Gem industry growth hit by worker shortage

Sector workforce currently at 600,000:

A $1bn revenue target is spearheading Sri Lanka's efforts to solidify its place as a key source market for gemstones and jewellery, although flat global sales of luxury goods, coupled with labour shortages, risk hindering the efforts.

Sri Lanka is home to 70 of the world's 200 varieties of coloured stones, including its best-known export, the Ceylon Sapphire. Estimates suggest that 80-90% of the country's rock formations could hold gem deposits.

However, with growing regional competition in gem and jewellery trading, Sri Lanka will have to dig deep to win back its status as an industry hub.

Market conditions. Operators hope that positive trends in Sri Lanka's tourism sector provide a welcome boost in the jewellery trade. Tourism growth reached double digits in the first nine months of last year, according to figures released by the Tourism Development Authority, with arrivals passing the 1.3m mark in September.

Yet, traders face a difficult operating environment industry wide, weighed down by the broader economic slump and weaker currencies in several key purchasing markets.

In China, for example - Sri Lanka's fastest-growing source market for tourist arrivals - the 2% devaluation of the yuan in August was the largest one-day move for the currency in a decade. Luxury goods retailers fear the weaker purchasing power of Chinese consumers could impact the lucrative tourism segment, as Chinese tourists spent a record $500 bn worldwide last year, according to research service China Confidential.

"Gems are the first to be affected by a crisis and the last to recover, though there is always a niche market," Ahsan Refai, Managing Director of retailer Zam Gems said.

Despite the concerns, a strong turnout at Facets Sri Lanka 2015, an annual international gem and jewellery show that which brought over 100 buyer delegations to Colombo in early September, sent out welcome positive signals for industry growth this year, after a more than 14% drop in exports in 2014.

Informal trading

Sri Lanka's gem industry also faces considerable domestic challenges, which include a smuggling problem, staff shortages and exploration constraints.

While gem, diamond and jewellery exports stood at $381.2 million last year, according to the Central Bank of Sri Lanka, operators estimate that the figure could be significantly higher, augmented by unofficial business, smuggling and undervaluing.

"There is a need for a freer movement of goods," said Chanaka Ellawala, former chairman of the Sri Lanka Gem and Jewellery Association and director at Ellawala Exporters.

"The tax on gem exports drives people to undervalue their goods. Building industry volumes and carving a niche as a trading hub also presented challenges, He added, "It is also very difficult to bring rough gems into the country, which could otherwise help build industry volumes and make the country more of a trading hub," he said.

Fine-tuning for the future

The past decades have been marked by turbulence for Sri Lanka's stone-cutting and polishing operations, with much of the country's manufacturing going to regional competitors.

While Sri Lanka has fought hard during the last 15 years to re-establish its gem manufacturing industry, operational challenges remain, led by a shortage of qualified workers.

Industry players believe recruitment shortfalls are due in part to a broader shift away from labour-intensive lines of work, although traders are confident that these hurdles could be overcome with the necessary resources and training.

Sri Lanka's Export Development Board estimates that the industry provides employment to over 600,000 people, including cutters, polishers, miners and marketers.

"For Sri Lanka to become a gem and jewellery trading hub and achieve higher export targets through value-added products, the lapidary industry and jewellery craftsmen need to be developed further," Akram Cassim, CEO of Colombo Jewellery Stores, said.

With many retailers today still importing designs, the industry also offers plenty of potential for value added, according to industry people.

"Only a small portion of the gems exported through formal markets are actually jewellery, so there is enormous potential to add further value," trader told . "This could easily double export volumes."

Upstream hurdles

Exploration also presents additional hurdles for the industry. Sri Lanka remains opposed to industrial-scale mining or foreign participation in the trade, meaning that most gemstones are acquired from pit mines dug by smallholders.

Stakeholders have long called for geological information mapping (GIM) to help with exploration, as most producers do not have the resources to conduct independent exploration.

With the country's Geological Survey and Mines Bureau legally confined to exploration of minerals other than gems, the National Gem and Jewellery Authority of Sri Lanka would likely be responsible for any future GIM efforts, though no official steps in this direction have been announced.

