Book Critique: Gems and Mines of Mogok
by Ted Themelis
352 pages, 2008
Reviewed by Robert Genis
"Truly fine quality Mogok gems are very few, less than 1% of the total
production. Most Mogok gems are low to medium quality and available in the local
and international market. Nevertheless, Mogok is truly a cornucopia of gems and
minerals for avid collectors and connoisseurs alike."
Ted Themelis probably knows more about the mines of Mogok than anyone on the
planet. It is obvious the kind of mind he has when you read his books. To write
a book like this you need to be ultra passionate or a little obsessive
compulsive. Maybe both. Whatever the reason, we readers benefit with almost
overwhelming information impossible to obtain anywhere else.
This section discusses the geology behind why the best stones in the world come
from Burma. Themelis offers killer Tectonic charts, graphs and illustrations. He
offers a wide variety of photos of crystals, rocks, minerals, geological maps
Genesis of Ruby, Spinel, Sapphire and Peridot
This is an extensive chapter of the "big four" gems produced in Mogok. Included
are informative drawings and photos of these stones. How these stones are formed
from crystals is also depicted. Some interesting spectrograms of ruby and
sapphire are presented. However, the best part is the extensive
micro-photographs of the inclusions of these stones. Dr. Gubelin is smiling
The book has beautiful photos of the gems of Mogok that star or have a cats-eye
effect. You may be surprised at the number.
Themelis takes no prisoners in this section. He discusses the fact that country
of origin is an important matter in pricing gemstones. In the old days, certain
well known jewelers would issue a document if a colored gemstone was truly
outstanding. It had to be of high quality, beautiful, not treated and must
possess certain characteristics consistent with the location. Typically, the
only stones that met these criteria were certain qualities of ruby and sapphire
from Burma, emeralds from Colombia, or Kashmir sapphires. Of course, in the late
1070s, the American Gemological Laboratories (AGL) and other labs started
independently identifying country of origin and gemstone quality. Many
investors/collectors entered the market and wanted a true third party opinion.
The discovery of Mong Hsu Burma ruby in 1991 threw a monkey wrench into the
county of origin issue. Suddenly, the market was filled with a large amount of
heated and fracture-filled red rubies from Mong Hsu. Should these be priced at
the same level as untreated Burma Mogok stones? Of course not. However, you can
understand why dealers would want to sell their Mong Hsu rubies at Mogok prices.
Suddenly, many new labs sprouted up and called the stones Burma without
delineation for the two areas in Burma. Is this deceptive to the buyer?
Absolutely. These new laboratory reports began issuing reports without regard
for beauty, quality, treatment, or value. Even gem dealer trade groups started
their own labs to issue these documents. In essence, these reports imposed an
origin surcharge" on the price of these gemstones, even if they didnt deserve
one. If you receive a report stating Burma, simply call the lab and ask if they
delineate between the Mogok and Mong Hsu areas. If they dont, you cannot trust
the paper. According to Themelis, a proper report must state:
If the lab just states location, it is not enough information to make an
No one knows when gem mining began in Mogok. Historians speculate it was around
1044 A.D. Burmese princes controlled the gems until 1866. The British owned the
mines until World War II, when the Japanese took over Burma. In 1947, the
Burmese government took control of the mines when they became independent.
Mogoks Golden Era was from 1947-1962, under licenses issued by the Burmese
administration. From 1962-1969, gem mining was conducted by the Mineral
Development Corporation (MDC) and trading by the government corporation No.
19." In 1969, the government nationalized the gem industry and all trading was
legally halted. Mogok remained under tight government control until the early
1990s. Recently, hundreds of joint ventures were licensed between the Burmese
government and private companies, ex-insurgent armies and ethnic minorities.
Today, mining is controlled by these groups:
* Myanma Gem Enterprise Ltd. (MGE)
They lease mining sites to actual buyers on government and non government
(farming) land. They have formed over 850 companies with this method.
* Union of Myanmar Economic Holdings Ltd (UHMEL)
This is a joint venture between the Myanmar Ministry of Defense and private
investors. The investors put up all the capital, and 60% goes to UHMEL and 40%
to the investors.
