Almost Three Years Later, Covid-19 Continues to Plague Gemstone Mining in Brazil and Madagascar

March 3, 2023

The pandemic changed a lot of things in the world. One effect was the interruption of supply chains of many types of raw materials, and the gemstone market was no exception. Dealers at the 2023 AGTA and GJX shows in Tucson spoke about the progress they have observed with regard to the health of these supply chains, and what still needs improvement. Based on conversations with sellers, two countries stood out for their vastly different philosophies regarding this issue: Madagascar and Brazil. Gemstone mining operations in both of these countries were heavily impacted by Covid-19, yet their policies regarding the export of their native gemstones could not be more different. 

Madagascar

Last year, vendors complained that Madagascar, a country renowned for its bounteous gemstone deposits, was not contributing much new material to the global market. Tom Cushman of Allerton Cushman & Co. spoke about how the mass closures of Madagascan gemstone mines were only part of the problem. Travel restrictions were so severe that face-to-face business, something that is essential in a country whose citizens often lack access to web-based communication technologies, was rendered impossible. Compounding the issue further, Mr. Cushman explained that while rough exports from Madagascar are legally permitted since Oct 2022, it still remains very difficult to export, dealing a significant blow to the legal gemstone export market. In fact, Mr. Cushman said that he knew several dealers whose businesses that relied on Madagascan gems were unable to attend last year's show due to a lack of inventory.

This year, Mr. Cushman said that things may appear to be getting better on paper, but very little progress has actually been made. He recounted how the government changed its policy regarding gemstone exports in the second half of 2022, finally giving miners a legal path to sell their stones out of the country. However, he said that these permits could only be issued to individuals who hold active pre-existing mining permits. The problem, as Mr. Cushman described, is that those mining permits are expired as the government stopped renewing them years ago. As a result of this complicated legal situation, all of the Madagascan gems that Mr. Cushman had for sale at his booth have been in his possession for a decade or more. Making things even worse, Madagascar miners face "increased prices, decreased production, and heightened cost of doing business." So, not only is selling their product legally a problem, but they face a greater financial burden pulling the gems out of the ground in the first place.

Another development in the laws is that the export of gemstone rough is prohibited, but faceted gems can be sold out of the country. At first glance, this looks like a positive effort by the government to develop local skilled labor and keep more of the profits of gemstone production in Madagascar. However, multiple vendors, including Rajesh Kumar of NRI Gems INC., pointed out a fundamental problem with this approach, namely that Madagascar "lacks cutters with the skill to handle gems internally." This ends up blocking the supply of gemstones, trapping uncut rough inside the country.

Last year, multiple dealers talked about how much of the mining activity in Madagascar is performed by small operations, often just families processing their own land. Many of these artisanal workers ceased mining during the Covid-19 pandemic to focus on more reliable paying jobs, especially since contact with their foreign buyers was so suddenly severed. Mr. Kumar says some of these family operations have restarted mining activity, but that output remains significantly less than pre-pandemic levels. As there is less mining overall, it also means that the supply of rare fine-quality gems like sapphires has been greatly impacted. While Mr. Cushman noted some positive first steps by the Madagascar government to reinvigorate their gemstone supply chains, Mr. Kumar says that he has not personally seen any notable improvement.

The most critical review of the present state of Madagascar laws and regulations came from John Ferry, founder and CEO of Prosperity Earth LLC. Mr. Ferry operates a coastal demantoid mine in Madagascar. He is proud to say that he is a present and hands-on business owner who directly oversees the conditions of his mine and his workers. All of his operations are fully permitted, and he provides a safe and profitable working environment for his many full-time employees - something that he says is exceptionally rare amongst the Madagascar gemstone mining operations. 

Mr. Ferry spoke at length about the general state of disorganization in Madagascar, saying that the government "lacks vision and strategy to develop mining, both artisanal and commercial." This lack of initiative, he says, is not limited to the gemstone mining industry. With regard to basic infrastructure in the country, Mr. Ferry stated that "the government has no public programs. All improvement projects fall on the backs of the people." As a result, even vital roadways are not cared for.  

