Thursday, March 1st, 2007 By Sarah Larenaudie/Merelani
Most gems are found in
several places in the world. Emeralds come from Colombia but also from
Zimbabwe; there's amethyst on almost every continent; and diamonds although
associated with Africa are mined in Russia and Australia, among other
places.
Not tanzanite. The stone,
which is often likened to blue sapphire but is more brilliant with violet
overtones, was discovered only 40 years ago, and geologists are convinced
that it occurs in only one place in the world: Africa's Rift Valley, 25
miles from the base of Tanzania's Mount Kilimanjaro, in a little place
called Merelani.
Twenty minutes down a dusty
unpaved road, about 30 miles east of Arusha, past Masai herdsmen in
traditional dress, is the guarded entrance to the mines. Ahead, teams of
donkeys are carrying drinking water to the miners. At a glance, you can take
in the entire four-mile stretch where the tanzanite is buried in maddening
folds deep below the earth's surface. It's hard to get an exact fix on how
much is there - Geologists recently updated their models and project a
15-year supply. Of course, it depends on all sorts of variables. Whether the
biggest companies produce to capacity; whether hundreds of small local
miners, without the sophisticated machinery or the credit lines of the big
guys, can continue to tunnel ever deeper to follow the vein. Whether plucky
independent owners like Money A. Yousuph who hasn't pulled out any tanzanite
since 2002, when he sold a 2.2-lb. chunk for $275,000 at a Las Vegas trade
fair - get lucky. "I'm about to," he says confidently.
My first encounter with
tanzanite, however, was not in Africa but in Jaipur, India, where many of
the world's colored gems are cut and polished. After merrily emptying
canisters of emeralds, a local dealer there, Ashok Chordia, abruptly
signaled his assistants to close the wooden shutters overlooking his
competitors' offices. In the dark, he flipped the lids of two metal boxes
filled with nuggets he identified as tanzanite. "Very, very rare," he said
mysteriously. "More precious than diamonds."
For months I asked everyone
about tanzanite. Industry insiders mentioned a connection with the New York
City jeweler Tiffany. Several jewelry manufacturers warned that it was a
very fragile stone and difficult to work with. Precious? They're selling it
on QVC. A Google search identified the Heart of the Ocean sapphire hurled
into the sea in the film Titanic as tanzanite (this is often repeated but
apparently false). More serious were references to American jewelers
temporarily suspending sales of tanzanite amid charges of links to al-Qaeda
financing in 2001 (the U.S. State Department subsequently investigated and
found no such connection). An American friend raved about a ring her mom
bought on a Caribbean cruise. But most people I asked had never heard of
tanzanite, and no jewelry stores in Paris, where I live, seem to sell it. In
Johannesburg, though, it's said to be all the rage.
"People are attracted by
the beautiful blue," explains Donald Greig in a telephone interview. He and
two brothers are the fourth-generation owners of Charles Greig Jewellers,
with six stores in South Africa. "It's a color that looks good on everyone,
which is not the case for emeralds and rubies." Seven years ago, he says,
tanzanite was difficult to come by, but today it represents an astounding
20% of sales in his stores, equal to watches and topped only by diamonds,
which account for a third of his sales. "It is by far our most important
colored gemstone," Greig says. "We are not pushing tanzanite, but that is
where the market is taking us."
That market tug has been a
decade in the making. The biggest miners, dealers and a marketing
organization they finance called the Tanzanite Foundation are gearing up to
try out some of the strategies that worked in South Africa on other markets,
beginning in London and New York City. The timing is good: in the wake of
the film Blood Diamond, jewelry consumers are asking more questions about
origin, which is easier to trace for tanzanite than diamonds and other gems.
Also the tanzanite industry has been eager to position itself as modern
miners, environmentally responsible and energetic in helping finance
schools, roads and water management for surrounding communities.
Jewelry-design team Anthony Nak of Austin, Texas, last year created a
12-piece collection featuring the stone to raise money for Tanzanite
Foundation projects because they looked to the future. "The discovery of
tanzanite changed the way the nomadic people there live forever. In 15 years
when that supply runs out, what's going to happen to them?" says Anthony
Camargo, half of the Anthony Nak team.
In the Nasinyai Masai
village is the new junior secondary school, where 220 11-to-14-year-olds
start their day at 5:30 a.m. with "water fetching," then study English,
science, social studies and HIV/AIDS awareness. "We have high rates of
infection because it's a mining area. Where people are thinking about money,
you always have more unsafe sex," says one of the teachers. Lenganasa L.
Soipey - a member of the Nasinyai village council and son of the Masai chief
who permitted the first tanzanite mining on Masai lands -draws the school
layout in the sand. "We built an enclosed school because we thought our
children might run back to the fields or to business," he explains. "If you
get a small piece of tanzanite and sell it, you might not come back."
Although tanzanite was
formed some 585 million years ago, it was not "discovered" until 1967.
Nomadic Masai tribes had pried balls of the stone from outcroppings on the
surface of the earth, but it was only when outsiders noticed that the stone
took off. One of them, Manuel D'Souza, an Indian tailor living in Tanzania
who was a hobbyist prospector, helped bring it to the attention of Tiffany,
and the New York City jeweler signed on for an exclusive. Tiffany is said to
have named the stone tanzanite after judging the technical name, blue
zoisite, to be too close to the English word suicide. The company promoted
it for several years, but mining rights were poorly managed by the Tanzanian
government, supplies were erratic and Tiffany moved on.