* Fifty-Fifty Joint Venture
This is a joint venture between MGE and Ruby Dragon Jade and Gems Co Ltd.
It must be remembered gemstone mining is a highly speculative endeavor. Some say
more money is made buying and selling the licenses than actually mining the
gemstones themselves. Mining costs are high and the average quality of gemstones
is low. Themelis speculate many of these companies might simply be fronts for
In this section, you will also be amazed at the photographs of the gem mining
methods used in Burma, If you want go on a trip inside the mines of Mogok, you
must see these photos.
Gem Mines of Mogok
According to Themelis, there are over 1250 mines operating in Mogok today. Of
course, these mines range from small, simple shallow plots to large open pit
mines. The author maps the main mining areas, discusses what is produced at the
location and includes actual photographs. This part includes the most detailed
maps of these areas ever produced.
Profiles of Mogok Gems
More than 60 varieties of gemstones have been found in Mogok. They fall into
* Jewelry gems
- Gems such as ruby, sapphire, spinel and others.
* Rare and Collector Gemstones
- Includes albite cat's-eye, green quartz, taafeite and many others.
* Ornamental gemstones
- Such as hematite, pyrite and rock crystal quartz.
This section is chocked full of data and photographs about these 60 varieties.
This section is a must have for gemologists and may be interesting for
What is a good research book without an Appendix? Themelis offers one up in
spades. It includes a written documentation of the Pain collection with
photographs from the British Museum of National History. A brief discussion of
treatment of Mogok gems is included. He also discusses how to identify Mogok
gemstones, including new high tech methods like Laser Induced Breakdown
Spectroscopy (LIBS), Scanning Electron Microscope (SEM), and FTIR (Fourier-trandform
Infra Red Spectroscopy). Gemologists will appreciate the Property Chart of Mogok
gems. An interesting discussion is the Burmese gem trading jargon. Finally a
chart of the Gem Mine of Mogok with geographic coordinates finishes off the
The book also comes with a companion CD. You can simply pop this in your
computer and take a brief slide show trip to mines of Burma. It` is a brief
replication of the book with Asian music in the background. It will definitely
get you in the mood to go to Mogok. Regretfully, the chance of getting to Mogok
is slim to none. This may be the next best thing. The photographs, satellite
images, geological models, illustrations, geologic/topographic maps and drawings
in this book are more than worth the price of the book. It is obvious this book
is a labor of love and took the author seven years to complete. Although
sometimes mired in technical detail, you can simply choose to read what you
want. Geologists and gemologists will devour the publication. Collectors or
owners of Mogok material will have a newfound respect for the material. If you
have a gemological library, this should be your next purchase. You can purchase
the book on-line at:
"The US is in recession, sales in mid-quality diamonds are falling and retailers
are going bankrupt. It is a very confusing situation. There is this recessional
middle market where people are spending less on diamonds and luxuries in general
because of rising oil and mortgage costs. But there is at the same time a
rapidly expanding high end of the market - driven by new wealth in China, India,
Russia and the Gulf - which is beyond anybody's control."
June 13, 2008
As wealth continues to spread to more people globally, demand is increasing for
very fine quality diamonds weighing 2 carats or more, and very fine colored gems
in varying sizes, but the supply of these gems is actually diminishing as
existing mines are depleted."
May 27, 2008
America is having a love affair with all thats natural. It started with
natural beauty aids. Natural colored diamonds begin with the word natural. The
affluent want natural today."
Christine Onassis Auction
Christie's auctioned a collection of jewelry belonging to Christina Onassis for
over $13 million. She was the daughter of Greek shipping tycoon Aristotle
Onassis, who struggled to find happiness despite her family's wealth. Christina
Onassis, after whom Aristotle's famous luxury yacht was named, saw her father,
brother and mother die in a period of just 24 months. She took over the family
empire after her father died. She died at 37 of fluid in the lungs in Argentina.
Christinas life was replete with drug abuse, weight problems and four failed
marriages. She had a daughter, Athina, who was three years old when her mother
passed away. Friends of Athina said the 23-year-old heiress, worth over $2
billion, wanted to get rid of much of the family's jewelry as she had no need
for it. The highlight of the auction was a pear shaped, 38 carat, D color,
potentially flawless diamond, which Onassis wore on a diamond pendant necklace,
sold for $7 million to a private buyer on the phone. A Carl Faberge semiprecious
stone Buddha with a moving head, tongue and arms fetched $2.5 million. It was
bought by Moscow collector Alexander Ivanov, who was in the room bidding and
spent $17.7 million on a Faberge egg last year.
