LETTERS TO THE EDITOR — Levelling the diamond field for all players

The dawning of the Canadian diamond industry and all it entails is upon us. Unfortunately, most Canadian and U.S. investors are not fully aware of the opportunities and pitfalls of the gemstone business.

When a large bulk test for diamonds or other gemstones is done, it is appropriate to wait for a valuation from knowledgeable people who represent the market for that particular type and quantity of gemstones to be sold over a sustained period. A long-term arrangement between a willing buyer and seller must be worked out before an investor can make a proper investment decision. This may seem a platitude, but as more producers feel they can sell outside the “cartel,” the market will become selective and only those within the cartel or those producing finer goods will be profitable.

The recent attempts at mining and marketing sapphires, red beryl and emeralds clearly point out the danger in regarding gemstones as a commodity.

The investor must know the size, quality and frequency of occurrence of these higher-quality stones and, most importantly, the demand for the product.

Diamonds are unique in the gem business, as marketing and advertising are still mostly done by one skilled, established organization. The market for diamonds, especially fine stones over 1 carat, is, although fragile, reasonably assured. However, the discovery of diamonds in the Northwest Territories is very significant and points out that the small miner will have a role in this new industry.

The development of these narrow zones will be well within the scope of smaller companies and may represent a new mining opportunity similar to the glory days of vein mining.

In a small operation, the presence of large, high-quality diamonds is a material fact and should be treated according.

To report a diamond as “gem quality” means nothing — it can be anything from road gravel to

a stunning multi-million-dollar stone. The term “gem quality” covers 100 grades in cut stones, 10 grades for clarity and 10 for color. For instance, a “D Color IF” (internally flawless) stone can be US$19,000 per carat and an “M Color I3” (imperfect 3) can be US$500 per carat — if you can sell it.

These are cut and polished stones. In rough or unworked stones, there are over 10 times as many grades as in the finished diamond. This sorting of rough diamonds and valuation is an art best left to the trade.

Perhaps the mystique of the diamond world is intimidating to some — it shouldn’t be.

To package these parcels up and ship them to Antwerp for evaluation will take weeks or months, and is not adequate for the investor. The “specials” or small stones from potentially small operators should be reported immediately.

I would suggest that stones be weighed, measured, photographed and carefully examined with a lens and reported as an initial material fact. The initial discovery report, for example, of an 8-carat colorless stone with no visible inclusions under 10-power magnification would get the phones ringing. While a 20-carat brown with many visible inclusions would be worthless, both are of “gem quality.” A brief field report would level the playing field in this new world of gemstones.

The recent gold scams only indicate that the mining industry has become trusting and careless. The gem trade as it now exists is one of trust, respect and an “old boy” network. This is going to change, however, and no business is so open to salting, theft and inflated valuations as the gem trade. We will need people trained in all aspects of the trade where currently there are very few.

George Stewart

Graduate Gemologist

Greenwood, B.C.