Tanzanite is one of the more recently discovered gemstones. Discovered in 1967 in the African nation of Tanzania by Masaai herdsman walking past Mount Kilimanjaro. The herdsmen took the stones into the nearest town, Arusha where they were thought to be Sapphire. On further testing however, it was revealed that the stones were not Sapphire at all but something never seen before. Since this discovery over 40 years ago, the only known deposit of Tanzanite remains on the slopes of Mount Kilimanjaro.
Tiffany and Company in New York got ahold of some samples of the new stone and their chief gemologist at the time, Harry Platt, fell in love with it. Throughout the 1970′s Tanzanite was exclusively marketed by Tiffany’s. As the stone was only available to a very small portion of the market as a result of this marketing arrangement, the price stayed fairly low without consumer demand to drive them upwards. This exclusivity was relinquished in the 1980′s however, allowing for greater market exposure and Tanzanite gained rapidly in popularity. As demand increased so did supply and eventually supply levels neared demand levels and prices leveled after a long period of appreciation. A “Tanzanite Gold Rush” was already in full swing and this had the effect of pushing supply levels above demand and around the mid 1980′s prices had peaked and then started dropping. Tanzanite, now priced much lower than that Tiffany’s had tried to introduce it to the market at, became the new darling of the gem industry.
Towards the end of the 1980′s there was a clear distribution channel in place from Africa through the cutting markets of Germany and then on to the USA market for selling. Tanzanite’s popularity continued to rise with the German industry pushing hard behind it. It reached its height of popularity in the 1990′s when new pockets were discovered in Mining Blocks B and C (The Tanzanite mining area is divided into 4 blocks A,B,C,D). These new pockets really increased the availability of the finest material which was, and still is, very rare (less than 1% of all Tanzanite mined). This also helped to market the stone as a premium gemstone in the market by appealing more to the high end of the market.
However, prices continued to drop as rampant mining continued and the Tanzanian government tried to stem the decline by forceably closing some of the mines. This had the desired effect and Tanzanite prices started to rise once more and by 1995 dealers from all over the world, but most especially from the US market were flocking to Tanzania to buy up whatever they could pushing prices still higher. Towards the end of the decade Tanzanite was widely regarded to be the single hottest selling gemstone, outselling all colored stones except ruby, emerald and sapphire.
The next price blip occurred in 1998. The El Nino rains which pounded the continent flooded the mines, causing the death of 100 independent miners. The tragedy had the effect of shutting down all active production at the mines and the market was very slow to recover. Although the mines gradually reopened, the collapse made it very difficult to mine effectively and production was a refraction of what it was previously and prices rose steadily again as demand once more outstripped supply.
In the early part of the new century the Tanzanian government allowed a South African Mining company called Afgem to buy an exclusive lease to Block C. Today, this lease is owned and operated by Tanzanite One Ltd an offshoot of Afgem. Their stated objective is to use a De Beers business model to control supply and market heavily to the consumer to create a “pull effect” in the market. They are using De Beers long term “Sightholder” distribution system strategy. Ultimately, this is driving prices further upward as the effects of increased and targeted marketing bears fruit.
During the past 5 years, prices have been on the increase. It is impossible to tell where the prices of Tanzanite will go in the future. However, it is noteworthy that the production mix has dramatically changed in the past few years and production of the finest material has declined by 80%. This is the so-called investment grade. Prices continue to rise for this material, whereas the market for medium grade pieces is stable. Extra fine goods are now very scarce.
The active production life of the Tanzanite deposits is now estimated at less than 10 years. Demand is currently stable and rising as designers and manufacturers continue to work with and promote the stone. Only time will tell where Tanzanite prices will go from here. Much speculation sees them rising in tandem with increasingly smaller supply, especially for the very fine pieces which are already very scarce.
Antony Zagoritis is a GIA Graduate Gemologist and director of a well established gem cutting and export company in Nairobi, Kenya, East Africa. To learn more about Tanzanite go to http://www.lapigems.com
Article Source: http://EzineArticles.com/?expert=Antony_Zagoritis
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