In May, at the at Magnificent Jewels and Noble Jewels in Geneva, a 3.73
pear-shaped blue diamond has sold for $4.93 million. This set another new record
for the highest price per carat received for any colored diamond. As is often
the case, the buyer of the blue stone was British jeweler Lawrence Graff. The
blue diamond is graded "fancy vivid," the most intense color and is mounted in
platinum. Its pre-sale estimate was $2.6-$3.3 million. The price per carat was
nearly $1.33 million, which exceeded the $1.32 million paid per carat for a 6.04
carat blue diamond it sold last October in Hong Kong. Also, at the auction, an
oval 5.06 fancy vivid purplish pink diamond, ring sold for $2.5 million.
Finally, a 6.2 fancy light pink diamond ring, claw-set with a fancy light pink
cut-cornered rectangular-cut diamond sold for $1.6 million. A total of 66
percent of lots were sold above their high estimate and the total sales were
over $57 million.
Another record was being broken at Christie's in May. A 13.39 blue diamond
became the most expensive color diamond ever sold at auction. It achieved a
world record price of $8.9 million. The fancy Intense" blue diamond is probably
the largest blue diamond graded "fancy intense" ever to be put on the block. It
had been estimated to sell at $6 to $8 million. Its buyer, a private collector,
chose to remain anonymous.
Other important pieces included an ornate necklace, set with large emeralds,
diamonds and natural pearls, sold for $5.59 million while a matching brooch
netted $4.38 million. Both went to U.S. dealers. An emerald colored diamond and
pearl pendent sold for $4.4 million. A colored diamond necklace fetched $3.1
million. Finally, a 21.4 flawless heart-shaped vivid yellow diamond was bid to
$3.14 million. The auction took in nearly $48.3 million, with 11 lots fetching
more than a million dollars.
Christies Hong Kong
In late May, Christie's had a record sale over $60 million at its Hong Kong sale
of Magnificent Jewels. Buyers in Hong Kong are buying the finest quality
diamonds gemstones, and jadeite. The top lot of the day in Hong Kong was a
101.27 carat F-VVS1 diamond, which sold to a private collector for $6.2 million
or about $61,000 per carat. The final stone is the size of a ping pong ball and
was cut from a 460 carat rough. The shield-shaped gem boasts 92 brilliant
facets. The stone was sold to a private buyer and naming rights were granted to
the new owner. It is the largest colorless diamond to appear on the auction
market in the last 18 years. Also, a 10.36 square-shaped fancy green diamond
fetched $3.4 million or $336,417 per carat. The auction sold 75 percent by lot
and nine of the top 10 lots at the auction sold for more than $2 million.
Jewelry TV Faces Lawsuits
On May 23, Marliese Weed filed a lawsuit against the Jewelry Television in U.S.
District Court in San Diego, Calif., accusing it of false advertising. Weed
claims that the company sold gemstones described as rare and expensive red or
green andesine labradorites. She said the items were actually colorless or
yellow common feldspar that had been chemically treated. She had purchased over
$4,0000 in stones.
A second false advertising lawsuit has been filed by Theresa and Gary Hurd of
Kodak, Tenn. They filed suit June 5 in Knox County Circuit Court. They claimed
the shopping network "fraudulently advertised and misrepresented" the gemstone
andesine-labradorite as being "highly coveted" and "extremely rare." The suit
claims the Hurds actually received a "low-cost yellow or colorless" stone that
had been given a "face lift" though treating. The lawsuits seeks in excess of $5
million and class-action status. Jewelry Television acknowledged that it has
discovered one of its sources for the gemstone that treated the stone. The
company reportedly said it shared that information with its customers and feels
it acted responsibly. The Jewelry Network started selling the stones in 2003 as
all natural and untreated material.
