 2021 commercial emerald auction results reveal the following:
- The number of companies bidding at the commercial auction increased from twenty-two to forty-nine companies.
- The number of bids per lot of commercial emeralds increased from six to fourteen per lot auctioned.
- In July-Aug 2021 97% of lots were sold, in May 2019 just 81% of lots were sold.
Emerald market outlook: Demand to remain strong with an
emphasis on ethical production
The entrance of younger consumers, often from emerging or new wealth centres to the emerald market combined with the growing importance of online purchases and the recognition of emeralds as a high value, tangible safe- haven investment has changed the dynamics of the global emerald market. The expectation is that demand for emeralds will remain strong.
The new emerald consumers are different. They seek customization and place a great emphasis on ethical mining and sourcing. A very large portion of the emerald supply chain is unregulated and nontransparent, the new emerald consumers find this unappealing and will seek out emeralds from ethical and responsible producers.
The Gemfields auction results highlight very steep increases in terms of price per carat for high quality grade emeralds, but also very robust and substantial revenue growth in the sale of commercial (mainstream) grade emeralds.
The global coloured gemstones market is forecast to grow at 4.8% per annum between 2021 and 2026.
Demand for ethically produced emeralds is expected to match if not outperform this forecast.
