Three tonnes of Zambian emeralds are auctioned in Jaipur. Indulekha Aravind watches them go.
“It’s like waiting for your school exam results,” jokes Manoj Dhandia of Dhandia Gems. Like the others, he has come to find out if his was the winning bid for any of the lots. For five days, from March 10 to 14, they have scrutinised the precious stones and placed bids. Now is the moment of reckoning.
Most try to look nonchalant. “What’s there to be nervous about? This is business as usual,” says JP Tambi of KL Tambi & Co, a manufacturer and trader of precious stones. “If we win it’s good for us, and if we don’t we'll buy the stones from the winners,” adds Dhandia. He is accompanied by his son, Vaibhav, 20, as part of the latter’s induction into the family business. Nevertheless, there is a flutter when Ian Harebottle, the South African CEO of Gemfields, emerges from the company office where the bids were evaluated. “Ian, give us a 20 per cent discount since South Africa beat us the other day,” one of the jewellers calls out. But Harebottle does not have the results which he says will be announced by Adrian Banks, the product director. Soon enough, Banks comes out with a sheet on which he has scribbled the results, the contrast between the unimpressive piece of paper hastily torn from a notebook and the import of its contents so stark to be almost comical.
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Till the bidding closed a few hours earlier, at 12 noon, the office was abuzz with manufacturers moving from table to table, examining the stones. Gemfields is auctioning 16.8 million carats of rough, uncut emeralds, weighing 3.36 tonnes, and divided into 35 schedules, or lots. This is the AIM-listed company's second auction of emeralds in Jaipur, considered the coloured stone capital of sthe world — over 75 per cent buyers of the coloured stones at Gemfields’ auctions are Indians, mostly from the Pink City. “It is the biggest emerald market in the world, particularly for cutting and manufacturing,” says Gautam Jain of Pee Gee Enterprises.
This particular auction is for lower quality stones. Out of over 100 companies that applied, 48 were invited to the auction. In keeping with the closed tradition of the world of precious stones, hard for an outsider to break into, the companies invited are those known either to Harebottle or Banks or recommended by someone they trust. It is the owners and executives of these select 48, mostly Indians, who mill around the tables at which, by turns, they can examine the various lots of stones on offer.
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Though the auction is for five days, preparations began months ago, in Zambia. Once the company decides to conduct an auction, the stones are sorted, graded and packed into steel boxes, the contents of which are evaluated and invoices examined by experts from the Zambian government which owns 25 per cent in the Kagem emerald mine. The trunks are then sealed and sent to a security company in Lusaka, which sends it as precious cargo by air to South Africa, Mumbai and finally Jaipur. In Jaipur, Banks examines the roughs and sets the minimum reserve price for each lot, keeping in mind the different grades, prevailing market prices and demand. At the end of each day, the more valuable stones are taken to a high security vault downstairs, while the others are left upstairs, in barrels. “You can’t keep lugging tonnes up and down,” says Banks. The stones are guarded by an in-house team of six, headed by an ex-army man, and five others hired for the auction. Fifteen CCTV cameras keep a close watch.
At the auction, each bidder has a different style for evaluation, with some like Dhandia coming every day, from 10 in the morning to 5 in the evening, to examine the stones. Once the bidders are seated in one of the 20 booths, an assistant takes out the stones and weighs them, after which the bidder examines a few from each lot, at times with a fibre optic light. “As soon as you see a particular lot, you’ll be able to make out if it's of interest to you, depending on the colour, size and what you intend to use it for. Then you calculate the price, which will not be difficult since you are in touch with the market. And if you really want that lot, you’ll make a bid that's at least 10 per cent higher than what you calculated as the price,” says Rajkumar Tongya of Precious Jewels Corporation. Tongya had bought a 720-carat single-crystal emerald at Gemfields’ auction in Johannesburg for a record (undisclosed) price.
Despite the hubbub around the tables, the actual auction is a silent one, with no hands raised or hats touched like at Christie’s or Sotheby’s. The bids, in sealed envelopes, are put into a box kept at the entrance of the office and are opened and evaluated behind closed doors on the last day by four Gemfields executives, including Harebottle, and two officials of the Zambian government. Secrecy pervades the announcement of the results as well, where neither the winning amounts nor the reserve prices are revealed. “This is to protect the margins of the winners and those who subsequently buy from them,” says Banks. The reserve price of a particular lot is revealed only if none of the bids reaches it. The lots that have been sold will be weighed in front of the new owners, who will tie and seal the bags, which they can take delivery of once the money has been transferred electronically to Gemfields.
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All eyes on him, Banks reads out the results of the emerald auction. Vaibhav Gems has swept the auction, winning 20 lots. The Jaipur-based company, which sells its stones mainly in the US and Europe through TV channels, had bid for all 35 schedules. “We usually buy most of the lots,” says Izwan Ullah, a director in the company. The results are greeted with applause and the winners congratulated by competitors.
With the auction over, Banks too is a satisfied man. Only one lot, of 770 kg, which had a reserve price of $400,000, remained unsold. “The bidding was very competitive and close, showing people are getting a better understanding of grading and values,” he says. The company has netted $9.9 million, it announces later, its second highest auction revenue.