David Sherman Sues AGTA and GIA
In April, 2008, David Sherman took legal action against the American Gem Trade
Association (AGTA), a corporation whose purpose includes the protection of the
members of the trade association and the Gemological Institute of America (GIA),
the well known diamond and colored gemstone laboratory.
In approximately 2005, it became known in the gemstone industry that Madagascar
stones were being passed off by the defendants and others as Brazilian Paraiba
stones. True Paraiba tourmalines originate from the Sao Jose de Batalha area of
Brazil in the Paraiba province. Like Burma ruby, the stone carried the value
purely on the reference of its place of origin. Sherman alleges the AGTA and the
other defendants entered into a conspiracy: they agreed to redefine as a Paraiba
stone any cuprous elbaite that contained copper and manganese regardless of
place of origin. The Brazilian stones have 2 to 3 percent copper concentration;
the African stones have only trace amounts of copper, in rare cases, copper
content of approximately 1 percent. "They stood to gain a lot from what they
decided to do," says Sherman. "They had a vested economic interest in preventing
lawsuits for fraud, maintaining the value of the African stones, or in
protecting the members of the gem association. AGTA had a clear economic
interest in passing off of the African stones as Paraiba stones."
The AGTA controls certifications and collects fees for providing them. According
to Sherman, the AGTA used its power in the jewelry business to widely
disseminate the false information regarding the redefinition of Paraiba stones.
"What the AGTA did was wrong," says Sherman. "We intend to go all the way," says
Sherman. "Ultimately, it's the public that has been injured here. It's in the
interest of the gem industry in the long run to prevent this destructive sort of
fraud." Recently, AGTA filed its response to the lawsuit and demanded the suit
be dismissed. Shermans attorneys refuse to drop the suit.
The Paraiba Predicament
By David Federman, Editor-in-Chief, Colored Stone
EDITOR: Here is an excellent article on this controversial issue by David
Federman. We are deeply concerned when dealers try to misrepresent their
material. We believe consumers need to know the truth about the material to make
an honest evaluation. Although this happens in the gem dealer to gem dealer
wholesale trades every day, it has been the laboratories that often settled the
arguments about country of origin and treatments. It is now even worse, when
supposedly independent laboratories, assist these dealers in their quest for
bigger dollars by giving them the tools to deceive. We are actually surprised it
took so long so someone to sue the labs. Of course, NGC has always marketed the
African tourmaline as being from Mozambique or Nigerian, not Brazil.
Maybe gem and jewelry giant Stuller Inc. should have delayed publication of its
April issue of the Stuller Standard. There on page 11, the company openly offers
"Mozambique Blue Paraiba Tourmaline" at prices ranging from $575 to $2,025 per
carat. Maybe lapidary Paul Wild should have had second thoughts about running an
ad in the March/April 2008 issue of JQ with the headline: "Paraiba ... New Found
Everywhere you look theses days -- at shows, in magazines, on TV -- you find the
public is being offered marvelous aqua and teal blue tourmaline from Mozambique
as "Paraiba tourmaline." There's just one technical problem.
It's not genuine Paraiba tourmaline. Paraiba is a Brazilian state in whose
Batalha mining area where the finest blue, green, and blue-green tourmalines
ever seen were discovered in 1987. The find was a culmination of a five-year
quest by miner Heitor Barbosa. By 1990, the best of these ferociously intense
neon-shimmering stones fetched $2,000 per carat. A year later, documented
selling prices had crossed the $10,000 per carat mark, and the place-name
Paraiba had become as much a pinnacle for superlative tourmaline as "Kashmir"
for quintessential blue sapphire and "Mogok, Burma" for peerless ruby.
"It is not every day that a gem locality becomes so celebrated for superb
quality that stones proven to have been mined there command a premium based on
origin," says fine gems dealer Ralph Esmerian, who in 2006 bought the famous
Fred Leighton store in New York City. "'Paraiba' is one of the few modern mining
areas to have attained the stature of provenance."
When supplies of bona fide Batalha Paraiba tourmaline began to taper off sharply
in the early 1990s, the market made due with closely reminiscent stones from two
mines -- the Mulungu and the Alto dos Quintos -- in the joining state of Rio
Grande del Norde. Although not technically from Paraiba, the stones shared a
common geographical and geological land mass. Hence some dealers felt entitled
to offer them as genuine "Paraiba" goods. But purists balked, arguing that these
newcomers were cousins at best, impostors at worst.