In 1997, a South African
entrepreneur named Mike Nunn, who was buying tanzanite from local miners,
spotted an opportunity. He recalls drinking a beer on the hood of his Land
Cruiser - the snow on "Kili" pink in the sun's glow and studying the mining
operations below. He had come from the Block D zone reserved for small-scale
miners and was headed to Block B, a second area for locals, studded like D
with a jumble of corrugated-iron roofs, holes and ladders marking each small
claim. But between them was a large dirt stretch with no activity. He made
inquiries, put together a group of private investors in South Africa, and
with them eventually took over the mining rights for Block C. The company
they created was ultimately baptized TanzaniteOne and listed in 2004 on the
Alternative Investment Market of the London Stock Exchange.
The company's initial
geology studies suggested that tanzanite could be mined more efficiently to
increase supplies, but market conditions were challenging. Tanzanite prices
fluctuated wildly, and small exporters regularly undervalued their rough
stones and smuggled them across the border to Kenya to dodge export taxes.
Safety was lacking - more than 100 miners were killed when tunnels flooded
in 1998 and the locals were hostile to the arrival of a well-financed
competitor. Finally, although Americans made 70% of all tanzanite purchases,
it turned out to be a niche business, heavy on souvenir trinkets offered on
Caribbean cruises. Most Americans had never heard of tanzanite.
Nunn and his teams decided
a comprehensive mine-to-magazine approach was needed, and they found a
blueprint in their own backyard in South Africa at the De Beers diamond
company. Several current best-selling books look at how trends are spawned
and spread, and debate continues over whether one could completely engineer
the next Big Thing. The answer is yes: De Beers did it.
Faced with a glut of
diamonds in South Africa that risked destroying prices, De Beers in 1890
organized a cartel to control supply, which was further tightened in 1925.
Beginning in 1938, the company commissioned a series of clever promotions in
the U.S. to convince consumers that diamonds were rare (they were not), that
they symbolized romantic love (a copywriter's concoction) and that they
should never be sold, further limiting the number in circulation. The
pinnacle of this campaign was the advertising tagline introduced in 1948: "A
diamond is forever." It was used to cement the role of the diamond solitaire
as the de rigueur choice for a wedding-engagement gift. In 2005, U.S. sales
of diamond engagement rings totaled $4.84 billion.
TanzaniteOne invested in
new technology for the mine and backed marketing and education initiatives.
Clear guidelines on qualities, especially color, were established to
eliminate price confusion. Nearly all tanzanite is heated to 450°C to
develop its blue color, and the finest quality tanzanite is predominantly
blue with violet accents. Quality tanzanite costs between $500 and $1,200
per carat at retail. Greig, the South African jeweler, says $1,000 per carat
is a good benchmark. Buyers should demand certification from an independent
laboratory. Top-grade flawless sells for $1,500 and up per carat and
represents only 0.13% of TanzaniteOne's annual production, executives say.
"Tanzanite is an amazing deep purply blue, and personally I find it more
appealing than sapphire," says London jewelry designer Stephen Webster, who
first worked with it in the early 1980s in Los Angeles. (But he warns that
it is more fragile than some stones: 6.5 on the hardness scale, compared
with 10 for diamond and 9 for sapphire.) "I'm looking at a piece right now,
and it's flashing red. It is very exotic. In top-end jewelry now, the client
is way over branded luxury goods. They are looking for limited availability
or one of a kind," he says.
Rarity is an effective
selling point, but dominating a category is better. The Tanzanite
Foundation's new ad campaign, "Be Born to Tanzanite," is an attempt to
position tanzanite as the stone one gives for a birth. And the De Beers
parallels continue. In 2005, in a controversial move, TanzaniteOne switched
to a "sightholder" selling system in which all the better production is
reserved for six preselected clients who buy at a price fixed by
TanzaniteOne. The move appears to have helped stabilize prices, which is
reassuring for retailers and final consumers, but it smacks of the diamond
cartel. However, there are important differences, argues Ian Harebottle, who
replaced Nunn, still the largest shareholder, as chief executive at
TanzaniteOne last May. TanzaniteOne controls only 35% of tanzanite, compared
with De Beers' historic 70% market share. In 2005, TanzaniteOne's sales
totaled $41.1 million. "We don't want to be a monopoly, and we don't want to
dictate," Harebottle says. "We want to be part of a successful industry
where miners but also cutters and retailers make margin."
Harebottle, a former
management consultant whose father was a diamond cutter, says he signed on
at TanzaniteOne because he "felt he would play a part in history." He boasts
about running "the world's most sophisticated colored-gemstone-mining
operation" and pioneering new technology like an optical sorter adapted from
the recycling industry that is used to scan the shaft debris for overlooked
tanzanite. Never mind that some systems underground such as having workers
hand-tie sacks of debris onto a pulley rope at 9-sec. intervals seem
straight out of The Flintstones. He's enthusiastic about the potential for
mining companies to have a positive impact in Tanzania.
And he and his team are
hoping fashion will embrace tanzanite too, but in a lasting way. "When Ben
Affleck gave Jennifer Lopez a pink-diamond ring, pink-diamond sales - and
even pink-sapphire sales shot up. It was phenomenal," notes Adrian Banks,
managing director of TanzaniteOne Trading. "Then it was over. It was a
fashion thing. Tanzanite is not a fashion stone; tanzanite is better than
that."
