Emeralds: Market Effect of Origin & Treatments, Pricing & Disclosure

Published March 2009

By Stuart M. Robertson, GG
Research Director of The GemGuide

Colombia, Zambia and Brazil are the primary producers of emerald for the international gem trade. Each of these sources produces all quality grades. Historically, the industry has prized Colombian above the others. Colombian emeralds serve as the benchmark by which price and quality are judged in the emerald market. Colombia is followed by Zambia and then all other sources. In recent years emerald mining has reemerged in Afghanistan where deposits produce small quantities of fine material. In addition to the four origins named here, numerous secondary sources exist, but they are currently of no significant value to the gem trade.

In Colombia, the three main mining districts traditionally have been Muzo, Coscuez and Chivor, with Muzo emerald prized (and priced) above all other by the international gem trade. However, the discovery of the La Pita mine at the end of the 20th century has proven to be a major producer of Colombian emerald surpassing Muzo and Coscuez in total kilos of rough produced annually. In each location, all qualities are produced, but fine and extra fine quality stones are scarce.

Emerald mining in Colombia exists as a relationship between government and private enterprise whereby the government leases the land to the mining companies. Beyond that, the government has little involvement in the gemstone mining areas and as a result, the region’s development is dependent on allocation of revenues from mining companies to develop and improve infrastructure. In recent years, several newcomers have attempted to adopt practices that would allow much of the benefit associated with these resources to remain in the mining region for the betterment of local communities.

Like most gems, emeralds are subjected to a range of enhancements to improve clarity. The most common is referred to as “oiling” and involves filling open fissures with an oil or resin. Quantifying the amount of enhancement became a concern in the 1990’s. The major laboratories all will indicate the amount of enhancement present, while determining the type of enhancing medium remains more challenging.

Our GemGuide publication and most laboratories, recognize three levels of treatment: minor, moderate, and significant. The AGTA Gem Testing Center and the GIA Gem Trade Laboratory both use these three descriptive terms on their reports. With the AGTA GTC, they also use the terms none for unenhanced emeralds and insignificant when trace residue may be present that does not reach the level of minor.
Regardless of the actual terminology used by any laboratory, the purpose of the disclosure is to indicate in general terms the amount of enhancement that has occurred.

Treatment identification raises several issues, the most obvious of which is that there is no single standard to quantify the filler amount. In a practical sense, the issue of reliability and repeatability must be considered. The amount of filler used to enhance most emeralds is only a trace. It is impossible using today’s methods to actually comment with a repeatable accuracy on the degree of improvement unless one observed the emerald both before and after treatment.

Pricing Treatments
Although some dealers still may prefer a particular enhancement product over another, the market has moved in the direction of buying stones that can be cleaned and then treated with that person’s filler of choice. Cedarwood oil has been suggested to be the preferred and traditional treatment. However, this appears to be largely based on the marketing of the idea that cedarwood oil is a natural product. The reasoning is obviously flawed as cedarwood oil (or any oil for that matter) does not occur naturally in emeralds.

When pricing emeralds, some consideration is given to the treatment amount. But today this consideration is significantly less important than it was eight to ten years ago. Today, many dealers question the accuracy of determining the enhancement amount by gemologists that did not see the before and after treatment effect. Instead, pricing is based on many factors including the number of surface reaching fissures.

The size (carat weight) and quality of an emerald directly relate to the price premium or discount associated with any given emerald. In other words, these attributes have the greatest impact on rarity and therefore, price. For example a 0.70ct fine quality emerald with a slight level of filler is ~ +10%, while the same quality emerald weighing 5.00cts will have a premium of about +25-30%.

The following chart shows the results of research concerning the relationship of filler amount to value. These figures can change with time as the greatest indicator of value is supply and demand.

In understanding the price structure of emerald it is important to understand the interrelation that exists between color, clarity, origin, size, and perception of rarity. It is this combination of factors that result in value.

The better understanding and acceptance of emerald enhancement in today’s market can be attributed to several factors, not the least of which is a rational acknowledgement that oiling of emerald is far less intrusive than treatments commonly encountered in other gems such as ruby and sapphire. Instead, the current emphasis involving fillers is directed toward their stability and ease in removal, and not whether the filler is a synthetic or natural oil or resin.

Disclosure
Disclosure is an important part of any gemstone sales transaction. Only with accurate information from producers can wholesale and retail sellers convey reliable information treatment to their clients. To assist in that process, industry groups have put forth useful nomenclature.

The American Gem Trade Association (AGTA) has published codes that their members as required to use. The following information is applicable to most gems. The enhancement should be explained to the client and then the corresponding “code” written on the invoice. “E” Enhanced-used for all gems that have been enhanced when specific enhancement unknown; “O” Oil/Resin infusion-notes that colorless oil, wax, resin, or other colorless substance has been used to enhance the stone; “D” Dyed-introduction of coloring matter. For a complete list of the dealer codes used by the AGTA, you can download a PDF. Go to http://agta.org/gemstones/agta-gim.pdf

At the retail level of the market most emeralds are disclosed as “oiled,” regardless of the actual filler used. This treatment is easier to explain than resins and oiling has been generally accepted in the market. The lack of specific detail is seen by retailers as a safe way to convey the fact that some treatment occurred even when the seller is not sure exactly what specific filler type was used.

Disclosure by appraisers becomes more difficult for the reasons previously stated. They have not seen the stone before it was treated. And now many understand that the process of estimating the amount of filler by visual assessment is unreliable. Most appraisers do not possess the necessary equipment to identify filler type should that become a question.

Unfortunately, appraisers have become the source that consumers rely on for information about their gem and jewelry purchases and yet appraisers are the further ones from the actual transaction. Some rely on limiting conditions inclusions with appraisals that include statements like this. “It may be beyond the scope of an appraisal to determine the exact treatment methods. Unless otherwise stated, the gems described in this appraisal are assumed to be treated.” These or similar statements are used to convey to the appraisal client that a stone has be enhanced but the exact process is not fully known to the appraiser.

Stuart Robertson is the Research Director of Gemworld International, Inc. In September, 2008, Gemworld and the AGTA hosted the inaugural World of Gems Conference. Proceedings of the conference contain greater detail on topics such as presented in this article. Historical price charts are also included. For information on the World of Gems Conference book, go to www.worldofgemsconference.com. For information on the GemGuide to wholesale gem pricing, or the GemGuide Appraisal Software, go to www.gemguide.com.

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