Imagine how these geographical and gemological absolutists greeted the influx of
similar-color but far less saturated tourmalines from Nigeria in 2001 sold as "Paraiba."
They condemned sellers for what they felt was a clear-cut fraud involving misuse
of a specific origin-name. "If you took chromium-colored ruby from Nepal or Sri
Lanka and sold it as 'Burmese,' you would be called a con man," says one New
York dealer, "So tell me why it was permissible to sell copper-bearing
tourmaline from Africa as Paraiba?" When a second wave of African "Paraiba,"
this time from Mozambique, began to deluge the market in 2005, dealers opposed
to this semantic waiver lost all patience with it.
To mollify them and buffer themselves from the growing possibility of lawsuits,
some dealers started calling Mozambique stones "African Paraiba." Others thought
that by spelling Paraiba with a small "p" this somehow limited liability. Still
others took refuge in suffixes such as "-like" or "-type," believing that the
phrases "Paraiba-type" or "Paraiba-like" clearly separated African from
Wrong on all counts, says California attorney John Hannon II. He is the lawyer
hired by gem dealer Dave Sherman of Paraiba.com, to sue the American Gem Trade
Association, GIA, plus numerous individuals, for the deceptive, misleading use
of the term "Paraiba" in conjunction with African tourmaline. Under California
law, he has the right to sue for damages to his client from loss of sales, as
well as punitive damages. In a copy of the suit leaked to Colored Stone, he is
asking for a total of $120 million. By colored stone trade standards, those are
Nevertheless, does the suit have merit? To answer this question, one has to look
at the broader issue of origin-selling in the gem trade.
Allowing a specific place-name to serve as a broad generic varietal name has
long been considered a breach of ethics and custom. After all, selling stones on
the basis of hallowed origins such as Kashmir and Mogok, Burma, are pivotal
value factors when pricing sapphires and rubies that can make as much as a 40
percent difference in their value.
It may seem crazy to pay a 40 percent premium for a gem on the basis of its
birthplace but this is a long-established tradition -- comparable, Esmerian
says, to the premiums paid for a Rembrandt painting as opposed to a student or
contemporary of the master. "Just as certain artists represent a yardstick of
exemplary work, certain mining localities represent a yardstick of exemplary
gemstones," he explains. Paraiba is the latest locality to be added to this
somewhat short list of prestigious origins.
Until recently, the gem trade was strict in its insistence on a one-to-one
relationship between origin and place. Then this tradition of parity came under
Back in the 1980s, there was precursor controversy involving use of the term "padparadscha,"
a name given to a delicate saffron-colored pinkish-orange sapphire from Sri
Lanka. Although "padparadscha" referred to color rather than place, it was
always assumed that this corundum had one origin only: Sri Lanka. So use of the
term "padparadscha" implied a single source.
But after brownish-pinkish-orange sapphires were discovered in the Umba Valley
region of Tanzania, some dealers who specialized in East African gems started
selling these stones as "African padparadscha." To prevent trade acceptance of
this new expanded definition for padparadscha, eminent gemologist Robert
Crowningshield published a major article in Gems & Gemology on the etymology of
this term and convincingly concluded that it applied only to a narrow range of
sapphires with certain hues, tones and saturations found in Sri Lanka. He
explicitly ruled out Tanzanian stones with their darker tones and strong tinges
of brown from inclusion in the padparadscha category. Case closed.
Publication of this article was widely interpreted and praised as both a market
intervention and a pre-emptive move by GIA to defend the integrity of key
historic gemological terms. Until the flood of beryllium-treated pinkish-orange
"padparadscha" sapphires from Madagascar a few years ago, this term was safely
restricted to pastel pinkish-orange sapphires from Sri Lanka. It is on such
precedents of gemological vigilance that the tradition of origin-selling has
depended and thrived.
Now this increasingly important institution of gem value and provenance is under
severe, multi-pronged attack and the gemological vigilance exercised by GIA in
1983 to defend "padparadscha" seems to be rapidly disappearing. Let's take a
look at the Paraiba scandal from a standpoint of weakened gemological vigilance.