The gem mining industry in Sri Lanka

Sri Lanka has been famous from time immemorial for the great variety and abundance of gem minerals of extremely high quality and uniqueness, earned it the name Ratna Deepa meaning Gem Island. Nature in her bounty has chosen the bosom of Sri Lanka to enshrine some of her rarest treasures.

Significant gem fields had been known from ancient times. Blue Sapphires, Cat's Eyes, Alexandrites, Rubies, Star stones found embedded in layer of gravel and sand, in river beds, marshes, fields or accumulated at the foot of hills have made Sri Lanka the renowned island for gems.

These precious stones perfected in the laboratory of nature lay hidden for countless ages, their luster undimmed, their value unrecognized.

Sri Lanka ranks with Myanmar, Brazil, South Africa and Thailand as one of the world's most important gem bearing nations. The story of Sri Lanka's gems is as old as civilization itself.

Legends, myths and the occult have been associated with the long history of the island's precious stones. Gems are deeply embedded in the traditional beliefs and the religious life of the majority of Sri Lankans. Priceless gems are among the treasures kept in the relic chambers of the great Buddhists tupas in the island.

The earth's greatest concentration of gems in over 50 varieties is found within the country's land area of approximately 25,000 square miles. The Arabs called this the land Jazirat Kakut, which denotes the same meaning the Island of gems. The fame of her gems spread far and wide. These priceless precious stones have adorned the crowns and thrones of royalty in many parts of the world

Procedure

Mining for gemstones is carried out on a cooperative basis. A number of miners form a group and share the costs of labour and profits from the sale of gemstones. This group is known as a Karuhavula. Its most important members are the investor and the miners.

The investor finances the whole operation project up to the sorting stage. The miners decide on a suitable site, once a suitable site is chosen, miners excavate until they reach the gem bearing illama. A miner is able to judge the depth of the illama by inserting a steel rod into the earth until it reaches the layer below the illama, called the malava.

Although the malava is found beneath the illama, there is a possibility of finding another layer of illama beneath the malava. The mine owner, being the head of a mine, is responsible for various legal activities. The organization and operation of a mine requires particular skills and some considerable experience of the industry. Mine owners tend to have been involved in gem mining for a significant period of time and the majority of them were middle aged.

Methods

There are two common mining methods. One is pitting: Pitting shafts are made to reach levels from 10 to 12 feet of pay gravel exist. Tunnels are made to collect the pay gravel around the base. Walls are structured with timber species that resist water rot and fern. Pits are generally confined to marshy terrain and paddy lands. Flooding is the main hazard in pit mining and the workers of the present day generally use water pumps to dewater.

The other is riverbed mining: Gems are also mined from riverbed material by using suction pumps for extraction of riverbed gravel for gems. Much harm can be done to riverbank stability by removal of gravel thus undermining the banks because there is no control of the operation.

Extraction

The mining methods used in Sri Lanka are specifically developed and suited to the terrain. Compared to other gem producing countries some of the techniques are both simple and apparently obsolete. However, these methods are effective, adequately efficient and generally safe. Moreover the initial capital cost of mining operations is generally very low which permits greater involvement by relatively poor rural inhabitants.

The Government has in fact banned the use of heavy, mechanized mining methods in gem mining. This not only prevents rapid, destructive depletion of an irreplaceable resource but also maintains an alternative source of revenue for much of the rural population who otherwise would be dependent almost entirely on agriculture.

Excavation of a pit is done usually by manual labour. In the first, stage, miners remove the non-gem bearing material, often soil, sand and gravel. This material is taken out of the pit and sorted and stored to be used later to fill in the hole.

