GemSelect Newsletter - March 2009

• The Situation in Madagascar
• Rare and Unusual Gems
• Customer Questions

Madagascar Instability

The supply of colored gemstones is often sporadic and unreliable. One simple reason is that colored stones are rare, with many varieties being rarer than diamond. Another reason is that many gems are mined in developing countries that are politically unstable and struggling to find a way to capitalize on their valuable gemstone reserves. Madagascar is a case in point.

Madagascar, the huge island off the coast of Mozambique, is believed to have some of the richest untapped gemstone reserves in the world. It has a population of about 20 million and is also one of the poorest countries in the world. Until the discovery of important sapphire and ruby deposits in the late 1990s, Madagascar was almost entirely dependent on agriculture. The island is the largest producer of vanilla in the world. Indeed the country was so dependent on vanilla that when Coca-Cola introduced a new formulation that used less vanilla, it caused a significant downturn in the Madagascan economy.

As a democratic republic, Madagascar has been unstable since the early 1970s and corruption remains a major problem. A serious political crisis in 2002 brought the country to a virtual standstill for 6 months over the results of a disputed election. Marc Ravalomanana was eventually declared the winner of the election and became president. He was re-elected in 2006. Ravalomanana is credited with improving the country's infrastructure and developing education and health, but has faced criticism for his lack of progress regarding poverty.

The lucrative gemstone trade has yet to yield clear benefits for the Malagasy people. Prior to 2005, restrictive rules made it very difficult for foreigners to buy Madagascan gems, and this meant that many gems were smuggled out of the country without any tax revenue going to the goverment. The rules were relaxed in 2005 and efforts were made to establish training so that more gems could be cut and polished in Madagascar instead of leaving the country as rough material.

The gem trade increased under the new regulations, but in 2008 a scandal erupted over the alleged smuggling of a huge 536 kg rough emerald-in-matrix from Madagascar. The government responded by imposing a ban on all gemstone exports from the country. The ban was eventually relaxed to permit the export of finished stones, but the export of rough stone is still prohibited. The latest rules have had a significant impact here in Thailand, where most Madagascan gems were once cut.

As if this were not enough, a new political crisis is brewing. In December 2008 major international aid donors, including the World Bank, suspended payments to Madagascar due to allegations of government corruption. President Ravalomanana is now under pressure from a political rival, Andry Rajoelina, mayor of the capital city of Antananarivo. Recent political unrest has resulted in the occupation of four government ministries by the opposition and more than 125 deaths in protests and demonstrations. Tourism has ground to a halt and international trade is has become even more challenging than before.

Representatives from the Southern African Development Community have now arrived in the country to facilitate talks between the two sides. We hope the Malagasy politicans can reach a compromise that will allow economic development to move forward.

Each month we feature a rare and unusual gem from our inventory. This month we would like to show you an exceptional unheated blue sapphire from Tanzania:

Top-Quality, Untreated Blue Sapphire

Top quality untreated blue sapphires are increasingly rare. It is especially hard to find them weighing over 2 carats. This remarkable 4.06 carat sapphire from Tanzania displays a rich saturated blue under any lighting conditions. This stone combines excellent clarity (VVS grade) and luster as well.

Every month we answer questions of general interest from our customers. Please feel free to send your questions or suggestions to our support team at help@gemselect.com!

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Happy Gem Hunting!
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