Ironically, a decade before the Paraiba nomenclature scandal, the industry
became embroiled in name-game crisis involving unqualified use of the term
"Burma." In the early 1990s, miners at Mong Hsu in Burma made what is probably
the biggest discovery of ruby in history. Unlike material from Burma's
long-celebrated Mogok region, however, Mong Hsu stones were usually so poor in
quality they required chemical reclamation using heat and glass to make them
salvageable. Suddenly, it became important for labs and dealers to distinguish
legendary Mogok-origin stones from their lackluster Mong Hsu counterparts. But
few did. Instead, most labs charged with determining origin for these stones
simply designated them as "Burma" in origin and ignored deflationary trade
contempt for Mong Hsu stones. Even today, few labs make the critical distinction
between Mogok and Mong Hsu.
Once the trade accepted the expansion of Burma origin to cover rubies from the
clearly inferior Mong Hsu deposit, the stage was set for even wilder distortions
of language. Worse, the stage was set for official collusion in these
Look, it is one thing for a bunch of renegade dealers to unilaterally adopt a
place-specific term like "Paraiba" and expand its meaning to include tourmalines
from Nigeria and Mozambique. It is another thing entirely for the trade groups
to which they belong and the gemological educational and research establishment
on which they depend for prevention of such nomenclature excess to endorse such
Let's face it, endorsement of the use of "Paraiba" as a varietal name by both
AGTA and GIA is the chief provocation for the $120 million law suit being
threatened against them. If you talk to either Sherman or his lawyer, you will
quickly understand that they believe these organizations felt it better to
condone rather than condemn widespread misuse of the term "Paraiba." "It's like
they decided to give a retroactive pardon and justification for what was clearly
a wrongful, misleading act," Sherman accuses.
So it would seem. In 2006, a consortium of American, European and Asian gem labs
known as the Laboratory Manual Harmonization Committee (LMHC) classified all
Paraiba-reminiscent tourmalines containing the colorizing trace elements of
copper and manganese as "cuprian elbaite." This was a legitimate action based on
But when the LMHC authorized member labs (among them, GIA, AGTA GTC, SSEF, and
Gubelin) to make blanket use of the term "Paraiba tourmaline" for all
copper-bearing blue, green and blue-green elbaite -- regardless of origin -- it
overstepped its bounds. Suddenly, it was kosher to sell Brazilian, Nigerian, and
Mozambique stones as "Paraiba." This generous rule also left open the door to
further expand use of the term for any and all future discoveries of cuprian
In a mailing to members dated May 18, 2006, the AGTA GTC wrote as follows:
"Beginning May 15th, the AGTCA GTC will adopt a new policy involving
identification reports for Paraiba tourmaline. Previously, our reports
identified this type of material as 'cuprian elbaite tourmaline' and if
requested, an origin report could be issued.
After extended discussions with clients, members of our industry and other
laboratories we are instituting a new policy whereby all cuprian elbaite will be
identified on our reports as 'paraiba tourmaline.' This policy is consistent
with widespread industry practice and has also been adopted into the guidelines
In short, AGTA was giving official approval to a practice many of its own
members protested and condemned. One of them, Simon Watt of Mayer & Watt,
Maysville, Kentucky, immediately advised his customers to stop buying Paraiba
goods. "Imagine an opal dealer having to tell his clients to stop buying
Lightning Ridge material," he says. "This was a momentous recommendation. But I
had no choice."
And here we reach the heart of the matter. "The suit revolves around one
uncontestable fact: a major trade group has accommodated the deceptive practice
of marketing African stones as Paraiba," says Brian Cook, of Nature's Geometry,
who was in Brazil when the first fabled Paraiba tourmalines were dug from the
earth. "There are enough laws, regulations and trade practice rules -- not to
mention trade group codes of ethics -- to have prevented this abuse."
For Cook and Watt, the issue is to see that justice is done but, at the same
time, protect the good will of the buying public. That's one high-placed
tightrope with no safety net. "We have to preserve consumer confidence," Cook
continues. "But right now we have consumer confusion. The word Paraiba should
never have been attached to African cuprian tourmalines. Mozambique tourmalines
are marvelous in their own right. But to this day, no other location in the
world has matched Batalha's top-quality saturation."