If the pit is shallow, the soil is removed with the miners standing at different levels of the pit and baskets being passed by hand to hand. If the pit is deep a pulley system is used. The illama is also removed in the same manner. In some instances the illama is excavated horizontally thereby creating a tunnel called a donava. These can extend from 6 to 9 meters form the shaft. A temporary shed is made above the gem pit to protect the miners from the heat. Planks and logs are used to support the walls of the pit. While timber is usually used for this purpose, as prices increase for materials, some miners more use alternatives such as steel plates. Gem pits sometimes suffer from accumulated water when the pit is dug and therefore mines are equipped with pumps to remove this water. Time taken to mine is usually determined by the amount of illama found. Mining can range from a couple of days to a couple of years.

Washing

After being thoroughly washed, the contents of the basket, called the nambuva, is examined for gemstones. The basket is tilted at an angle allowing the sunlight to fall on the contents. The examiner usually determines if a stone is valuable by the color, variation of color, transparency form or shape. The same basket is examined many times by different people. This is the most important stage of the mining and done by the most experienced hands.

As time passed, new mining methods were discovered which did not hamper the cultivation of crops and the farmlands remained untouched. With advanced technology a vertical shaft was protruded until it reached the illiam. Feeder tunnels were built and were supported by timbers of wood and bamboo.

The miners dug the tunnels and loaded their knapsacks with the precious gravel as made their way to the surface. Pumps operated full-time to keep the tunnels water free. The process of washing, screening and sorting took place on the surface, once the miner climbed up.

River dredging

The gemstones erode from mineral rich rocks and eventually get washed down the rivers. Finding the right spot in the river is the tricky bit as strong currents sweep away even the heaviest gems and slow waters means sifting through a lot of unwanted debris.

Perhaps the simplest type of mine workings is the river dredging which are developed around the exploitation of present day stream gravels and illam exposed during down cutting and erosion by the river or stream.

They also sometimes build dams to help them trap and sort the gemstones before they do the sieving. In their simplest form the dredging operation involves raking up a the river gravel or illam into a shallow pile using a long handled iron rake-like tool known locally as a mammoty, and letting the river wash away the fines.

The resulting coarse fraction is then picked over by workers to extract the gem minerals. Often riffles, small dams and other barriers are built up on the riverbed to control the current and direct it into riverbanks or accumulations of gravel to assist in winnowing out the fine sediment and washing the gravels illegal dredging of riverbed gravels for gems.

The gravel bar is an artificial construction and such features significantly modify the flow of the river resulting in damage to riverbanks and seriously affecting water supply. In some instances, particularly where the river is too deep to permit traditional dredging methods bottom sediment is dredged into weighted baskets pulled across the riverbed on ropes.

The resulting basket of sediment is then processed on the riverbank. River dredging is carried out both legally and illegally and if not closely controlled has significant negative environmental impact as well as health and safety implications for the workforce. River gravels are dug out using a hoe and washed in-situ. Unwanted material is simply discarded with fine-grained mud and silts held in suspension in the water.

Mine workers

The majority of gem mining in Sri Lankans carried out within communities by the local population. It is pre-dominantly a low-technology labour intensive industry carried out usually when the agricultural workload is at a minimum and when the paddy fields are not producing crops. In Sri Lanka gem mining is solely a male occupation.

The number of staff employed by owners varied depending on the type of operation carried out with five to six people employed in shallow mines, 8-12 in deep mines and around seven in river dredging. Total numbers employed tended to average between 11- 16 depending on the number of mines owned.

The length of time of involvement in the industry also varied but the majority of owners had worked in the industry for at least six years with some having worked up to 30 years in the business. Most of them took up mining as it was shown to be profitable and several had progressed to become mine owners after working as gem miners themselves, using what they had earned to invest in their own mines.

Gem mining is a physically demanding and labour intensive occupation and which is restricted to the male population in Sri Lanka. Mine workers cover a wide range of ages from 18-50 with a relatively even distribution throughout this range. No children below the age of 18 are allowed to work in gem mining.

Mine workers enter into a verbal agreement with a mine owner who is generally someone well-known and local to the area. Seventy percent of miners work in the industry because there is either no alternative employment or because they have specialist skills in the industry. Only a small proportion (20%) got involved with mining in anticipation of making high profits. Mineworkers tend to stay in the industry for several years with the greatest majority having worked in mining for 11-20 years.