By Marcena Hunter and Lynda Lawson

Known for their beauty, coloured gemstones have been used in jewellery, to adorn clothing and in religious ceremonies for centuries. Fuelled by demand from jewellers and investors, the coloured gemstone sector is an international trade linking supply countries in Africa and traders in Thailand and elsewhere in Asia. Today, there are more than 50 source countries and over a hundred gemstone varieties. In 2015, a conservative estimate of the global annual market for rough coloured gemstones – the term used to describe uncut, unpolished stones – valued the sector at between US$17 billion and US$23 billion. Africa is a prominent supplier of gemstones, which are shipped across the Indian Ocean to Asia for beneficiation. Rough coloured gemstones are mined throughout Africa, largely by artisanal and small-scale mining (ASM) operators. Small-scaling mining will continue to be a vital source of gemstones for the international market because many gem deposits are small, which means they are short-lived and therefore not appropriate for large-scale mining operations. From Africa, the rough stones are shipped mainly to Thailand, India and Sri Lanka, which are home to long-established, traditional processing centres, and are the main global hubs for cutting and polishing stones for the global retail market. China is also expanding its market share of this industry through increasing use of machine cutting (a process traditionally done manually). Dubbed the ‘ruby trading kingdom’, Thailand is one of the world’s major processing centres for coloured gemstones. The country has been the world’s leading exporter of precious coloured gemstones for the last eight years consecutively,5 with overall exports in 2017 valued at US$1.9 billion. Thailand plays an especially prominent role in ruby and sapphire supply chains. The Thai gemstone industry is known to be heavily dependent on African rough coloured gemstones (see the map); however, official trade records fail to reflect the immense scale of the trade. This is because of the clandestine nature of flows, which are of both an informal and illegal nature. Most African coloured gemstones are moved undeclared through informal channels or are under-declared in official channels. African rough-gemstone traders play a significant role in these supply chains, and have been able to exploit their knowledge of the gemstone industry, as well as their close social and ethnic networks, to buy and export stones from Africa to Asia with ease. In Thailand it is openly acknowledged that the country’s import figures for coloured gemstones from Africa are underreported. For example, according to participants in this research, Madagascar has been an important source of sapphires and other gemstones supplying the Thai industry for over 20 years. After the discovery of brilliant-blue sapphires in the 1990s, numerous gem rushes ensued and Madagascar became the centre of the sapphire universe, but has only recently started to be included as a source country in official Thai trade records. The informal nature of the coloured-gemstone trade, combined with the inherent difficulty in valuing rough stones at the site of extraction, provides ample opportunity for criminal and corrupt actors to exploit and profit from it. This includes large-scale smuggling of stones, resulting in significant underreporting of export and trade figures. Based on Thai trade figures and estimates of authorities and stakeholders, there is a strong likelihood that hundreds of millions of dollars of coloured gemstones are smuggled annually from Africa to Thailand. According to authorities and those engaged in the trade, coloured gemstones may also be being used in money-laundering schemes.

Geneva: Global Initiative Against Transnational Organized Crime (GI-TOC) 2020. 56p.