One thing for sure, Sherman's suit has served noticed on the industry for
adopting self-serving nomenclature rules that clearly disregard long-standing
deceptive advertising laws such as the Lanham Act. Now it will have to
scrutinize other practices that could bring more law suits.
Better yet, AGTA and others should make a true contract with the public. As AGTA
member Bob Van Wagoner of Maui Gems puts it: "It has always been our kuleana [a
Hawaiian word for duty to the land and people] as gem dealers and gemologists to
protect our clients from charlatans. When we enable, rather than disable, the
cheaters, we become just like them. The trade must do everything in its power to
restore consumer confidence."
In The News
Corruption, looting cloud Kashmir's gems future
May 16, 2008
By Haroon Mirani
EDITOR: Kashmir sapphires have been a hot topic in the press recently. It was
probably started by the high prices reached by some Kashmirs at auction. We have
yet to see any new production of Kashmirs that rival the old stones that have
been with jewelry owners and collectors for decades. However, with new mining
technology, we will keep an open mind about any new production, if it occurs.
In 1882, the then ruler of Kashmir Maharaja Ranbir Singh heard that extremely
beautiful gems found in his territory were being traded in the Indian city of
Calcutta (now Kolkata). Enraged, he went there - then instigated a most
remarkable feat of reverse trading. The maharaja's men traced and seized the
gems, then gradually undid all the transactions that had taken place during the
transfer of the stones to Calcutta from Kashmir.
The gems originated in a landslip that had exposed unusual blue stones noticed
by members of a passing caravan, who in ignorance of their value traded them for
salt in the Indian state of Himachal Pradesh. The stones then changed hands a
few times until someone recognized them as sapphires of particular beauty and
breathtaking color. Soon, their price multiplied and by the time they reached a
Calcutta jeweler they were worth the equivalent of US$400,000.
So the maharaja, starting in Calcutta, went through the various towns and cities
where the gems had been traded reversing the numerous deals. The jeweler got
back his $400,000 and the first trader got his bag of salt.
The gems were found to come from an extremely rugged area called Padder, where
an industry quickly developed to extract more in the two months of the year when
the deposits were accessible.
The next five years yielded sapphires whose quality earned them fame in the
jewelry world to the extent that more than 100 years later the gems have
achieved a legendary status. A limited number still appear to fetch huge prices
In April 2007, Christie's sold a 22.66 carat Kashmir sapphire set in a pendant
for over $3 million. Kashmir blue sapphires fetch upwards of $15,000 per carat.
The more recent history of Padder and its sapphire deposits is less glittering.
War has blighted the region, allowing unregulated miners to grab over the past
two decades what spoils they could. As a fragile peace has returned, the
state-owned company that is now supposed to run the mine, Jammu Kashmir Minerals
Ltd (JKML), could get only 13.2 million rupees ($33,000) from an auction of 12
kg of the corundum (raw sapphire) accumulated from its own sporadic mining over
Sapphires are a mere sideline for JKML, whose staff of around 2,000 are more
involved in extracting coal, gypsum, marble and other minerals that occur in the
state. Gem experts and politicians were fiercely critical of JKML's auction.
Sajjad Ahmed Kichloo, an opposition legislator from the region accused the miner
of undervaluing the auction process.
"The bids were manipulated so as to benefit some traders, who are involved in
underhand dealings with higher officials," he said. Kichloo also questioned the
amount of sapphire that was available for sale. "The amount of sapphire
auctioned is less than what was actually extracted," he said. He demanded an
inquiry by Central Bureau of Investigation, India's premier investigation
agency, in the entire process.
Disrespect for ownership seems a constant when it comes to sapphires, with
people in the industry claiming that corruption and looting - from the state
treasury as well as from mines - are prime factors behind the decay for what
should be highly promising industry.
In 1989, when an anti-India insurgency broke out in Indian administered Kashmir,
the mines became a no-go area for the state authorities, with the region deemed
to be rebel-controlled. That left the mines open for about a decade to anyone
who could extract the sapphires.
When a team of JKML and other state officials visited the mines in 1998 after a
gap of 10 years they reported: "It seems everyone except the government of Jammu
and Kashmir has been benefiting from mining and selling the priceless sapphires.
