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Shetty was commenting on the prospects of mining gems in India, which Gemfields has been pursuing for about four years. After irregularities surfaced in coal and iron ore mine allocations, the government called for auctions to enhance transparency, making the acquisition of mineral assets costlier.
Gemfields plans to walk out of India if the government decides to auction deposits of precious stones. Without an assurance of returns on investment, the company does not want to pay any amount upfront.
Gemstone deposits in India are scattered. A geological survey has been conducted to assess deposits, but their quantity has not been estimated.
“Since we started talks with government three years ago, we acquired mines in Mozambique and Ethiopia. But little progress was made in India, which has the least deposit of gemstones in comparison with other minerals. Auction of gemstone deposits does not make sense,” Shetty said.
Gemfields is in talks with four state governments, including those of Odisha and Jharkhand, but the complexities of environment clearance and rehabilitation have made exploration tough in India. There is a huge quantity of yellow sapphire in Jammu & Kashmir.
Gemfields produces nearly 60-65 per cent of the world’s coloured gems and supplies emeralds, rubies and sapphires to Indian jewellery manufacturers and retailers.
“In Mozambique, we purchased the Montepuez ruby deposit for $2.5 million. This is the largest known ruby deposit in the world. We invested in this deposit to create value which has now become $1 billion worth of assets. We want similar value creation in India,” Shetty said.
Gemfields, currently spends around 12% of annual sales to the tune of around $150 million of which India gets nearly 15%. In five years, however, the company plans to increase to $500 million of which marketing spend and India's share would continue to remain unchanged.
Shetty emphasised on jewellers to offer resale value of jewellery to customers to win their confidence.
