The Colour Club

Since Ian Harebottletook over the CEO postion of Gemfields in 2009, emerald trade has breathed a fresh life. Now he aspires to venture in thecomplete coloured stone arena starting with what he calls ‘traffic light’ strategy.With Mozambican rubies, Zambian emeralds and Sri Lankan sapphires, the red, green, blue band acquisition is Gemfields’ objective. Kunjal Karaniya, spoke to him about the current emerald market, ruby auctions, foray in Sri Lanka and his future plans.

Q1) How is the current market scenario for emeralds?
A1) The current market scenario for emeralds is excellent. It continuously amazes me. I started with Gemfields in the year 2009, which was also the period of global economic downfall, but I see every challenge as an opportunity and hence I converted it as a ladder to position emerald and other gemstones on the top.

The market is getting better and better with every passing year and we used the opportunities at the right time, marketed it well and thus could garner success. We have a strong demand from India, China, U.S., Asia and Europe. The demand is across the board when it comes to age, but younger generation loves it as they are looking for something different and unique. Even in Hollywood, the celebrities have started moving from diamonds to emeralds.

Q2) Please share some details on the output of emeralds.
A2) Gemfields has enjoyed a stellar year which has seen a threefold increase in revenue to US$ 160 million and a year-on-year EBITDA increase of US$ 58 million. In addition to record revenues from our emerald business, the year saw Gemfields hold its inaugural ruby auction of Mozambican rubies, generating sales of US$ 33.5 million from 1.82 million carats sold. Both our auction system and the rubies themselves received widespread acclaim from numerous industry stakeholders, underlining the significance to Gemfields of this new business.

Output of Zambian emeralds and beryl should rise to between 25m and 30m carats this year, compared to 20m carat in the year to the end of June. Ruby output should rise from 6.5m ct to 8m.

The consistent price increases achieved in our emerald business demonstrate our ongoing commitment to supporting the competitiveness of Zambian emeralds in the international market and affirm that our global marketing strategies, including our Fabergé business, are successfully driving demand for coloured gemstones. Our shares rose 5.1 per cent to 51.5p.

Q3) How was the demand for emeralds last year?
A3) The demand for emeralds is phenomenal, emerald tops in the colour palate. The demand from India is great as it is a country where both men and women love accessories. Not to miss the demand is also strong from China, Arabian countries and Europe. The demand is rising as people now-a-days love individuality, something different and this is exactly what emerald symbolises, each emerald is unique and different.

Q4) Please comment on the price factor for emeralds during last two years.
A4) As there is increase in global demand, the price for emerald increases. Also there are a lot of marketing activities for awarenessbeing done, hence the cost adds. The value and price for emeralds have almost doubled today as they are more scarce and rare.

Q5) Any new major corporate happenings / marketing strategies?
A5) The Company’s strategy remains that of becoming the global ‘Coloured Gemstone Champion’ and we are very pleased with our recently announced opportunity to add Sri Lankan sapphires to our portfolio of premium coloured gemstones.

We recently entered into what we consider to be the third of the ‘big three’ coloured gemstones. With revenue-producing emerald and ruby operations in Zambia and Mozambique already in the Gemfields portfolio, the proposed development of sapphire operations in Sri Lanka will realise our stated red, blue and green ‘traffic light’ of coloured gemstones strategy.

Sri Lanka is already known as a key source of sapphires of all colours, and of the highly sought-after padparadscha sapphire. The favourable business climate and attractive incentives available via the Board of Investment of Sri Lanka provide a sound platform for our investment and evaluation of growth opportunities.

We are excited about the possibility of being able to offer a reliable supply of well-graded sapphires to customers attending our auctions, and to ensuring that all gemstone stakeholders in Sri Lanka - including its government and general population - benefit from the value addition and transparency that the Gemfields approach has already delivered in Zambia and Mozambique.

Q6) What do you look for in your employees?
A6) Passion is a huge one, skills can be educated. I find that not many people come into my organisation with ideal skills. It is about enthusiasm in applying your skills. I look for 3 A’s: Aptitude, Attitude and Ability. I do not want them to slog. I also give them time to spend with family, friends, hobbies so that they come back to office refreshed. Also, I am not a typical boss for them as I believe in open interaction and not bossing around.

My major job is placing the correct person in the apt role. The dare is not finding best people but finding best people and letting them find out how wonderful they are. I have a core team that helps me be in a really strong position.

Q7) What are the challenges faced in constantly upgrading thepopularity of Gemfields?
A7) We do not have many challenges as we are already established in the industry and most of people in the industry as well outside are happy with us. We have an open door policy, so if anyone is unhappy with us, can talk to me directly and we will try to change it.

We also love change, and one of the reasons why we always stay ahead is because we dare to accept and bring change and work on it profusely to make it happen. Hence, we do it openly, move forward and people appreciate us.

Q8) Any new campaign in the pipeline?
A8) Our marketing initiatives includes the Project Blossoming initiative in India and the ‘100 Good Deeds Bracelet’ project in collaboration with Mary Fisher and featuring Mila Kunis as project ambassador. We have just did a minor change in the Mila Kunis campaign by releasing very natural and black and white photographs of her wearing stones. This change was incorporated as we noticed that normal people can connect easily to someone who is presented in her natural skin rather than adding a glamour quotient.

Q9) In the last auction, were you satisfied with the pricing and outcome of ruby auction?
A9) The ruby auction in Singapore was not only an incredible success; it revealed a great demand for the stone. At the auction we were hoping it would go well, but the results were way beyond our best expectations. In that mine we had invested almost £35 million to date and we got £33 million back in the very first auction. From a pure numbers point of view we were very pleased. The market is ‘desperate’ for supply and the mineral deposit in Northern Mozambique has the potential to be the greatest ruby deposit of all time.

It was just unreal; I am just blown away with the pricing. It was wonderful and I am completely satisfied with the auctions. We received exciting comments from the industry as we were able to bring ethical and transparent auctions. There was nervousness in the beginning as few of them had never been to auctions before, but it ended wonderfully. Now, the next one is going to be hungrier and stronger.

Q10) What are your further plans for auctions?
A10) This was just a tester and we came to know that the market is hungry for more. So we will have next ruby auction in November or December this year and more two to three auctions next year. The demand is incredible and we are very excited. People in industry just focus on diamond and rubies, but we plan to bring all together and offer ruby, sapphire and emerald in near future and later almost all the possible stones.

Q11) What are your future plans?
A11) If you are not moving ahead, you are stuck. We are doing emeralds and rubies right now, but I would like to speak about the coloured stone ‘traffic light’. We plan to size up lot more emerald production and the similar for sapphires. After Sri Lankan sapphire venture this month, we are optimistic on the Colombian emerald endeavour within the next financial year and we would be let down if it doesn’t fructify. Coming to Fabergé, it is possibly one of the supreme jewellery brands of all time. We have the opportunity of being part of history.