The loss is phenomenal. It can never be quantified.''
Smugglers had broken all the mines' gates, locks and seals and damaged the four
operational tunnels with crude blasting techniques. Police have yet to recover
any of the illegally mined gems. Suspicion was also raised over some JKML
employees, who according to some quarters, "conveniently helped to start one of
the most profitable smuggling rings in Kashmir".
If that is the case, they would be carrying on a strong tradition. In 1947, when
the monarchy in Kashmir was ended, the rulers were reported to possess enormous
amounts of sapphires but few of these have been seen since.
Sofi Mohiudin, a political commentator said the last king, Maharaja Hari Singh,
left Indian-administered Kashmir with sapphires, diamonds, gold and other
valuables. "He took away what he could when he fled Kashmir. The rest was put in
the [state] government treasury, or Toshakhana," he said.
The Toshakhana was looted by successive rulers, Mohiudin said, and no concrete
record or catalogue of the articles was strictly maintained. "In 1963 the
Kashmir government donated 717 kg of gold to India for its defense fund during
Indo-China war, and it is during this time that first large-scale embezzlement
Then in the late '70s more valuables were looted by authorities, and besides
this "there was a regular pilferage," Mohiudin said.
Various sapphire collections have come to light at different times only to
recede into the darkness of history. Kathryn Bonanno Patrizzi, a jewelry
consultant, wrote in a journal that her husband, Osvaldo Patrizzi, founder of
Geneva-based Antiquorum auction house and a renowned gemologist, once came close
to inspecting a chest of Kashmir sapphires.
"He had already arrived in India and was only moments away from the chest that
was supposedly filled with 18,000 carats of Kashmir sapphires!! However, it
seems that the Indian government had also been made aware of the treasure, and
all was confiscated just prior to his arrival," Ms Patrizzi wrote in the June
2002 issue of Antiquorum Magazine.
The government has remained silent over such claims, further fueling
The corruption in the area (Kashmir was India's second-most corrupt state
according to a 2005 Transparency and absence of accountability have taken their
toll of the sapphire industry and prevented what could be a valuable
"Sizable"' sapphire deposits still exist in the 2 sq. km area around the
original mine, say experts, a view supported by a satellite survey by National
Remote Sensing Agency (NRSA) of the Padder mines. Geo-scientist Haji Abdul Majid
Butt says that on the basis of the satellite imagery there are 480kg of gem
varieties on one ridge that could be recovered. There are six such ridges,
putting the potential of the mines at billions of dollars.
That would suggest a profitable future for JKML, but its present circumstances
argue otherwise. The company survives on government aid and is unable to pay its
employees for months at present seven, according to JKML general manager Abid
Sohail - at a time. The recent corundum auction was carried out to raise cash
The Jammu and Kashmir government six years ago moved towards initiating a global
tender to attract international companies to exploit the region's sapphires,
with offers sought four times including last year. Only six companies have taken
part in the tendering process due, said some in the industry, to the
government's lackadaisical attitude and unprofessional manner. Three have been
asked to make presentations about their financial and technical capability and
The authorities continuously say that they are getting a poor response from
bidders, but given the global demand for Kashmir sapphires, industry experts
believe other factors are at play.
Butt, who recently attended an international conference on Kashmir sapphires in
London, recalls: "Such is the demand for these gems that during my stay I got
hundreds of calls from people seeking Kashmir sapphires and willing to pay any
amount. Actually it is the incompetence by our government which fails to get the
Of the three companies under consideration, Gujarat Minerals Development
Corporation (GMDC), and controlled by the Gujarat government, is tipped as the
hot favorite. India's second-largest producer of lignite, it has the economic
resources to develop the sapphire mines, with net sales in its most recent
reported quarter almost doubling to 2.57 billion rupees from 1.33 billion a year
earlier and net profit rising to 932.5 million rupees from 526.571 million
It is in the running four years after the government tried to sell the rights to
the mine to London-based jeweler Dianoor for $2 billion. That deal fell by the
wayside after the Daily Rehmat local newspaper exposed flaws in the tendering
process and possible kickbacks received to ministers.
While the authorities delay a final decision, illegal mining continues.
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