With regards to the laws that state gems must be cut locally, Mr. Ferry voiced the same sentiment that Mr. Kumar had, namely that there is no one in the country with the talents to accomplish this, especially on a large, industrial scale. Specifically, Mr. Ferry said, "Madagascar requires decades of development to gain skills to cut the gems mined there. However, the government is not even trying (to train its people)". 

While Mr. Ferry sees the current situation as grim, there may be a glimmer of hope on the horizon. He says that there is a presidential election scheduled for this year and hopes that new leadership will change the political landscape. 

Brazil

As was the case in Madagascar, gemstone mining in Brazil was greatly impacted by Covid-19. Last year, vendors reported issues with overall production, saying many mines were producing markedly less material or simply shuttering operations altogether. However, unlike Madagascar, vendors reported that Brazil is doing its best to reinvigorate its gemstone supply chains and get their local gems back on the global stage. 

Unfortunately, the country faces multiple hurdles to get production back to pre-pandemic levels. Gene McDevitt of Koroit Boulder Opal, who sells Brazilian rutilated quartz, summed things up in just a few words: "Mining in Brazil is difficult, expensive, and dangerous." The biggest issue from his perspective is that gemstones are a limited commodity and all mines eventually run dry. He said that "all of the easy stuff has been mined. This means that miners have to dig deeper to get to the gemstones. On top of that, they face increased expenses like high gas prices." 

Brazil is home to many gemstone deposits, and the global demand for its stones always craves more. Sean Byrne of Bellagem Inc. said that "it was never easy to get Brazilian gems even when there were a lot of them out there. Right now, there aren't many at all". This was echoed by Yin Chin of Sara Gem who says that they are selling inventory obtained before Covid-19 struck.

While some of the large mines may have started to yield fewer gems, miners with smaller-scale ambitions are still finding beautiful materials to fashion into bold jewelry. Brian and Kendra Grace Cook of Nature's Geometry have their own mine in Bahia, Brazil which produces rutilated quartz. They use the gems they find to create beautiful pieces that allow the natural beauty of the quartz to be admired without unnecessary ornamentation. 

While the Cooks are in possession of all required legal permits for their mine, Val de Souza of Brazilian Gem Center says that many small mining operations still face challenges to obtain the proper paperwork needed to operate. He stated that larger corporations can spend the time and money to do things properly, but even then it is quite difficult. He speculates that part of the reason permits are so hard to get is increased concern on the part of the government to maintain the integrity of the Amazonian environment. Mr. de Souza says that even Minas Gerias, home to many of the most famous gemstone deposits in the world, remains under tight restrictions. This has forced him to look to Thailand to obtain new inventory. 

Brazil is clearly still recovering from the pandemic, however, Samuel Sabbagh and his son Victor of Ben Sabbagh Bros. described how the government has made outreach a priority to help get things back on track. The Sabbaghs explained that they and a few other vendors at the GJX show were only able to attend Tucson this year thanks to sponsorship by the government. They said that "everything has slowed since COVID for all items. Nothing is easy to get." Additionally, they discussed how Brazil, unlike Madagascar, encourages exports by keeping them tax-free.

In the end, dealers report that neither country has completely recovered from the effects of the pandemic. Moreover, they seem to agree that a return to pre-pandemic production and exportation likely won't rebound for years to come. By all accounts, each country, which both have massive gemstone deposits, sees extremely different paths forward and their policies directly affect the global availability of many gemstone species. On one hand, Madagascar seems to be clamping down on its mining activity and export output, choking its outbound supply chains with no clear plan to reopen legal international trade. Conversely, Brazil is advertising its gems and local talent by encouraging exportation via tax-free policies and sending ambassadors to highly visible events like the Tucson show. While their local workers still face challenges like increased production costs, they are part of a community that wants them to succeed and profit.