Sri Lanka & Madagascar: What’s Happening in the World’s Most Important Sapphire Markets

Jennifer Heebner, Editor in Chief

Ongoing difficulties in Sri Lanka and Madagascar combined with residual COVID-19 issues are causing higher prices and a tougher time acquiring top goods. With the Tucson gem shows just weeks away, dealers have been hustling to stock up on Sapphires, and many are finding difficulty in doing so.

Sri Lanka still suffers from a near economic collapse that took place mid 2022, while Madagascar’s policies surrounding the export of gemstones remains volatile. In Madagascar, there have been intermittent periods of export for years.

“We are going to be going through a tough 8–12 months as the global supply chain for gemstones will be making significant shifts starting at the mining level,” says Sheahan Stephens of the eponymous gemstone firm. Stephens is in regular contact with jewelry and gemstone government officials in Sri Lanka. All the Sapphires he sells are sourced in that island nation as well as in Madagascar.

Availability of Goods

Finding the best goods remains difficult. Allen Kleiman of A. Kleiman & Co. talked to AGTA from Sri Lanka, where he was shopping for gemstones to bring to the GemFair in Tucson. He said this trip was his toughest in terms of finding top-quality merchandise.

“There’s just very little production out of Sri Lanka and Madagascar,” he says. “Finding fine blues and unheated stones in any size is difficult. Even 3 ct. sizes are hard to find—it’s crazy. Everyone is looking for the same quality, and that puts a lot of pressure on the market,” he adds.

John Bachman of the same-name gem firm sees the same problem. “There’s just not enough material to go around.”

Plus, many stones mined in Sri Lanka don’t make it to market anymore. “Stones are sold off in local auctions, and there’s huge competition from the Chinese,” he says.

Ron Rahmanan of Sara Gem Corp. recently spent eight days in Sri Lanka and had better luck sourcing on this trip than his last (he travels there every few months). He says most gems in Sri Lanka are coming from Madagascar, and there are many Sri Lankans there on the ground to buy. In Sri Lanka, meanwhile, the government is tightening restrictions on mining permits to keep responsible practices in effect and is considering levying higher taxes on the gem industry because of financial struggles. Bottom line, Rahmanan says, is that “sometimes you’ll pay more for a stone and get less.”

Award-Winning blue Sapphire from A. Kleiman
Award-Winning blue Sapphire from A. Kleiman & Co.
Prices & Problems

Beyond the difficulty of finding quality stones is the action of paying for them. Stephens recalls when he first brought teal Sapphires to market around 2012. He was paying about $100 a carat for them; today he pays more than $350 a carat. “I’m seeing a pullback in purchasing of green and teal,” says Stephens. “That color has hit its pricing threshold—it can’t go higher.”

Kleiman sees price increases of about 20% on Sapphires. He remains grateful for opportunities to purchase goods given the challenging nature of sourcing Sapphires today. On this most recent trip, he planned to buy rough and cut and recut everything ahead of the Tucson shows.

Bachman maintains that sourcing blue Sapphires in Sri Lanka has only been really difficult in the past year. “That’s when we saw prices shoot up to double what they were four years ago,” he says. “This doesn’t happen overnight, and I’ve never seen prices go down, but it makes me wonder where we’re going with this insatiable worldwide demand.”

Another thorny (and ongoing) issue is that some traders in source countries are going direct to consumer—a problem that has plagued the industry since COVID days, according to Stephens. “When steps in the supply chain—such as testing stones to ensure they don’t fade—are skipped, those will be issues for consumers,” he says.

Stephens estimates that about a quarter of peach to pink Sapphires from Madagascar fade. This is a problem for the retailers who buy directly from Sri Lankan or East African merchants looking to bypass dealers who test material for color stability prior to sale.

“Dealers and retailers alike need to take the correct steps to verify and validate that the pink, peach, yellow, padparadscha, and some varieties of purplish-pink Sapphires don’t fade,” he insists.

Gems in Tucson

Challenges aside, dealers will not have empty cases at the upcoming shows. Margit Thorndal of Madagascar Imports specializes in Sapphire melee—3 mm and under stones—from Madagascar. “Very few people do that,” she observes. She’ll have a rainbow of offerings, including pinks, purples, blues, and more. “Much of the purple is not heated,” she notes.

One of Kleiman’s most recent prized acquisitions to debut in the desert is an oval, no-treatment Alexandrite from Tanzania that he’s in the process of recutting.

Because of Bachman’s struggles to source traditional blue Sapphires, he’ll be offering star Sapphires from Sri Lanka. He also has some blue (and yellow) Sapphires from Madagascar.

Sara Gems’ Rahmanan will bring a fresh supply of unheated Sapphires as well as a 10 ct. pink Sapphire and some Rubies from Mozambique.

As for Stephens, his team will bring peach and pink Sapphires from Madagascar, along with a prediction: a market correction is coming, and power centers are shifting.

“Sri Lanka conditions will not improve for many years—maybe six to seven—because of politics and an uncontrolled GDP-to-debt ratio,” he says. And export restrictions aside, “Madagascar output will surpass Sri Lanka this year and next until Sri Lanka stabilizes, though Sri Lanka will still be a source for gem processing.”

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