Gemfields saw weak sales of lower-quality goods at its most recent auction of emeralds from the Kagem mine in Zambia as direct competition from another producer and waning luxury demand weighed on results.
The company garnered $16.1 million from the sale of 30 lots comprising 141,084 carats between November 4 and 21, representing only 70% of the total 43 lots offered, it said last week. The total for the sale, which took place in Bangkok, Thailand, was the lowest in more than two years. Revenue at the previous auction, which took place in March, came to $35 million, while the event it held in November last year brought in $30.8 million, with 94% of goods sold.
However, some of the higher-quality goods offered in the sale performed very well, Gemfields noted.
“While the top-quality lots in this auction saw bidding within touching distance of our all-time records for emeralds, the overall result for this auction is very disappointing, driven by fewer and poorer bids for lesser-quality grades,” said Adrian Banks, managing director of product and sales at Gemfields. “While the wider luxury and gemstone markets are undeniably facing challenging times, customer attendance and engagement at the auction were good.”
The company also held back lots from sale due to strong competition with another company that was offering goods at better prices.
“We continue to see emerald market dynamics considerably disturbed by a competing Zambian emerald producer who is holding regular auctions in Dubai and promoted as the ‘largest emerald auction in history,’ and selling through their emeralds at what customers are reporting as low prices,” Banks added. “We believe this is a transient market dynamic and does not reflect a medium- or long-term structural change in supply or market demand. We have taken proactive steps to support the market by withholding certain lots that did not achieve satisfactory bidding.”
Image: Rough emeralds. (Gemfields)
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